2024 (3) TMI 497 - AT - Service Tax

Non-payment of appropriate service tax on the amount received from the said service recipient - providing taxable services on execution of agreements with Meghalaya State Electricity Board, Shillong for erection work on re-conductoring, feeder bifurcation and construction of new feeder - demand alongwith interest and penalty - HELD THAT - As per the contract, the appellant was entitled for service charge on execution of work, which has been treated by Departmental Officers as service tax, this is the negligence on the part of the investigating officers for harassment of the appellant - Moreover, the Notification No.45/2010-ST dated 20.07.2010 was available with the Department. Despite that, they issued a show-cause notice to the appellant to harass the appellant - Further, during investigation, they recovered amount of service charge which is treated as service tax which is not permissible in law. In that circumstances, it is held that the appellant has borne the service tax, which has been forcefully recovered by the respondent from the appellant and the service recipient has not borne any part of the service tax involved in this case. The appellant is not required to pay service tax on their activities in the impugned order and whatsoever, the service tax was forcefully collected by the respondent from the appellant, the same is to be refunded to the appellant along with interest - the impugned order set aside - appeal allowed.

Summary

Issues involved: Appeal against demanding service tax, interest, and penalty under the Finance Act, 1994.

Summary:

Issue 1: Demand of service tax, interest, and penalty

The appellant, engaged in providing erection, commissioning, and installation services, was alleged to have not paid appropriate service tax on services provided to Meghalaya State Electricity Board. Despite investigation and issuance of a show-cause notice, the appellant did not pay the directed service tax initially. Subsequently, under further persuasion, the appellant paid the service tax amount. The appellant claimed exemption under Notification No.45/2010-ST, stating that they were engaged in services against a State-sponsored scheme for electrification by the State Government of Meghalaya. The appellant argued that the service tax collected during investigation should be refunded as they had borne the tax amount.

Issue 2: Interpretation of Notification No.45/2010-ST

The appellant contended that their activities were exempted from service tax under Notification No.45/2010-ST, dated 20.07.2010. They argued that the investigating officers had mistakenly treated service charge as service tax, causing harassment to the appellant. Despite the availability of the notification, a show-cause notice was issued, and the recovery of service charge during investigation was deemed impermissible by the appellant.

Judgment:

After considering submissions and examining the contract details, it was found that the appellant had borne the service tax, which was forcefully recovered during investigation. The Tribunal held that the services provided to Meghalaya State Electricity Board were indeed exempted from service tax under Notification No.45/2010-ST. Consequently, the appellant was not required to pay service tax as per the impugned order. The Tribunal directed the refund of the forcefully collected service tax amount to the appellant along with interest, setting aside the impugned order and allowing the appeal with any consequential relief deemed necessary.