2022 (11) TMI 1092 - AT - Service Tax

Benefit of abatement - N/N.15/2004- ST - Value of purchased material - benefit denied on the ground that the appellant has failed to produce any evidence of purchase of material in respect of which deduction has been claimed under Notification No. 15/2004-ST or 1/2006- ST - period 2005-06 and 2007-08 - HELD THAT - The appellant has purchased of some raw materials however exact quantum of the same may not be ascertainable. Notification No. 15/2004-ST or for that matter 01/2006-ST, does not require proof of purchase of raw material to the extent of the abatement. In these circumstances denying the benefit of these notifications, for the reason that the quantum of purchase shown profit and loss account does not match invoices produced by the appellant is improper and incorrect. The appellants are entitled to benefit of abatement under Notification No 15/2004- ST or 01/2006-ST as the case may be - The appeal is allowed by way of remand to the original Adjudicating Authority for the purpose of recalculation of the demand.

Summary

Issues:
Appeal against demand of Service Tax, interest, and penalty - Entitlement to benefit of Notification No. 15/2004-ST for the period 2005-06 and 2007-08.

Analysis:

Issue 1: Appeal against demand of Service Tax, interest, and penalty

The appeal was filed by M/s. Jay Gurudev Construciton Co. against the demand of Service Tax, interest, and imposition of penalty. Despite multiple scheduled hearings where no one appeared on behalf of the appellant, the matter was taken up for decision. The issue revolved around the denial of the benefit of Notification No. 15/2004-ST by the Commissioner (Appeals) due to the appellant's alleged failure to provide evidence of material purchase for which deduction was claimed under the said notification. The Commissioner (Appeals) highlighted discrepancies between the appellant's contentions and the documents submitted, questioning the corroboration between the material purchase shown in the profit and loss account and the actual invoices produced by the appellant.

Issue 2: Entitlement to benefit of Notification No. 15/2004-ST for the period 2005-06 and 2007-08

The crux of the matter lay in determining whether the appellants were entitled to the benefit of Notification No. 15/2004-ST for the years 2005-06 and 2007-08. The Commissioner (Appeals) had denied this benefit, citing the lack of evidence regarding the purchase of raw materials to the extent of the abatement claimed. However, the Tribunal opined that the notifications in question did not mandate proof of purchase to the exact quantum as shown in the profit and loss account. Consequently, the denial of benefits based on discrepancies between the account figures and invoices was deemed improper and incorrect. The Tribunal held that the appellants were indeed entitled to the benefit of abatement under Notification No. 15/2004-ST or 01/2006-ST, as applicable.

Final Decision:

The Tribunal allowed the appeal by remanding the case to the original Adjudicating Authority for the recalibration of the demand. The decision was pronounced in the open court on 20.10.2022.