2024 (7) TMI 549 - AT - Service Tax

Failure to discharge the service tax liability - Security agency service - legal fee paid to the advocates - reverse charge mechanism - Commission paid to the directors. Failure to discharge the service tax liability - Security agency service - legal fee paid to the advocates - reverse charge mechanism - HELD THAT - The appellant had filed a reply to the show cause notice dated 15.09.2015 vide a letter dated nil/October, 2015. Perusal of that letter shows that the appellant has acknowledged his liability vis- vis receiving the Security Agency Service. With respect to legal fee, it was mentioned that the payment is mainly in the form of renewal fee, inspection fee, boiler deposit etc. Hence, were not the services provided in relation to advice, consultancy or assistance. Commission paid to the directors - HELD THAT - The appellant who otherwise is a limited company is supposed to declare to their auditors such details as are relevant to make conclusions about groupings. The grouping in the audit balance sheet has already become final. No evidence is there to counter the said finality. Resultantly, the demand with respect to the commission to the directors was also confirmed. Since there is nothing on record except the said two replies by the appellant, those replies have duly been considered while confirming the demand in question. In the absence of any document on record, there are no reason to differ from those findings. The impugned order upheld - appeal dismissed.

Summary

Issues:
1. Appellant's failure to discharge service tax liability.
2. Challenge to two Order-in-Originals dated 19.07.2016 and 16.12.2016.
3. Delay in filing appeal and subsequent proceedings.
4. Liability under Reverse Charge Mechanism.
5. Disputed service tax demands on various services.

Analysis:
1. The appellant, engaged in manufacturing Soya products, failed to discharge service tax liability for the years 2012-13, 2013-14, and 2014-15. Two show cause notices were issued, demanding service tax on legal services, commissions, security services, GTA services, Manpower Supply Services, and more.

2. The two challenged Order-in-Originals upheld the demands for Security Agency Service and commissions paid to directors under Reverse Charge Mechanism. The demand for legal fees was dropped in one order, while the demand for other services was confirmed in the second order, subsequently upheld by the Order-in-Appeal.

3. The appeal was filed after a delay of 101 days, which was condoned. Despite warnings and opportunities, the appellant failed to appear, leading to the dismissal of the appeal due to non-appearance. The department presented arguments, emphasizing the appellant's liability under Reverse Charge Mechanism.

4. The appellant's replies to show cause notices acknowledged liability for Security Agency Service but disputed legal fees and commissions as consultancy services. The appellant's contentions were considered, leading to the confirmation of demands for Security Agency Service and commissions paid to directors.

5. The subsequent show cause notice demanded service tax on Manpower Supply Services and GTA services. The appellant's replies were deemed insufficient, with discrepancies in labor salaries and lack of proper invoices leading to the confirmation of these demands. The liability on legal services and GTA services was also confirmed based on the appellant's responses and legal provisions.

6. With no additional evidence on record, the Tribunal upheld the orders, dismissing the appeal and confirming the demands raised in the show cause notices. The judgment was pronounced on 05.07.2024, bringing the legal proceedings to a close.