2012 (4) TMI 251 - AT - Service Tax

Demand - Condonation of delay - Show Cause Notice was issued in this case by comparing the income tax return with the ST-3 return and it was found that the income shown in the income tax return was much more than the ST-3 return - Even though, the appellant explained that receipts on bank statements includes receipt of various other amounts such as interest, loan etc and therefore without proper verification that cannot be taken as income for rendering services, the original adjudicating authority proceeded to confirm the demand on the basis of bank statement - Held that the original adjudicating authority confirmed bigger amount than what was mentioned in the Show Cause Notice also, which was rightly set aside by the Commissioner (Appeals), hence is not the subject matter of the appeal - Appeals are decided by way of remand to original adjudicating authority

Summary

Issues: Delay in filing appeal, Discrepancy between income tax return and ST-3 return, Verification of income for Service Tax purposes

In this judgment by Appellate Tribunal CESTAT, Ahmedabad, the issue of delay in filing the appeal was addressed. The delay of 6 days was explained by the appellant's counsel, attributing it to a mistake by a clerk who misstated the date of receipt. The Tribunal, considering the explanation provided, condoned the delay. Moving on to the main issue, the Show Cause Notice was issued based on a comparison between the income tax return and the ST-3 return, revealing a significant difference in income. The appellant argued that income tax return shows income on an accrual basis, while Service Tax is payable upon receipt of payment, which may not always align. Despite the appellant's explanation and submission of bank statements to clarify the nature of receipts, the original adjudicating authority proceeded to confirm the demand solely based on the bank statement without proper verification. The Commissioner (Appeals) rightly set aside the confirmation of a higher amount than initially indicated in the Show Cause Notice. However, the Commissioner's decision to confirm the demand based on the income tax return was deemed unjust as the appellant had not claimed to inflate income to misrepresent the company's financial status. The Tribunal concluded that the matter should be remanded to the original adjudicating authority for proper verification of the amounts received for services provided by the appellant during the period covered by the Show Cause Notice, ensuring the appellant's right to present their case before a final decision is made. The Tribunal also decided on the COD application, stay application, and the appeal in line with the remand for further verification.