2022 (7) TMI 716 - AT - Service Tax

Evasion of service tax - allegation that appellant have collected the service tax from the customers but not paid it to Department - availment of cenvat credit without having any corroborative evidence - suppression of facts or not - whether this tribunal is competent to consider the fresh documents submitted first time for deciding the present case? - HELD THAT - It is held in catena of cases that the tribunal is the final fact finding authority, any documents even submitted first time before this tribunal can be considered in the interest of justice. Hon ble Supreme Court (Three Judges Bench), 1996 (12) TMI 7 - SUPREME COURT , which is to the effect that the Tribunal has jurisdiction to examine the question of law which arises on facts, as found by the authorities below, and having bearing on tax liability of assessee, even though said question was neither raised before the lower authorities nor in appeal memorandum before the Tribunal, but sought to be added later as an additional ground by a separate letter - the Law/Rules has not precluded CESTAT for considering new grounds/ evidence. Section 9D is applicable in the case of Service Tax matters also. The Department for confirmation of service tax demand also relied on the statement of the Director of the Appellant. We find that, it is settled law that though the admission is extremely important piece of evidence but it cannot be said to be conclusive and it is open to the person who has made the admission to show that this is incorrect. - there are numerous decisions of the Tribunal laying down that such admission of persons, cannot be considered to be conclusive evidence to establish the guilt of the assessee. Burden of proof is on the Revenue and same is required to be discharged effectively. The details contained in records of service recipient cannot be accepted as admissible piece of evidence. Moreover, none of the persons on whose statement reliance was placed by the department were cross-examined. On the basis of documents/ records received from customers of Appellant revenue alleged that they have collected the service tax payment. However on the basis of records of other persons it cannot be concluded that Appellant has collected the service tax from their customers. In the present matter revenue in support of their contentions nowhere produced any corroborative evidence in the form of Bank Details or any documents recovered from the business premises of the Appellant by which it can be concluded that Appellant have collected the Service tax. In the present matter department clearly failed to prove the case that Appellant have collected the service tax from their customers. CENVAT Credit - HELD THAT - The charges against the Appellant that they have not produced the input service documents on which they have taken cenvat Credit, It is found that contrary to this fact, the appellant has recorded the receipt of the input services in their cenvat account and produced the cenvat credit account along with input service invoices on the basis of which Cenvat credit has been availed by them - there are no reason to deny the Cenvat Credit. Other issues such as Limitation, demand to be made under Section 73 or 73A, omission of Chapter V the Finance Act, 1994 vide Section 173 of CGST Act etc. are not dealt with and the same are kept open - the demand of service tax (except the amount of service tax payable as per the appellant, admitted by the appellant and deposited as stated in the appellant s submission) interest and penalty is not sustainable - appeal allowed.

Issues Involved:
1. Jurisdiction and constitutionality of the proceedings.
2. Invocation of incorrect provisions of the Finance Act, 1994.
3. Lack of analysis of activities for taxable services.
4. Absence of documentary evidence for service tax collection.
5. Applicability of reverse charge mechanism for GTA services.
6. Use of pre-2012 definitions for post-2012 transactions.
7. Denial of Cenvat Credit.
8. Reliance on statements recorded under duress.
9. Reliance on TDS/26AS statements for service tax demand.
10. Validity of search proceedings.
11. Absence of corroborative evidence.
12. Limitation period for demand.

Issue-wise Detailed Analysis:

1. Jurisdiction and Constitutionality of the Proceedings:
The appellant argued that the proceedings were without jurisdiction and unconstitutional, as the provisions of Chapter V of the Finance Act, 1994 were omitted by the CGST Act, 2017. The tribunal did not address this issue directly, as the case was decided on other grounds.

2. Invocation of Incorrect Provisions of the Finance Act, 1994:
The appellant contended that the show cause notice invoked the wrong provision (Section 73 instead of Section 73A). The tribunal noted that the demand under Section 73 was appropriate as it covered tax not paid or short paid, and the demand was not vitiated by the invocation of Section 73 instead of 73A.

3. Lack of Analysis of Activities for Taxable Services:
The appellant argued that the show cause notice did not analyze the activities allegedly carried out by them to determine if they fell within the definition of taxable services. The tribunal found that the department failed to analyze the transactions properly and mechanically raised the demand.

4. Absence of Documentary Evidence for Service Tax Collection:
The appellant claimed that no documents like invoices or debit notes raised on customers were found during the search, and the revenue authorities failed to prove that service tax was collected from customers. The tribunal held that the burden of proof was on the department, which was not discharged effectively.

5. Applicability of Reverse Charge Mechanism for GTA Services:
The appellant provided Goods Transport Agency (GTA) services, and the service tax, if any, had to be paid by the recipient under the reverse charge mechanism. The tribunal agreed that the appellant was not liable for service tax on GTA services.

6. Use of Pre-2012 Definitions for Post-2012 Transactions:
The appellant argued that the demand was based on definitions of services that existed before 01.07.2012, whereas the entire period of dispute was post-2012. The tribunal found that the show cause notice failed to analyze the transactions properly and mechanically raised the demand.

7. Denial of Cenvat Credit:
The appellant was denied Cenvat Credit amounting to Rs. 49,88,527/-. The tribunal found that the appellant had recorded the receipt of input services in their Cenvat account and produced the necessary documents, thus there was no reason to deny the Cenvat Credit.

8. Reliance on Statements Recorded Under Duress:
The appellant claimed that the statements of their directors were recorded under duress and pressure. The tribunal noted that the statements alone could not be considered conclusive evidence without corroborative documentary evidence.

9. Reliance on TDS/26AS Statements for Service Tax Demand:
The tribunal held that the demand of service tax based solely on TDS/26AS statements was not sustainable, as income tax and service tax are separate and independent acts with different provisions.

10. Validity of Search Proceedings:
The appellant argued that the search proceedings were vitiated due to the panchas being from different localities. The tribunal did not address this issue directly, as the case was decided on other grounds.

11. Absence of Corroborative Evidence:
The tribunal found that the department failed to provide corroborative evidence, such as bank details or documents recovered from the appellant's premises, to prove that service tax was collected from customers.

12. Limitation Period for Demand:
The appellant argued that the demand was barred by limitation, as there was no suppression of facts. The tribunal did not address this issue directly, as the case was decided on other grounds.

Conclusion:
The tribunal set aside the demand of service tax (except the amount admitted and deposited by the appellant), interest, and penalty, as the department failed to prove its case with sufficient evidence. The appeal was allowed with consequential relief in accordance with the law.

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