9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (8) TMI 202 - AT - Service TaxShort payment of service tax - dropping of demand - non-imposing commensurate penalty. Whether the Adjudicating authority had erred in dropping the demand amounting to Rs. 18,95,70,056/- for the period 2007-08 to 2011-12 Rs. 22,47,16,252/- for the period 2012-13 on account of short payment of service tax on Works Contract Service? - HELD THAT - The impugned order has gone on to observe that the erstwhile Rule 6 of Service Tax Rules, 1994 did not permit recovery of tax unless the payments were received. We note that the adjudicating authority has relied on the decision of the Tribunal in the case of TURRET INDUSTRIAL SECURITY PVT. LTD. VERSUS COMMR. OF C. EX. CUS 2007 (10) TMI 148 - CESTAT, KOLKATA , wherein it was held that in terms of Rule 6(1) amount of tax payable by the assessee is to be calculated on the basis of payments received in preceding month, tax cannot be calculated on the basis of value of services shown on an accrual basis in Profit Loss account. The impugned order has also relied on the decision of the Tribunal in KANPUR SECURITY SERVICES VERSUS COMMISSIONER OF C. EX., KANPUR 2008 (2) TMI 78 - CESTAT, NEW DELHI , wherein it was held that service tax is leviable only on the amount received by service provider and not on amount still due from parties. In the instant case, the adjudicating authority has relied on a CA certificate submitted by the appellant which carries a date different from what has been indicated by the department in their review order or what has been submitted by the ld. AR. Further, once the CA certificate has been submitted by the appellant, the onus shifts on the department to negate the certificate to substantiate their allegation. Thus, unless evidence to the contrary is submitted by the department to disregard the CA Certificate, there are no infirmity with the findings in this regard in the impugned order. In the instant case, it is on record that the appellant had submitted the required details, but the demand notice had estimated the turnover to be 150% more as compared to the previous year s turnover. This estimated inflated demand has been rightly rejected by the adjudicating authority. There are no infirmity in the impugned order - the impugned order is upheld - appeal dismissed.
Issues Involved:
1. Short payment of service tax on Works Contract Services for the period 2007-08 to 2011-12 and 2012-13. 2. Non-imposition of commensurate penalty. Issue-wise Detailed Analysis: 1. Short Payment of Service Tax on Works Contract Services: The Department initiated an investigation against the respondent, who was engaged in manufacturing, procurement, and commissioning of ash handling equipment, including EPC projects for thermal power plants, and operation and maintenance of ash handling projects. The investigation was based on discrepancies observed between the income shown in the respondent's WCT returns and their ST-3 returns for FY 2007-08 to 2011-12. The Department alleged that the respondent had underreported their taxable income under "Works Contract Services" and demanded service tax amounting to Rs. 18,95,70,056/- for the period 2007-08 to 2011-12 and Rs. 22,47,16,258/- for the period 2012-13, along with interest and penalties. The respondent contended that the services received from M/s Parah International were not classifiable under "Business Auxiliary Services" (BAS), as they were provided on a principal-to-principal basis and not on behalf of the recipient. The respondent also argued that the services were performed outside India, and hence no service tax was applicable as per Section 64 of the Finance Act, 1994. The adjudicating authority dropped the demand based on the reconciliation of the respondent's balance sheets with their ST-3 returns, supported by CA certificates. The Department argued that the CA certificates were insufficient and that the adjudicating authority erred in dropping the demand. The Tribunal noted that the adjudicating authority had relied on CA certificates dated 19.03.2016 and 22.08.2016, which certified that the respondent had correctly discharged their tax liability on receipt and billing basis. The Tribunal emphasized that unless the Department could provide evidence to discredit the CA certificates, the adjudicating authority's reliance on them was justified. The Tribunal further observed that the demand for the period 2012-13 was based on the Best Judgment method, which was not appropriate as the respondent had submitted all necessary documents to the Department. The Tribunal cited Supreme Court decisions, stating that Best Judgment assessments must be based on reasonable estimates and not arbitrary caprice. 2. Non-imposition of Commensurate Penalty: The Department also contested the non-imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The respondent argued that the alleged non-payment of service tax was due to a bona fide belief that the services were performed outside India and hence non-taxable. The respondent further contended that in revenue-neutral situations, no mala fide intention could be attributed to invoke the extended period of limitation. The Tribunal upheld the adjudicating authority's decision, noting that the respondent had provided sufficient evidence to support their claim of correct tax payment. The Tribunal reiterated that the burden of proof to discredit the CA certificates lay with the Department, which had failed to provide any contrary evidence. Conclusion: The Tribunal found no infirmity in the adjudicating authority's order to drop the demand for service tax and penalties. The appeal filed by the Department was dismissed, and the adjudicating authority's order was upheld. Order Pronounced: The judgment was pronounced in the open Court on 30.07.2024.
|
