2024 (10) TMI 628 - AT - Service Tax

Short payment or nonpayment of service tax - failure to provide cenvat documents to the Departmental Officers for verification - period 2007-08 to 2011-12 - Penalty - HELD THAT - It is found that for confirmation of demand of Rs.4,20,162/-, it is submitted by the assessee that they have paid more than the service tax as alleged that they have short paid of service tax. To that effect, the assessee has produced the reconciliation statement, which shows that that against the short payment of Rs.4,20,162/-, the appellant has paid excess amount of Rs.4,62,251/-. Therefore, the demand of Rs.4,20,162/- is not payable by the assessee. With regard to the appeal filed by the Revenue against the impugned order, it is found that the assessee has later paid the service tax on advance received on Customs House Agent Service and no service tax is payable by the assessee on reimbursable expenses in terms of the decision of the Hon ble Supreme Court in the case of Intercontinental Consultants Technocrats Private Limited 2018 (3) TMI 357 - SUPREME COURT - there are no merit in the appeal filed by the Revenue and the same is dismissed. Penalty - HELD THAT - As the Appellant Assessee paid the excess amount, therefore, the demand of Rs.4,20,162/- on account of short payment of service tax is also not sustainable, the same is set aside and no penalty is imposable on the assessee. The appeal filed by the assessee is allowed.

Summary

Issues:
Short payment of service tax, non-maintenance of separate accounts for taxable and non-taxable services, payment of service tax on advances received, payment of service tax on reimbursable expenses.

Analysis:

Short Payment of Service Tax:
The case involved discrepancies in the taxable value declared by the assessee in their ST-3 Returns for the years 2007-08 to 2011-12, leading to short payment or nonpayment of service tax amounting to Rs.4,20,162. Additionally, the assessee failed to provide cenvat documents for verification, resulting in a gross violation of the Cenvat Credit Rules, 2004. The Tribunal noted that the assessee had actually paid an excess amount of Rs.4,62,251 as service tax, thereby refuting the demand of Rs.4,20,162. Consequently, the demand was deemed not payable by the assessee.

Non-Maintenance of Separate Accounts:
The Tribunal observed that the assessee, who provided both taxable and non-taxable services, had not maintained separate accounts as required under Rule 6 of the Cenvat Credit Rules, 2004. This non-compliance led to a demand of Rs.1,10,701 for not paying the stipulated percentage of the value of non-taxable/exempted services. However, the Tribunal did not delve into this issue in its final decision.

Payment of Service Tax on Advances Received:
The assessee received advances amounting to Rs.66,64,411 for "Customs House Agent" services during the period in question. The Tribunal held that service tax was payable on this amount, indicating a liability on the part of the assessee.

Payment of Service Tax on Reimbursable Expenses:
Regarding the collection of Rs.16,28,09,235 for "Customs House Agent" services, the assessee argued that this amount represented reimbursable expenses and, therefore, no service tax was payable based on a Supreme Court decision. The Tribunal concurred with this argument, stating that no service tax was payable on reimbursable expenses as per the mentioned judicial precedent.

Conclusion:
The Tribunal dismissed the appeal filed by the Revenue, as the assessee had subsequently paid the service tax on advances received and was not liable to pay service tax on reimbursable expenses. The demand of Rs.4,20,162 for short payment of service tax was set aside, and no penalty was imposed on the assessee. Consequently, the appeal filed by the assessee was allowed, leading to the disposal of both appeals in favor of the assessee.