2024 (6) TMI 709 - AT - Service Tax

Time Limitation - service tax demand on the services received by the appellants from outside India - in relation to business or commerce or not - sovereign function - no proper examination of documentary evidences - HELD THAT - The appellants nowhere contended against applicability of the service tax on them; rather their representative at the time of personal hearing had admitted that there is short payment and they are factually required to make the payment. The statement furnished by the appellant before the audit wing was also recorded in paragraph 6 of the impugned order. It is surprising that how the appellant s representative had made the statement, that they are liable to pay the service tax, inasmuch as in paragraph 6, the authorized signatory s statement was recorded, which is to the effect that he is not aware about the billing pattern and had acted as per the direction of the Corporate Office and accounting instructions and that they had accounted SDC charges separately in the invoices. Further, it is not the case of Revenue that the appellants had not entered into any written contracts with the overseas entities for provision of requisite services. The original authority has not examined the documentary evidences including the contracts, to conclude that the appellants had really received the taxable services and were liable for payment of service tax as recipient of service under the Reverse Charge Mechanism (RCM) - the original authority should properly examine the material evidences for a conclusion regarding leviability of service tax on the appellants or otherwise, for provision of the taxable service under the category of Management, maintenance or repair service . The matter is remanded to the Original Authority for passing of denovo adjudication order upon due consideration of the available documentary and other evidences and those to be submitted by the appellants - Appeal allowed by way of remand.

Summary

Issues involved: Appeal against Order-in-Original confirming service tax demand, imposition of penalty under Section 78, applicability of service tax on services received from outside India.

Summary:
The appeal was filed against the Order-in-Original confirming service tax demand, interest, and penalty imposed on the appellants under Section 73(1), Section 75, and Section 78 of the Finance Act, 1994 respectively. The appellants, engaged in providing taxable services under 'Management, Maintenance or Repair' category, were registered with the jurisdictional Service Tax Department. The audit wing observed that charges paid towards foreign technical fees should be included in the value of taxable service for service tax payment. Show cause proceedings were initiated, leading to the impugned order confirming the demands. The appellants contended that the proceedings were time-barred and that service tax on services from outside India was not applicable due to the nature of the activity being a 'sovereign function'. The Tribunal noted discrepancies in the impugned order and remanded the matter to the Original Authority for fresh adjudication based on documentary evidence.

The appellants challenged the impugned order on grounds of time limitation and non-applicability of service tax on services received from outside India. The Tribunal observed discrepancies in the impugned order regarding the appellants' liability for service tax. The appellants' representative had admitted to short payment, but the Tribunal found inconsistencies in the recorded statements. The Tribunal emphasized the need for a proper examination of documentary evidence to determine the applicability of service tax on the appellants for the taxable service provided. Consequently, the matter was remanded to the Original Authority for a fresh adjudication considering all available evidence and granting a personal hearing to the appellants.

In conclusion, the appeal was allowed by remanding the matter for denovo adjudication by the Original Authority, ensuring a thorough examination of evidence and providing a personal hearing to the appellants.