2021 (12) TMI 791 - AT - Service Tax

Short payment of service tax or calculation error - bank receipt was shown which is different from the bank statement available with the appellant - HELD THAT - The gross value received is shown in the ST-3 return, for example, in the month of April 2009, as per the ST-3 return, the gross receipt is ₹ 1,56,63,650/- and after deduction of value of exempted services, it comes to ₹ 62,31,716/-. Whereas in the statement showing the calculation of short payment of service tax, in the column of bank receipt, the figure shown is ₹ 70,13,066/- which is not tallying with the ST-3 return. For this discrepancy, the appellant have written letters dated 06.11.2015, 22.03.2016, 05.04.2016 and 23.04.2016 to the Adjudicating Authority for seeking clarification for this calculation. However, the Adjudicating Authority in Para 14 of adjudication order has not given any clarification on the ground that all the calculation and working was carried by CERA audit very much in the presence of the appellant and at this juncture, this is not relevant. As per the principles of natural justice, the Adjudicating Authority is duty bound to give clear clarification on the working of differential service tax with the support of necessary documents such as bank statement/ ledger and ST-3 return etc. The appeal is allowed by way of remand to the Adjudicating Authority for passing afresh order after providing clarification to the queries raised in letters referred above and also after granting personal hearing.

Summary

Issues: Calculation error in short payment of service tax, Lack of clarification by Adjudicating Authority, Discrepancy in figures between ST-3 return and bank receipt

In this case, the appellant raised a preliminary objection regarding the calculation error in the short payment of service tax. The appellant argued that the bank receipt shown differed from the bank statement available with them, leading to a discrepancy. Despite requesting clarification through multiple letters to the Adjudicating Authority, no response was provided, and the order was passed without considering the appellant's queries. On the other hand, the Revenue contended that the figures of the ST-3 return and bank statements submitted by the appellant were used to calculate the service tax demand, indicating no discrepancy. However, upon careful consideration, the Member (Judicial) found that there was indeed a mismatch between the gross value received as per the ST-3 return and the figure in the bank receipt. The appellant's letters seeking clarification were not addressed adequately by the Adjudicating Authority, who claimed that the calculations were done in the presence of the appellant during CERA audit. The Member disagreed with this stance, emphasizing that natural justice principles require clear clarification supported by necessary documents like bank statements and ST-3 returns. Consequently, the impugned order was set aside, and the appeal was allowed for remand to the Adjudicating Authority to provide the required clarification, address the appellant's queries, and grant a personal hearing. The appellant was directed to produce the bank statement/ledger to support their claim of the discrepancy in the service tax calculation. The appeal was allowed for remand to the Adjudicating Authority for further proceedings.