2023 (11) TMI 1079 - AT - Service Tax

Levy of interest and penalty - Non-payment of service tax - reimbursement received on various headings - principles of natural justice - HELD THAT - It has been held by the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT wherein the Hon ble Supreme Court has held that reimbursable amount is not part of the consideration received and hence is not liable for Service Tax payment - Even the Co-ordinate Benches of the Tribunal at Bangalore and Ahmedabad have held in the case of the same Appellant (CISF) that medical expenses and other reimbursable expenses are not liable for Service Tax. Therefore, the Appellant is not required to pay Service Tax Rs. 1,29,625/- on account of medical expenses reimbursement received in 2009-10 and Service Tax of Rs. 1,70,049/- on account of medical expenses reimbursement received in 2010-11 - interest and penalty on these amounts set aside. Balance confirmed Service Tax amount of around Rs. 30.00 Lakhs - Appellant claims that they have taken the correct turnover while discharging the Service Tax, but due to some clerical and typographical error, the correct figures have not been reflected in the ST-3 Returns, which has resulted in confirmation of this amount in the Order-in-Original - HELD THAT - This fact is required to be verified by the adjudicating authority - matter remanded to the adjudicating authority for the limited purpose of getting this fact verified in respect of payments made by them vis- -vis the turnover taken by the Department to confirm the demand in the impugned Order-in-Original. He is directed to follow the principles of natural justice and give opportunity to the Appellant to provide all the documentary evidences, Chartered Accountant Certificate etc. in support of their submissions. Appeal disposed off.

Summary

Issues:
The issues involved in the judgment are related to the payment of Service Tax on reimbursements received by the Appellant, the confirmation of Service Tax demands by the Department, and the appeal against the Order-in-Original before the Tribunal.

Payment of Service Tax on Reimbursements:
The Appellant had paid 'Security Services' to a PSU and was also paying Service Tax on service charges received from clients. However, for reimbursements received, they were not paying Service Tax. The Department noticed a difference between the amount received from clients and the taxable value declared in the ST-3 Returns. The demand for Service Tax on the differential amount was raised, leading to the confirmation of certain amounts. The Appellant contended that they are not required to pay Service Tax on reimbursements and had already paid the disputed amount. The Tribunal referred to previous judgments and held that the Appellant is not liable to pay Service Tax on certain reimbursements, setting aside interest and penalties on those amounts.

Confirmation of Service Tax Demands:
Regarding the confirmed demand, the Appellant disputed a portion related to medical expenses reimbursement. The Tribunal acknowledged that certain medical expenses reimbursements were not liable for Service Tax based on previous rulings. The Appellant had already paid the disputed amounts and was contesting only the interest and penalties. The Tribunal set aside the interest and penalties on these amounts.

Appeal Against Order-in-Original:
For the remaining balance of the confirmed Service Tax amount, the Appellant claimed that they had calculated the tax correctly but clerical errors led to discrepancies in the ST-3 Returns. The Tribunal remanded the matter to the adjudicating authority to verify the payments made by the Appellant and the turnover considered by the Department. The adjudicating authority was directed to follow natural justice principles, allow the submission of documentary evidence, and quantify any outstanding demand. Interest was to be paid if any demand was confirmed, with no penalties imposed on the recalculated amount. All penalties from the original order were dropped, and a decision was to be made within four months.

In conclusion, the Tribunal ruled in favor of the Appellant regarding the payment of Service Tax on certain reimbursements and set aside interest and penalties on the disputed amounts. The matter of the confirmed Service Tax demands was partially resolved, with a remand for verification and quantification of the remaining balance. The adjudicating authority was instructed to follow due process and provide a decision within a specified timeframe.