2023 (1) TMI 803 - AT - Service Tax

Levy of service tax - Renting of Immovable Property Service - audit team found that the appellant had let out its premises in Gurgaon for commercial purposes to M/s. Usha Fabs Private Ltd. and was not collecting any rent for it - renting of residential flat in Mussorie for residential purpose - HELD THAT - The entire case of the department is built by wrongly understanding the amounts advanced by the appellant to M/s. Usha Fabs Pvt. Ltd. as amounts received as advances by the appellant. A bare perusal of the documents presented before us including the ledgers brings out the correct facts. Audit team appears to have been confused between what is a credit and what is a debit and came to a conclusion that the amounts advanced by the appellant were amounts received by it. The correct facts were presented by the appellant in reply to the SCN and also during the personal hearing as recorded in the impugned order. However, while giving her findings, the Commissioner has recorded just the opposite as facts. The entire case is built on a mistaken reading of the ledgers by the audit team and continued in the SCN. Even after the correct facts were presented, the demand was confirmed in the impugned order without giving any reasons. Once it is found as a fact that the appellant had given advances and not received them from M/s. Usha Fabs Pvt. Ltd., nothing survives in the impugned order. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax, interest, and penalty against the appellant.
2. Allegation of deliberate suppression of facts for evading service tax.
3. Interpretation of the amounts advanced by the appellant to another company.

Analysis:
1. The appellant challenged the order confirming the demand of service tax, interest, and penalty imposed by the Commissioner. The Commissioner upheld the demand against the appellant for service tax under Section 73, along with interest under Section 75 and a penalty under Section 78 of the Finance Act, 1994. The appellant was given an option to reduce the penalty amount by paying the entire service tax along with interest within a specified timeframe. No penalty was imposed under Section 76 of the Act.

2. The audit team observed that the appellant had relations with another company and had let out properties for commercial and residential purposes. A Show Cause Notice was issued based on these observations. The appellant contended that the amounts mentioned in the notice were advances given by the appellant to the other company and not received from them. The appellant's submissions were supported by documentary evidence and balance sheets, demonstrating that the amounts were indeed advanced by the appellant.

3. The Commissioner's findings contradicted the appellant's submissions, stating that the appellant had not received advances but had given them to the other company. The appellant's representatives reiterated this fact during the personal hearing. The Tribunal noted that the entire case was based on a misunderstanding by the audit team regarding the nature of the transactions. The Tribunal found that the demand was confirmed without valid reasons, as the appellant had given advances and not received them. Consequently, the appeal was allowed, and the impugned order was set aside with relief granted to the appellant.