2022 (6) TMI 307 - AT - Service Tax

Demand of service tax - value of taxable services - alleged erroneous adjustments in the books of account - rejection of CA certification - period 2010-11 - HELD THAT - It is found that in the course of adjudication, the Appellant had duly submitted the facts before the Ld. Commissioner as appearing in the reply to the Show Cause Notice. The Appellant also submitted a reconciliation statement which shows the brokerage income as per the ledger and the disputed adjusted amount which was added to the said ledger amount to submit that service tax has been deposited in Financial Year 2012-13. The Appellant also submitted a Chartered Accountant s Certificate to justify the said computation. It is a settled position that the authorities cannot reject the C A certificate without stating the reasons as to why the CA certificate submitted by the Appellant is not acceptable to such authorities. Therefore, the stand taken by the Ld. Commissioner to confirm the impugned demand of service tax is legally not tenable. There are no reason to sustain the service tax demand of Rs.5,17,406/- and interest thereon and equivalent penalty of Rs.5,17,406/- imposed on the Appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to service tax demand of Rs.5,17,406/- for the period 2010-11 due to alleged erroneous adjustments.

Analysis:
The appeal was against an Order-in-Original dated 29.07.2016, confirming a demand of Rs.9,99,683/- and dropping the remaining demand of Rs.4,46,49,840/-. The Appellant contested the demand of service tax of Rs.5,17,406/- for 2010-11, related to alleged erroneous adjustments. The Appellant argued they deposited service tax on accrual basis, even though it was due on receipt basis till 31.03.2011. They made an adjustment in 2010-11 for brokerage income not received, which was later included in 2012-13 calculations. The Appellant provided a Chartered Accountant's certificate and reconciliation, ignored by the adjudicating authority. The Ld. Commissioner confirmed the demand based on lack of ledger submission for 2012-13 and absence of documents showing receipt of the impugned amount that year.

The Tribunal noted the Appellant's submission of facts, reconciliation statement, and CA certificate. The Ld. Commissioner confirmed the demand citing absence of ledger for 2012-13 and lack of documents proving receipt of the impugned amount. However, the Commissioner did not dispute the content of the CA certificate. The Tribunal found the Commissioner's stand legally untenable as rejecting the CA certificate without stating reasons is impermissible. The adjudicating authority did not request ledger copies during the audit, despite the Appellant providing them later. The Tribunal held that since the reconciliation statement and CA certificate were unchallenged, the demand confirmation was unjustified.

Conclusively, the Tribunal found no basis to uphold the service tax demand of Rs.5,17,406/-, interest, and penalty. The appeal was allowed, providing consequential relief as per law. The judgment was pronounced on 07 June 2022.