2024 (6) TMI 770 - AT - Service Tax

Determination of service tax not levied or not paid under the provisions of Section 73 of Finance Act, 1994 - determination of value of taxable services for charging service tax as provided under Section 67 of the said Act - value of taxable services for charging service tax is properly determined during the proceedings of this case or not. Whether for determination of service tax not levied or not paid under the provisions of Section 73 of Finance Act, 1994, it is essential to determine the value of taxable services for charging service tax as provided under Section 67 of the said Act? - HELD THAT - Section 67 of Finance Act, 1994 provides that where service tax is chargeable on any taxable service with reference to its value, then such value shall be the consideration in money charged by the service provider. Therefore, it is primarily important to determine the value on which service tax shall be levied as a specific percentage and such value should be the value of taxable service. Clause (44) of Section 65B of Finance Act, 1994 has provided for definition of service and it has elaborately dealt with a list of activities which shall not be included in such definition - while determining value of taxable service under Section 67 ibid, such aspect as to the activities which are covered by negative list and activities which are mentioned in the definition of service as those which are not covered by such definition becomes important - for arriving at amount of service tax not paid or not levied arriving at correct value of taxable service which has not suffered service tax needs to be determined as the first step. Whether the value of taxable services for charging service tax is properly determined during the proceedings of this case? - HELD THAT - In the present case the charges were framed in the show cause notice for arriving at taxable value of Rs.4,54,64,051/- without examining the books of account and records maintained by the appellant and without quoting any admissible evidence for making out a prima facie case. It is noted that in the case of M/S KUSH CONSTRUCTIONS VERSUS CGST NACIN, ZTI, KANPUR 2019 (5) TMI 1248 - CESTAT ALLAHABAD , this Tribunal had held that without examining the records for difference in the figures reflected in income tax returns and ST-3 returns, Revenue cannot raise demand without establishing the entire amount received by the appellant as reflected in the income tax returns is consideration for providing services. There was no basis for arriving at taxable value of Rs.4,54,64,051/- for the period from October 2013 to March 2014 in the subject show cause notice dated 24.04.2019. The subject show cause notice is not sustainable in law. Whether the impugned order is sustainable in law or whether any part of the said impugned order is not sustainable? - HELD THAT - Since the subject show cause notice is held as non- sustainable, the impugned order passed by learned Commissioner (Appeals) is set aside and the appeal is allowed. Appeal allowed.

Summary

Issues Involved:
1. Determination of service tax not levied or not paid under Section 73 of the Finance Act, 1994.
2. Proper determination of the value of taxable services for charging service tax.
3. Sustainability of the impugned order in law.

Issue-Wise Detailed Analysis:

A. Determination of Service Tax Not Levied or Not Paid Under Section 73 of the Finance Act, 1994:

The Tribunal noted that Section 66B of the Finance Act, 1994, provides for the levy of service tax at 14% on the value of service. Section 67 specifies that the value on which service tax is chargeable should be the consideration in money charged by the service provider. It is crucial to determine the value of taxable services first. Clause (44) of Section 65B defines 'service' and lists activities excluded from this definition. Section 66D provides a negative list of services not qualifying as taxable services. Therefore, the correct value of taxable services must be determined as the first step before arriving at the amount of service tax not levied or paid.

B. Proper Determination of the Value of Taxable Services for Charging Service Tax:

The Tribunal observed that the Revenue, without examining any records of the appellant, concluded that the taxable value of Rs.4,54,64,051/- for the period from October 2013 to March 2014 was not subjected to service tax. The show cause notice did not provide evidence proving that this amount was consideration received for providing services. The Tribunal relied on several precedent decisions, including Umesh Tilak Yadav, Modern Road Makers Pvt. Ltd., Lord Krishna Real Infra Pvt. Ltd., Sharma Fabricators & Erectors P Ltd., and Kush Construction, which established that demands based solely on differences between figures in ST-3 returns and income tax returns are unsustainable without examining the assessee's records and proving that the differential amount was for taxable services.

C. Sustainability of the Impugned Order in Law:

The Tribunal held that the show cause notice dated 24.04.2019 lacked a basis for arriving at the taxable value of Rs.4,54,64,051/-. The notice was deemed unsustainable in law as it was presumptive and did not establish that the amount in question was consideration for taxable services. Consequently, the impugned order passed by the Commissioner (Appeals) was set aside, and the appeal was allowed.

Additional Note on Concurring Order:

The concurring opinion emphasized that the Commissioner's order lacked reference to the appellant's defense reply to the show cause notice, which is essential under Section 73(2) of the Finance Act, 1994. The documents and sample invoices submitted by the appellant were not adequately considered by the adjudicating authority. The computation of the demand based on TDS data without seeking further details was found improper. Hence, the appeal was allowed by setting aside the order passed by the Commissioner (Appeals).

(Order pronounced in the open court on 10.06.2024)

Conclusion:

The Tribunal concluded that the show cause notice was not sustainable due to the lack of examination of the appellant's records and the presumptive nature of the demand. The impugned order was set aside, and the appeal was allowed.