2019 (9) TMI 74 - AT - Service Tax

Short payment of service tax - discharge of liability on accrual basis or on receipt basis - Point of Taxation rules - According to the Department, the Appellant had short paid service tax amounting to ₹ 1,76,429/- for the year 2007-2008, whereas according to the Appellant there is no short payment of Service Tax liability because this amount of Service Tax was discharged by the Appellant in April, 2008, since ₹ 14,27,411/- was received by the Appellant in April, 2008. HELD THAT - It is not in dispute that prior to 1 July, 2011, the Appellant could have discharged Service Tax liability on receipt basis even though the ledger was maintained on accrual basis. If that be so, then it is clear from the financial summary referred to above submitted by the Appellant, that the short paid Service Tax demanded in the Show Cause Notice to the extent of ₹ 1,76,429/- is towards receipts issued in 2007-2008 for an amount of ₹ 14,27,411/-, which amount the Appellant received in the month of April, 2008 - The adjudicating authority has not accepted this contention of the Appellant only for the reason that the figures in the two challans do not correspond to tax liability of ₹ 1,76,429/-. The adjudicating authority committed an error in rejecting this contention of the Appellant for the reason that the tax amount mentioned in the two challans would also include that tax amount for the other amount received by the Appellant in the month April, 2008. It would have been different if the amount mentioned in the Challans was lesser than ₹ 1,76,429/- because in that case the Appellant would not have discharged the entire tax liability - The Commissioner (Appeals) completely failed to advert to this issue in the order even though the said submission was noticed by the Commissioner (Appeals) in the impugned order. There is no short payment of Service Tax for the period in issue - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Challenge to the order passed by the Commissioner (Appeals) dismissing the appeal.
2. Allegation of short payment of service tax by the Appellant.
3. Discrepancy in tax liability calculation based on accrual and receipt basis.
4. Appeal against the order dated 28 May, 2014 by the Deputy Commissioner.

Analysis:
1. The appeal challenges the order of the Commissioner (Appeals) dismissing the appeal against the order of the Deputy Commissioner. The Commissioner upheld the demand for service tax based on the Show Cause Notice issued to the Appellant for short payment of service tax amounting to ?1,76,429 for the year 2007-2008.

2. The Show Cause Notice alleged that the Appellant short paid service tax on taxable services rendered, prompting a demand for recovery under the Finance Act, 1994. The Appellant contended that they had already paid the tax demanded through challans in April 2008, disputing the basis of the demand created on accrual basis.

3. The Appellant argued that prior to July 2011, they could discharge service tax liability on a receipt basis. The financial summary presented by the Appellant showed that the disputed amount of ?1,76,429 was paid in April 2008 upon receiving ?14,27,411, supporting their claim that there was no short payment of service tax.

4. The Deputy Commissioner rejected the Appellant's contention, emphasizing discrepancies in challan amounts and the demanded tax liability. The Appellant's appeal to the Commissioner (Appeals) reiterated their stance, highlighting the discrepancy between tax liability and actual payments made, but the Commissioner failed to address this crucial issue in the order.

5. The Tribunal found that the Appellant had discharged the entire tax liability based on the amount received in April 2008, as supported by the financial summary and the Chartered Accountant's certificate. The discrepancy in challan amounts was attributed to including tax for other receipts. Consequently, the Tribunal set aside the Commissioner's order, ruling in favor of the Appellant.

6. The judgment emphasizes the importance of considering the historical context of tax liability calculation methods and the need for a thorough examination of evidence to determine compliance. The ruling underscores the necessity for adjudicating authorities to address all relevant issues raised by the parties to ensure a fair and just decision.