2023 (6) TMI 1243 - AT - Service Tax

Extended period of limitation - SCN issued after more than five years - levy of service tax on the differential value on the basis of gross receipts - HELD THAT - The appellant have submitted calculation of service tax liability, both at the assessment stage and before the Commissioner (Appeals). Both the Court below without finding any error in the said calculation have arbitrarily rejected the same and have made their own calculation, resulting into confirmation of demand and imposition of penalty. It is found that such rejection of calculation of service tax and the ST3 Return filed by the appellant is bad in law, without finding any fault or error in the same. The ST-3 Returns submitted by an assessee is binding on the Department, unless the Department finds material faults or errors in the same. Further, issue of show cause notice on the apparent difference in the gross turnover as per balance sheet or ST-3 Return, as compared with Form 26 AS have been deprecated by this Tribunal in several matters. Form 26 AS is not the prescribed document in the scheme of Service Tax Assessment and the same cannot be adopted blindly without any attempt to reconcile the difference. On perusal of the calculation submitted by the appellant of their tax liability, there are no error found in the same. Further, the appellant against the tax liability of Rs.72,724/-, have already paid an amount of Rs.76,908/-. Thus, have paid higher amount than the tax liability. Thus, the whole exercise is unwarranted and mis-conceived on the part of the Department. The show cause notice is hit by limitation as the same has been issued after more than five years - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are non-appearance of the appellant despite notices being served, calculation of service tax liability based on third-party information, denial of benefit of exemption notifications, imposition of penalties, and rejection of appellant's calculation of tax liability.

Non-appearance of Appellant:
The appellant failed to appear despite notices being served twice, leading to the hearing proceeding with the assistance of the authorized representative for Revenue. The Tribunal noted the appellant's absence and lack of application for adjournment.

Calculation of Service Tax Liability:
Based on third-party information from the Income Tax Department, a show cause notice was issued to the appellant for a differential value in service tax. The appellant contested the notice, arguing that they are registered with the Department and provided works contract services. The Adjudicating Authority did not consider the appellant's submission and calculation, leading to the confirmation of the proposed service tax liability and imposition of penalties.

Denial of Exemption and Imposition of Penalties:
The appellant appealed before the Commissioner (Appeals) on grounds of arbitrary tax demand, denial of exemption notifications, failure to consider tax liability as per books of accounts, and imposition of penalties. The Commissioner recalculated the service tax liability, partially allowing the appeal and confirming a reduced demand along with penalties.

Appellant's Grounds for Appeal:
The appellant appealed before the Tribunal, arguing that benefits under exemption notifications were denied, and tax liability was calculated incorrectly. They contended that their tax calculation was arbitrarily rejected without error findings. The appellant sought the setting aside of the impugned order, including the penalty.

Tribunal's Decision:
The Tribunal found that the rejection of the appellant's tax calculation was unjustified, as there were no errors found. The show cause notice was deemed hit by limitation, issued after more than five years. Consequently, the Tribunal set aside the impugned order, allowed the appeal, and granted the appellant consequential benefits in accordance with the law.