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2022 (7) TMI 718 - AT - Service TaxScope of SCN - Presumption with regards to documents seized - Revenue strongly argued that the Appellant have filed fresh and new evidences before this Tribunal by submitting for the first time and said fresh evidence/documents are not allowed - evasion of service tax - Business Auxiliary Service - Advertising Agency Service - Market Research Agency Service - Management or Business Consultancy Service - tax collected from customers but not paid to Revenue - burden to prove - demand alongwith Interest and penalty - HELD THAT - This Tribunal being the final fact finding authority can consider the additional documents/arguments - On this legal issue the decision of the Hon ble Supreme Court (Three Member Bench), in the case of NATIONAL THERMAL POWER COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX 1996 (12) TMI 7 - SUPREME COURT , is noted, 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. In view of Section 36A of Central Excise Act, 1944 it is only when such document is tendered in evidence against the person who produced the same or from whose custody or control it was seized that the presumption under Section 36A is available - In the present case admittedly none of the alleged invoices / documents was produced by the Appellant or seized from the Appellant s premises or control. In view of the above, when the presumption under Section 36A is not available. The burden of proof is squarely on the Department to prove that the source documents are related to the Appellant and that any taxable services under the source documents were actually provided by the Appellant. This burden has not been discharged in the present case. The department could not have simply accepted the customers documents provided by them on its face value and the same needed strict corroboration which is completely absent in the present case. 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 have 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. 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 and the same is accordingly set aside - appeal allowed.
Issues Involved:
1. Jurisdiction and constitutionality of the proceedings. 2. Payment of Service tax by the appellant. 3. Taxability of services under reverse charge mechanism. 4. Incorrect invocation of provisions under the Finance Act, 1994. 5. Reliance on TDS/26AS statements for Service tax demand. 6. Admissibility and corroboration of evidence. 7. Applicability of Section 9D of the Central Excise Act, 1944. 8. Validity of search proceedings and evidence collection. 9. Suppression of facts and 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 post the enactment of the Central Goods and Service Tax Act, 2017, which omitted Chapter V of the Finance Act, 1994. They cited the Supreme Court judgment in Rayala Corporation Vs. Directorate of Enforcement to support their claim that no proceedings can be initiated for violations of the omitted provisions. The Tribunal, however, did not specifically address this argument, leaving it open. 2. Payment of Service Tax by the Appellant: The appellant had deposited Rs. 50,00,000/- during the investigation, which they claimed was to avoid harassment. It was argued that the services provided were either non-taxable or taxable under the reverse charge mechanism, thus no liability should be fastened on them. The Tribunal noted that the tax amount already deposited should not attract penalties. 3. Taxability of Services under Reverse Charge Mechanism: The appellant contended that services provided to M/s CMIPL were chargeable under the reverse charge mechanism. The Tribunal agreed, noting that the appellant hired vehicles for providing Goods Transport Agency services, and the service tax liability lay with the recipient, not the appellant. 4. Incorrect Invocation of Provisions under the Finance Act, 1994: The appellant argued that the demand should have been proposed under Section 73A, not Section 73 of the Finance Act, 1994. The Tribunal found that the show cause notice did not specify the exact sub-heading under which the services fell, making the taxability indeterminate. 5. Reliance on TDS/26AS Statements for Service Tax Demand: The Tribunal held that TDS/26AS statements under the Income Tax Act cannot be solely relied upon for determining Service tax liability under the Finance Act. They cited several precedents to support that income tax and service tax are independent, and the TDS statements are not conclusive evidence of taxable services. 6. Admissibility and Corroboration of Evidence: The Tribunal emphasized that documents recovered from customers, not from the appellant, require strict corroboration. They found that the burden of proof was on the department to link the documents to the appellant, which was not discharged effectively. 7. Applicability of Section 9D of the Central Excise Act, 1944: The Tribunal noted that the statements of the directors were not subjected to cross-examination as required under Section 9D, making them inadmissible. They cited the P&H High Court's decision in G-Tech Industries Ltd. v. Union of India, emphasizing the mandatory nature of Section 9D. 8. Validity of Search Proceedings and Evidence Collection: The appellant argued that the search proceedings were vitiated due to non-compliance with the CrPC provisions regarding Panchas. The Tribunal did not specifically address this argument but focused on the lack of corroborative evidence from the search. 9. Suppression of Facts and Limitation Period for Demand: The appellant contended that there was no suppression of facts, and the demand was barred by limitation. The Tribunal did not delve into this issue, as they had already decided the matter on other substantive grounds. Conclusion: The Tribunal set aside the demand of Service tax (except the amount already deposited by the appellant) along with interest and penalties. They allowed the appeal with consequential relief, highlighting the inadequacy of evidence and procedural lapses by the department. The judgment emphasized the need for strict adherence to legal provisions and proper corroboration of evidence in tax demands.
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