2014 (5) TMI 181 - HC - Service Tax

Claim of Notification No. 12/2003-ST - Tribunal held that demand for the period 2009-10 is within the normal period of limitation and the benefit of the Notification No. 12/2003-ST is not available to applicants as he had not produced evidence by way of invoices under which the goods were sold to the service recipient - Held that - The condition in the Notification is only production of documentary proof indicating the value of the goods and materials supplied. This does not in any manner mean that the goods have to necessarily be supplied by way of or under invoices. Therefore, evidence was produced before the authority and the sufficiency of it has to be examined. If the appellant is able to show from the documents i.e. contract read with other documents including its R.A. Bills (Running Account Bills) and returns filed with the Sales Tax Authorities, the value of goods sold and supplied to the satisfaction of the authorities, it would be complying with the condition provided in Notification No. 12/2003-S.T., dated 20 June, 2003. We are normally loath to interfere with the discretion exercised by the Tribunal in passing orders, directing pre-deposit for the purposes of entertaining the appeal on merits. However, in this case, the Tribunal has committed a fundamental error in insisting only upon production of Invoices, as evidence of goods being sold and ignoring the contract, R.A. Bills, etc. to arrive at the value of goods sold. Therefore, grave prejudice has been caused to the appellant and we are required to interfere with the impugned order. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Appeal against Tribunal's order for pre-deposit of Service Tax amount.
2. Interpretation of Notification No. 12/2003-S.T., dated 20 June, 2003.
3. Sufficiency of evidence required to claim benefit under the Notification.
4. Tribunal's discretion in directing pre-deposit for entertaining appeal on merits.

Analysis:
1. The appellant contested the Tribunal's order directing pre-deposit of Rs. 1 Crore out of a total demand of Rs. 12.70 Crores for Service Tax and penalty. The Tribunal had invoked the extended period of limitation, alleging suppression of facts by the appellant to evade payment. The appellant argued that all facts were known to the revenue and that the demand was erroneously computed. The Commissioner upheld the demand, leading to the appeal before the Tribunal.

2. The crux of the matter revolved around the interpretation of Notification No. 12/2003-S.T., dated 20 June, 2003, which provides benefits based on documentary proof of goods supplied in rendering services. The appellant claimed the benefit of this notification, contending that the value of goods sold for executing contracts should be excluded from the Service Tax demand. However, the Tribunal found the evidence of goods supply unsatisfactory, leading to the demand confirmation.

3. The appellant argued that they had provided sufficient evidence through returns filed under the Sales Tax Act, agreements with customers, and a Chartered Accountant's certificate. They contended that the Tribunal erred in requiring only invoices as proof of goods supply, ignoring other relevant documents like running account bills and contracts. The Tribunal's insistence on invoices was deemed a fundamental error causing prejudice to the appellant.

4. The High Court intervened, setting aside the Tribunal's order and remanding the matter for fresh consideration. The Court emphasized the need to evaluate all documentary evidence presented by the appellant, not just invoices, to determine the value of goods supplied. The Tribunal was instructed to independently assess the evidence to ascertain the appellant's entitlement to the benefits under Notification No. 12/2003-S.T., dated 20 June, 2003. The Court clarified that the observations made were preliminary, and the Tribunal could refer the case back to the Commissioner for further examination based on the evidence presented.

In conclusion, the High Court's judgment focused on the correct interpretation of the notification, the sufficiency of evidence required to claim benefits, and the Tribunal's discretion in directing pre-deposit for entertaining the appeal on merits. The Court emphasized a holistic evaluation of all documentary evidence to determine the value of goods supplied and remanded the matter for fresh consideration, ensuring a fair assessment of the appellant's claim.