2005 (11) TMI 19 - AT - Service Tax

Service Tax ST-3 returned filed by appellant was finally assessed under Sec 71 Demand for additional tax cannot be raised under Sec 74 as said Sec invoked for correcting mistake apparent from records by assessing officer Revenue should have filed appeal u/s 85 against assessment order

Summary

Issues:
1. Validity of Show Cause Notice issued to the appellant.
2. Application of Section 74 of the Finance Act, 1994 for rectification.
3. Interpretation of provisions of Section 71 and Section 85 of the Finance Act, 1994.

Issue 1: Validity of Show Cause Notice issued to the appellant:
The appellant challenged the Show Cause Notice (SCN) issued by the Deputy Commissioner of Service Tax, arguing it was incorrect and without authority. The appellant contended that the invocation of a larger period was not applicable as all necessary information had been provided to the jurisdictional Superintendent of Service Tax. The appellant claimed there was no escapement of Service Tax as the Superintendent never directed them to produce any additional documents during the assessment.

Issue 2: Application of Section 74 of the Finance Act, 1994 for rectification:
The Departmental Representative defended the SCN, stating that the Deputy Commissioner was correct in issuing it due to the appellant's failure to provide documents along with the ST 3 returns for verification. It was argued that Section 74 allowed for the rectification of any apparent mistakes within two years of the original order, making it applicable in this case to recover any escaped Service Tax. However, the appellant argued that Section 74 could not be used to reopen a final assessment under Section 71.

Issue 3: Interpretation of provisions of Section 71 and Section 85 of the Finance Act, 1994:
The Tribunal analyzed the provisions of Section 71, which required the Central Excise Officer to assess returns after considering relevant records. It was noted that the assessment had been finalized by the Superintendent, and therefore, it was deemed that there was no error in the assessment process. Additionally, the Tribunal examined Section 85, which provided for appeals against assessment orders. The Department chose not to appeal the assessed ST 3 returns, indicating that the statutory remedy under Section 85 was available but not utilized.

In conclusion, the Tribunal set aside the order-in-appeal, ruling in favor of the appellant. The judgment highlighted the importance of following statutory provisions for appeals and rectifications, emphasizing that Section 74 could not be used to circumvent the appeal process under Section 85. The decision underscored the significance of proper assessment procedures and adherence to legal frameworks in tax matters.