2022 (3) TMI 404 - AT - Service Tax

Business Auxiliary Services - quantification of service tax on the basis of third party evidence is not correct - extension of benefit of SSI exemption - HELD THAT - The appellant is entitled to pay service tax on receipt basis and admittedly their gross receipt from services provided during the period under dispute is ₹ 58,451/- which is supported by their bank statement, same has not been found to be untrue by the Court below - the appellant is entitled to SSI exemption and are not liable to pay service tax for the financial year 2012-13. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax for financial year 2012-13.
2. Applicability of Notification No.33/2012-ST for threshold exemption.
3. Benefit of SSI exemption.
4. Invocation of extended period of limitation.
5. Jurisdiction of the show cause notice.
6. Entitlement to abatement under Section 67(2) of the Act.

Analysis:
1. The appellant, engaged in providing taxable services, was found to have not paid service tax amounting to ?1,81,719 for the financial year 2012-13. The Department issued a show cause notice demanding the unpaid tax along with a penalty under Section 78. The appellant argued that their turnover was below ?10 lakhs, entitling them to pay tax on a receipt basis as per Rule 6 of Service Tax Rules. The Adjudicating Authority confirmed the demand and penalty.

2. The appellant contended that they were eligible for SSI exemption and threshold exemption under Notification No.33/2012-ST due to their turnover being below ?10 lakhs in the preceding financial year. The Commissioner (Appeals) noted the appellant's failure to file a return for 2012-13, denying them the benefit of the exemptions. The Commissioner upheld the demand for the balance period.

3. The Tribunal considered the appellant's argument that they should pay service tax on a receipt basis, as their actual receipts for services provided in 2012-13 were only ?58,451, as opposed to the reported turnover of ?14,70,221. Relying on Rule 6(1) of the Service Tax Rules, the Tribunal held that the appellant was entitled to SSI exemption and was not liable to pay service tax for the financial year 2012-13.

4. The Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits in accordance with the law. The judgment emphasized the appellant's entitlement to pay service tax on a receipt basis and upheld their claim for SSI exemption based on the actual receipts during the disputed period.