2021 (10) TMI 96 - AT - Service Tax

Quantum of penalty u/s 78 - suppression of taxable value - consulting engineer services provided to clients - rent-a-cab service - legal services - reverse charge mechanism - period 2011-12 to 2015-16 - extended period of limitation - HELD THAT - The allegations of Revenue are frivolous, that it was only on enquiry it came to know about the affairs of the appellant, i.e. providing of taxable service in view of the admitted facts that appellant is a registered assessee under the Service Tax provision, and have been filing their returns and paying tax. It is not alleged by the Revenue that the appellant was not maintaining proper financial records, register and vouchers for their transaction. It is further found that Form No. 26AS is not a statutory document for determining the taxable turnover under the Service Tax provisions. Also it is found that form 26AS is maintained on cash/ receipt basis by the Income Tax Department for the purpose of tax deducted at source, etc. being the relevant data for Income Tax - the whole basis of show cause notice is incorrect and/or misconceived. Extended period of limitation - HELD THAT - The appellant is entitled to exemption under the Notification No. 25/2012-ST under Sl. No. 13(a) of the said notification for providing consulting engineer services in the matter of road construction. When road construction is exempt, every activity is exempt relating to the road construction including consulting engineer services - This Tribunal in M/S LORD KRISHNA REAL INFRA PRIVATE LTD. VERSUS COMMISSIONER OF CUSTOMS, C.E. S.T., NOIDA 2019 (2) TMI 1563 - CESTAT ALLAHABAD has held in other disputed cases, that even the barricade provided on the side of highway, maintaining greenery on the side or middle of highway, construction of any facility, refreshment centre for road users, is also part of the road construction and such activity is also exempt. Even the administrative building constructed by the concessionaire, for construction of the road or highway for administration and collection of toll etc. is part of road. Rent a cab service - Reverse charge mechanism - HELD THAT - There is no specific allegation as required under Section 66A read with Notification no. 30/2012-ST. The extended period of limitation is not available to Revenue - appeal allowed - decided in favor of appellant.

Issues:
1. Tax liability on consulting engineer services, rent-a-cab service, and legal services under reverse charge.
2. Alleged suppression of taxable value and non-payment of service tax.
3. Application of cum-duty benefit and calculation of tax liability.
4. Reduction of penalty by the Commissioner (Appeals).
5. Dispute over tax liability on reimbursements for consulting engineer services.
6. Challenge to tax liability calculation based on Form 26AS.
7. Contention regarding burden of proof and cogent evidence.
8. Sustainability of penalty under section 78 of the Act.
9. Benefit of exemption for consulting engineer services related to road construction.
10. Extended period of limitation invocation and suppression of material facts.
11. Validity of tax computation based on Form No. 26AS.
12. Entitlement to exemption under Notification No. 25/2012-ST.
13. Lack of specific allegation for demand under reverse charge mechanism for rent-a-cab service.

Analysis:

1. The appeal concerned tax liability on consulting engineer services, rent-a-cab service, and legal services under reverse charge. The appellant was alleged to have suppressed taxable value and not paid service tax during the period 2011-12 to 2015-16.

2. The adjudicating authority initially proposed a tax liability of &8377;75,26,309, later reduced to &8377;58,34,034, with interest and penalty imposed. The Commissioner (Appeals) further reduced the penalty to &8377;46,19,772 but confirmed the tax liability.

3. The appellant contended that reimbursements for consulting engineer services should not be taxed separately as professional fees were already taxed. They argued that only the gross amount charged for services should be taxed as per section 67(1)(i) of the Act.

4. The challenge was also raised against the tax liability calculation based on Form 26AS, with the appellant arguing that not all amounts in Form 26AS were liable to service tax, citing various case laws to support their position.

5. The appellant disputed the sustainability of penalty under section 78 of the Act, claiming that the conditions precedent for imposing the penalty were not met in this case.

6. The Tribunal found that the appellant was entitled to exemption under Notification No. 25/2012-ST for providing consulting engineer services related to road construction. The extended period of limitation invoked by the Revenue was deemed incorrect.

7. It was held that Form No. 26AS was not a statutory document for determining taxable turnover under the Service Tax provisions, as service tax is chargeable on a mercantile basis, not cash basis.

8. The Tribunal set aside the impugned order, ruling in favor of the appellant and holding that they were entitled to exemption and that the extended period of limitation was not available to the Revenue.

9. No specific allegation was found for the demand under reverse charge mechanism for rent-a-cab service, leading to the allowance of the appeal and granting of consequential benefits to the appellant.

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