2024 (3) TMI 560 - AT - Service Tax

Liability of service receiver to pay under reverse charge mechanism - repair and maintenance service - HELD THAT - The show cause notice was issued without scrutinizing the appellant s record related to documents of services received by the appellant. The show cause notice was issued on comparing the date in the financial statements and ST-3 returns. It was the responsibility of Revenue that wherever the data between financial statements and ST-3 returns did not tally, they should have called for more information, scrutinized the information and made out a prima facie case that service tax was payable by the appellant and then should have issued show cause notice. Since that process of issue of show cause notice was not adopted, the contention of the appellant that blasting and painting services were provided by corporate entity and the consultancy was in respect of consultancy other than legal consultancy are accepted. Since both the parties agree that repair and maintenance is not covered by reverse charge mechanism, the demand of Rs.96,589/- does not sustain along with interest and penalty. Since the appellant is not pressing for confirmation of demand of Rs.45,062/-, the balance demand confirmed along with interest and penalty is set aside. Appeal allowed in part.

Summary

Issues involved:
The appeal is against an order demanding service tax, interest, and penalty. The issues include confirmation of service tax on reverse charge mechanism for blasting and painting service, consultancy charges, and repair and maintenance service.

Confirmation of service tax on blasting and painting service:
The appellant confirmed service tax payable on blasting and painting service received, citing that the service was provided by corporate entities exempt from reverse charge mechanism as per Notification No.30/2012-ST. The appellant's argument was accepted due to lack of documentation from Revenue, leading to the demand being set aside.

Confirmation of service tax on consultancy charges:
The demand for consultancy charges paid by the appellant was confirmed, but the appellant argued that the service tax was for consultancy other than legal consultancy, for which the liability lies with the service provider. Revenue failed to provide evidence supporting the demand, resulting in the demand being set aside.

Confirmation of service tax on repair and maintenance service:
The demand for repair and maintenance service was confirmed under reverse charge mechanism, but both parties agreed that repair and maintenance services are not covered under this mechanism. Consequently, the demand, along with interest and penalty, was deemed unsustainable and set aside.

Conclusion:
The show cause notice lacked scrutiny of the appellant's records related to services received, leading to the acceptance of appellant's arguments regarding blasting and painting services and consultancy charges. As repair and maintenance services are not covered under reverse charge mechanism, the demand related to it was also set aside. The balance demand not pressed by the appellant was also set aside, resulting in the appeal being allowed in part.