2010 (6) TMI 148 - AT - Service Tax

Photographer Services- In this case the appellant is a small photographer. Held that- the income tax return Ipso-facto does not raise demand unless revenue brings out the case clearly by the letters of law for each financial year show that there was service tax liability.

Summary

Issues involved:

1. Failure to provide essential documents for defense during adjudication process.
2. Discrepancy found by audit party leading to initiation of proceedings.
3. Service tax liability on a small photographer without proper justification.

Issue 1: Failure to provide essential documents for defense during adjudication process

The appellant's counsel argued that the adjudication was completed without providing the basis and relied upon documents for the case. The appellant had requested essential documents for defense, but they were not provided, leading to a lack of clarity in the process. The counsel emphasized that the appellant, being a small photographer, was unfairly subjected to tax without proper documentation. The counsel requested that both the stay application and appeal be allowed due to this procedural deficiency.

Issue 2: Discrepancy found by audit party leading to initiation of proceedings

The Departmental Representative (DR) contended that the proceedings were initiated based on a discrepancy identified by the audit party, as mentioned in the appellate order. The DR argued that due to this identified discrepancy, the appellant's appeal should not succeed, and a pre-deposit should be directed accordingly.

Issue 3: Service tax liability on a small photographer without proper justification

Upon hearing both sides and examining the records, the tribunal noted that the appellant, established as a small photographer, had not earned income exceeding Rs. 50,000 on average for the relevant financial years. Despite this, a service tax demand of Rs. 11,856 was imposed for all three years without clear justification in the order. The tribunal observed that the original order lacked reasoning for imposing service tax liability each year and did not align with the income tax returns. Highlighting the absence of a clear legal basis for the tax demand and the violation of natural justice, the tribunal concluded that the appeal should be allowed. The tribunal emphasized that without a proper demonstration of liability by the authorities, the challenged orders could not be sustained, rendering the stay application moot.

In conclusion, the judgment highlighted the importance of providing essential documents for defense during adjudication, the significance of justifying tax liabilities for small entities, and the necessity of clear reasoning in tax imposition orders to ensure procedural fairness and compliance with legal standards.