2024 (2) TMI 1021 - AT - Service Tax

Non-payment of service tax regularly - service tax returns not filed regularly - Manpower Recruitment or Supply Agency Service - Supply of Tangible Goods Service - Works Contract Services - Commercial or Industrial Construction Services - Business Auxiliary Service - suppression of facts or not - invocation of Extended Period of Limitation - HELD THAT - At least prior to 01.07.2012, the correct classification of services are must to demand the service tax. Therefore, the adjudication order is lacking with regard to the service wise bifurcation of the demand which needs to be done. The appellant have made a submission that appellant s request for cross-examination has not been acceded by the Adjudicating Authority. For a fair play in adjudication, the opportunity of cross-examination ought to have been extended to the appellant so the truth can be brought on record and justice can be delivered. The appellant also submitted that as regard the manpower recruitment agency service the appellant was only required to pay 25% of service tax and in respect of the service provided in execution of works contract they were require to pay 50% of the Service Tax. However, department in violation of the statutory provisions demanded service tax at full rate of 100% from the appellant, for the period of 01.07.2012 to 31.03.2013. This issue also need deliberation. Since, the issue that whether demand can be time barred or not is a matter of fact based on record. It is found that the aspect of limitation also was not properly addressed by the adjudicating authority. Therefore, in view of the above deficiency in the adjudication order, the entire matter needs to be reconsidered considering the detailed submission of the appellant. The matter needs to be remitted back to the Adjudicating Authority - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Invocation of extended period of limitation.
2. Classification and computation of service tax demand.
3. Liability of sub-contractor to pay service tax.
4. Adherence to statutory provisions for service tax rates.
5. Denial of cross-examination request.
6. Timeliness of the demand.

Summary:

1. Invocation of Extended Period of Limitation:
The appellant contended that the show cause notice dated 11.10.2013, invoking the extended period under Section 73(1) of the Finance Act, 1994, was unsustainable due to the absence of intent to evade tax. The appellant maintained regular books and cooperated with the Department, negating any suppression or willful misstatement. The tribunal found that the adjudicating authority did not properly address the limitation aspect, necessitating reconsideration.

2. Classification and Computation of Service Tax Demand:
The appellant argued that the show cause notice and the adjudicating order failed to clearly classify the services and provide a service-wise bifurcation of the demand. The tribunal agreed that correct classification of services, especially prior to 01.07.2012, was essential and found the adjudication order deficient in this regard.

3. Liability of Sub-Contractor to Pay Service Tax:
The appellant, acting as a sub-contractor, argued that the main contractor should bear the service tax liability to avoid double taxation. The tribunal noted that the adjudicating authority ignored the appellant's request to verify service tax payments by main contractors, thus requiring reconsideration.

4. Adherence to Statutory Provisions for Service Tax Rates:
The appellant claimed that post the negative list regime, it was only liable to pay a specified percentage of service tax (25% for manpower recruitment and 50% for works contract services). The Department's demand for 100% service tax was contested as contrary to statutory provisions. The tribunal acknowledged this issue needed further deliberation.

5. Denial of Cross-Examination Request:
The appellant's request to cross-examine officers of its clients was denied, which was crucial as the demand was based on client details. The tribunal emphasized that fair adjudication required granting the opportunity for cross-examination to ensure justice.

6. Timeliness of the Demand:
The appellant extensively argued that the demand was time-barred, citing various judgments. The tribunal noted that this factual matter was not adequately addressed by the adjudicating authority, warranting a fresh examination.

Conclusion:
The tribunal found significant deficiencies in the adjudication order and remitted the matter back to the Adjudicating Authority for reconsideration. The authority is directed to pass a de-novo order, addressing all issues raised by the appellant, without being influenced by the tribunal's observations. The appeal was allowed by way of remand.