2023 (5) TMI 1130 - AT - Service Tax

Reverse Charge Mechanism - levy of service tax - suppression of value - legal, professional and consultancy expenses - security expenses - manpower and security service - invocation of extended period of limitation - HELD THAT - The show cause notice does not contain the gist of allegations for raising the demand on RCM basis. The provisions of service tax read with the rules thereunder do not provide for raising of demand on the basis of apparent difference in the figure of expenses in the balance sheet and the amount offered for service tax in the ST-3 Returns. This court takes judicial notice that the demand under service tax on reverse charge mechanism, has to be worked out and calculated transaction wise-wise and invoice-wise. In absence of such exercise, it is found that the show cause notices is vague and fit to be held misconceived and mis-directed. The impugned order set aside - appeal allowed.

Summary

Issues involved:
The issue in this case is whether demand of service tax under Reverse Charge Mechanism (RCM) has been rightly raised on the appellant.

Details of the judgment:
The appellant, engaged in providing taxable services, was alleged to have suppressed taxable values leading to a demand of service tax under RCM. The appellant contested the demand, providing clarifications on various expenses. Despite the appellant's submissions, show cause notices were issued invoking extended periods of limitation. The matter was adjudicated twice, with the second round leading to a higher confirmed amount. The appellant challenged the orders, arguing that the demands were based on assumptions and presumptions without proper verification. The appellant maintained that full service tax had already been paid in certain instances, and there was no suppression or fraud. The appellant contended that the demands were illegal and lacked proper basis. After considering the contentions, the court found the show cause notices vague and misdirected, setting aside the impugned order in favor of the appellant.

This judgment highlights the importance of proper verification and calculation in raising demands under RCM, emphasizing the need for transaction-wise and invoice-wise assessment. The court ruled in favor of the appellant, stating that demands based on apparent differences without detailed calculations are misconceived. The appellant was granted consequential benefits in accordance with the law.