2009 (12) TMI 61 - HC - Service Tax

Question of law - In order to consider the questions of law framed in this appeal, first the court has to ascertain, whether the assessee has filed the return in accordance with the Service Tax Act within the stipulated time and whether tax is paid if service charges are received by it and similarly this Court has to consider whether the show cause notice issued by the department is barred by time - questions could be answered only if the assesses has collected the service charges from its customers. The assessee has produced before the Tribunal xerox copies of the certificate issued by the Chartered Accountant of its Company. Revenue contends that, actually the assessee has collected the service charges from its customers which is a question of fact - However, the learned counsel for the assessee contends that the Commissioner did not consider the material placed before him in regard to filing of the returns. - Without ascertaining the actual facts, the substantial questions of law cannot be answered by us. In the circumstance, in order to find out whether service charges are collected by the assessee and whether the assessee has really filed the return or not, the matter requires to be reconsidered by the Commissioner. Matter remanded to Commissioner

Summary

Issues:
- Challenge to legality and correctness of CESTAT order
- Unconditional setting aside of service tax demand
- Consideration of legal provisions for service tax payment
- Existence of suppression of facts for time limit invocation

Analysis:
The High Court dealt with an appeal challenging the legality and correctness of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order. The primary issues revolved around the unconditional setting aside of the service tax demand without considering legal provisions for payment and the existence of suppression of facts for invoking the time limit under Section 73 of the Act. The respondent-assessee, registered under the Finance Act, 1994, had been regularly filing returns but not paying service tax due to non-receipt of charges from customers. The department issued a show cause notice, alleging non-payment, leading to the authority's order demanding tax, penalty, and interest. The Tribunal reversed this order, prompting the appeal.

The court emphasized the necessity to determine if the assessee filed returns within the stipulated time and paid tax upon receiving service charges. The Tribunal's decision relied on certificates from the assessee's Chartered Accountant, contradicting the Commissioner's findings. The Revenue argued that the assessee did collect service charges and failed to file returns promptly, while the assessee's counsel contended that the Commissioner overlooked relevant evidence on return filings. These conflicting claims underscored the need to ascertain factual details regarding service charge collection and return filing before addressing the legal questions.

Given the disputed facts, the court concluded that a proper assessment of whether service charges were collected and returns filed was essential before addressing the legal issues raised. Consequently, the appeal was allowed without delving into the substantial questions of law. The CESTAT's order and the Commissioner of Service Tax's decision were set aside, emphasizing the need for a reconsideration by the Commissioner based on clarified factual findings.