2023 (8) TMI 124 - AT - Service Tax

Wrongful (amount) payment of service tax - part amount do not pertain to any service rendered - amounts are not reflected either in the invoices or in the books of accounts under relevant Heads and the appellants did not provide any proof like invoice etc. to show that those payments were for the purposes cited - conditions laid down in the N/N. 12/2003 not satisfied - extended period of limitation - HELD THAT - A simple perusal of the Notification would indicate that the exemption contained therein is applicable subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. The documentary proof could be in any form such as invoices, debit/ credit notes, books of accounts etc. - it is found that the appellants did not produce any evidence to that effect, either before the original adjudicating authority or before appellate authority. Payment of service tax payable within one month of the issuance of OIO - HELD THAT - The appellants claim to have paid only Rs.1,88,220/- out of total demand of Rs.4,46,078/- along with interest and 25% of the penalty. We find that in terms of Section 73 (3) of the Finance Act, 1994, the appellants are required to pay the service tax confirmed along with interest and 25% of the penalty; it is not open to the appellant to pay a portion of the demand that they think is payable and claim the benefit of the provision of law. Therefore, the appellants cannot take shelter under the provisions of Section 73 (3) of the Finance Act, 1994. Extended period of limitation - suppression of material facts or not - HELD THAT - Suppression by itself may not indicate any intent. However, suppression coupled with the appellant s failure to disclose the amounts collected in the ST-3 returns; failure to deposit the applicable service tax, which they are not disputing, leads to the inevitable conclusion that the intent, to evade payment of service tax, is presentin this case considering the facts and circumstances - the extended period is rightly invoked. Levy of penalties - HELD THAT - The interest of justice will be more than met if penalty under Section 78 is imposed - penalty imposed under Sections 76 and 77 are being set aside. The appeal is partly allowed by upholding the confirmation of duty, interest and penalty under Section 78; penalties under Sections 76 77 are, however, set aside.

Summary

Issues:
The issues involved in the judgment are the liability to pay service tax on the amount collected by an authorized service station, the applicability of exemptions under Notification No.12/2003, the timely payment of service tax, and the invocation of the extended period for demand of duty.

Liability to Pay Service Tax:
The appellants, an authorized service station, collected Rs.474 from customers for services under a scheme. The Department sought service tax on the entire amount, while the appellants contended that only Rs.200 was chargeable. The Original Authority confirmed the demand, which was upheld by the Appellate Authority. The appellants argued that penalties should be waived as they paid the admitted amount before the show-cause notice was issued.

Applicability of Exemptions under Notification No.12/2003:
The Department contended that the appellants did not satisfy the conditions of the notification as they failed to provide documentary proof indicating the value of goods and materials for which the collected amount was charged. The appellants did not submit any evidence to support their claim for exemption, as required by the notification.

Timely Payment of Service Tax:
The appellants claimed to have paid the admitted service tax within thirty days of receiving the Order-In-Original (OIO). However, they only paid a portion of the total demand, which was not in compliance with the provisions of Section 73(3) of the Finance Act, 1994. The appellants' argument that the show-cause notice was time-barred due to no suppression of facts was rejected by the Tribunal.

Invocation of Extended Period for Demand of Duty:
The Department invoked the extended period for demand of duty, alleging suppression of facts by the appellants. The Tribunal found that the appellants failed to disclose material facts in their ST-3 Returns, indicating an intent to evade payment of service tax. The Tribunal upheld the demand of duty, interest, and penalty under Section 78, while setting aside penalties under Sections 76 and 77.

*Separate Judgement Delivered by the Judges:*
The judgment was pronounced by the Appellate Tribunal CESTAT CHANDIGARH, with Mr. S. S. Garg, Member (Judicial) and Mr. P. Anjani Kumar, Member (Technical) presiding over the case.