2023 (6) TMI 542 - AT - Service Tax

Best Judgement Assessment - Faithful discharge of service tax liability for the relevant years or not - proceedings conducted under section 73 of the Finance Act, 1994 - applicability of section 72 of the Finance Act - levy of penalty u/s 78 - HELD THAT - It is clearly a case where the Department acquired knowledge of the fact that the appellant had collected service tax for the services provided to BALCO when the records of BALCO were examined which indicated that BALCO had taken credit of service tax paid by the service providers. This resulted in seeking information from the appellant, but the appellant did not provide the relevant information sought by the Department as a result of which the Department had to gather information from BALCO. It is on the basis of the information provided by BALCO that the show cause notice was issued to the appellant for initiating proceedings under section 72 of the Finance Act. The appellant not only failed to produce any evidence in reply to the show cause notice, but in this appeal also nothing has been brought on record to substantiate whether the appellant had, in fact, deposited service tax which it had been collected from BALCO. It was incumbent upon the appellant to make available all the relevant documents to the Department even prior to the issuance of the show cause notice but that was not done and even in reply to the show cause notice no evidence had been produced by the appellant which may indicate that the service tax collected by the appellant from BALCO, had been deposited with the Department. The only course open to the Department was to have initiated proceedings under section 72 of the Finance Act and it did - The appellant does not dispute the figures that have been provided by BALCO but what is sought to be contended is that these may include some other services that may have been provided. It may be so, but then it was for the appellant to have conclusively demonstrated before the Department that the service tax collected from BALCO for the services provided to it had actually been deposited by the appellant and was also shown in the ST-3 returns filed by the appellant. Whether service tax liability should have been determined @ 4% and not @ 12% under the composite scheme for the works contract? - HELD THAT - For invocation of the composite scheme it was incumbent upon the appellant to first demonstrate that the services related to works contract and secondly that the appellant had also opted for the composite scheme. In the absence of these two vital factors, the appellant cannot contend that service tax could have been levied only @ 4% and not @ 12%. This is also what has been observed by the Commissioner in the impugned order and there is no infirmity in this finding recorded by the Commissioner. Levy of penalty under section 78 of the Finance Act - HELD THAT - It is not possible to accept this contention of the learned counsel appearing for the appellant. Once the best judgment assessment has been carried out under section 72 of the Finance Act, it is section 73 of the Finance Act which provides for recovery of the amount and that is why the levy of interest and penalty are recoverable under section 73 of the Finance Act and not under section 72 of the Finance Act. It is also not possible to accept the contention of the learned counsel that the matter should be remitted to the Commissioner for a fresh determination after providing an opportunity to the appellant. The order passed by the Commissioner is sustained and the appeal is dismissed.

Summary

Issues Involved:
1. Confirmation of Service Tax Demand
2. Invocation of Sections 72 and 73 of the Finance Act, 1994
3. Applicability of Composite Scheme for Works Contract
4. Imposition of Penalty under Section 78 of the Finance Act, 1994
5. Request for Remand

Summary:

1. Confirmation of Service Tax Demand:
The Commissioner of Central Excise & Service Tax, Raipur, confirmed a demand of service tax amounting to Rs. 1,41,31,604/- against the appellant, M/s Ramson Corporation, based on a show cause notice issued on October 19, 2012. The investigation revealed that the appellant had provided various services to BALCO, Korba, but had not deposited the collected service tax with the Department. Despite repeated requests, the appellant failed to furnish the necessary documents, leading the Department to rely on information provided by BALCO.

2. Invocation of Sections 72 and 73 of the Finance Act, 1994:
The appellant contended that it was unclear whether the proceedings were conducted under section 72 or section 73 of the Finance Act, 1994. The Department clarified that section 72 was invoked for best judgment assessment, and section 73 was used for recovery of the determined amount. The Tribunal found that the appellant did not provide evidence to show that the collected service tax was deposited with the Department, justifying the invocation of section 72.

3. Applicability of Composite Scheme for Works Contract:
The appellant argued that the service tax should have been determined at 4% under the composite scheme for works contract. The Tribunal held that the appellant failed to demonstrate that the services were related to works contract and that it had opted for the composite scheme. Consequently, the service tax was correctly levied at 12%.

4. Imposition of Penalty under Section 78 of the Finance Act, 1994:
The appellant argued that penalty under section 78 could not be imposed if section 72 was invoked. The Tribunal rejected this contention, stating that once the best judgment assessment is carried out under section 72, recovery, including interest and penalty, is governed by section 73.

5. Request for Remand:
The appellant requested a remand to furnish evidence. The Tribunal denied this request, noting that the appellant had ample opportunity to present its case both in response to the show cause notice and during the appeal. A remand cannot be ordered merely on the asking without substantial grounds.

Conclusion:
The Tribunal sustained the order passed by the Commissioner and dismissed the appeal, confirming the demand of service tax, interest, and penalties.