2014 (6) TMI 863 - AT - Service Tax

Service Tax demand - difference in the figures available in the income tax returns and the value of services declared in the ST-3 returns filed by the appellants - Held that - It is observed that calculation of Service Tax liability based on the income tax return and ST-3 returns is the basic point of the Revenue. Filing documents and pointing of correct calculation in determining of Service Tax liability can always be agitated by the appellant before the appellate authority. Strictly speaking, the point agitated by the appellant before the first appellate authority cannot be considered as additional grounds on some other legal issues which were not taken up before the adjudicating authority. Out of total duty demand of Rs.3,40,573/- confirmed by the adjudicating authority, an amount of Rs.1.5 lakh was deposited by the appellant at the time of admitting the stay. In the interest of justice and in view of the judicial pronouncements on the issue relied upon by the appellant, the matter is required to be remanded to the adjudicating authority to grant a personal hearing to the appellant to explain their case regarding quantification of duty and re-conciliation of difference between the income tax figures vis-a-vis those given in ST-3 returns. Option of 25% payment of penalty admissible under Section 78 of Finance Act, 1994 has also not been extended to the appellant. Quantum of penalties under Section 76 of the Finance Act, 1994 will also depend upon the short levy, if any, recalculated and determined by the adjudicating authority. - matter remanded back - Decided in favour of assessee.

Summary

Issues involved: Appeal against Service Tax demand based on difference in figures between income tax returns and ST-3 returns.

Analysis:
1. The appellant challenged the Service Tax demand solely on the grounds of differences in figures between income tax returns and ST-3 returns. The appellant argued that demand solely based on this difference is not sustainable, citing various case laws in support.

2. The Revenue contended that the appellant did not contest the issue on merits before the adjudicating authority, and additional grounds cannot be raised before the appellate authority as per legal precedents.

3. The Tribunal considered both arguments and observed that while the Revenue's calculation of Service Tax liability was based on the income tax return and ST-3 returns, the appellant should have the opportunity to contest the computation of Service Tax liability at the appellate stage. The Tribunal decided to remand the matter to the adjudicating authority for a fresh decision, allowing the appellant a personal hearing to explain the quantification of duty and reconcile the differences between income tax figures and ST-3 returns.

4. The Tribunal also noted that the appellant had already deposited a portion of the disputed amount at the time of stay, and the matter of penalties under the Finance Act would depend on the recalculated duty determined by the adjudicating authority. The Tribunal set aside the lower authorities' orders and remanded the matter back for de-novo proceedings.

5. Ultimately, the appeals filed by the appellants were allowed by way of remand, with the Tribunal emphasizing that the appellant would not seek a refund of the amount already deposited during the stay.

This detailed analysis outlines the key arguments presented by both parties, the Tribunal's considerations, and the ultimate decision to remand the matter for a fresh adjudication, ensuring the appellant's right to contest the Service Tax liability calculation.