2014 (9) TMI 153 - HC - Service Tax

Import of services - design service - proof that the design services in question were received prior to 18.04.2006 or prior to 01.06.2007 - levy of service tax where payment was made in the year 2008-2009 for the invoices raised by the service provider on the Appellants for the year 2004-2005 and 2005-2006 - Held that - once the Adjudicating Authority while passing the order-in-original proceeds on the assumption that there is material on record with regard to rendering of services, but the controversy is whether the tax or taxable event occurred after the notification or rule being brought into force or not, then, the Tribunal was obliged in law to consider this aspect and in its entirety. It ought to have then commented upon the presumption or the basis on which the Adjudicating Authority proceeded. If the Adjudicating Authority proceeded on an erroneous basis and there was indeed no material which would support the legal argument of the Assessee, then, the Tribunal could have observed that the legal argument is not required to be answered in the absence of necessary factual basis. If the services were received during the period 2004-2005 and the stand of the Assessee is that no service tax is liable to be paid on the said services and which have been availed of prior to the date of notification or rule coming into force, then, there was some material on record and in the form of at least Audit Report. These documents and in comparison to the contents of the Ledger Account, dates of bills/ invoices should have been considered and thereafter, a proper and complete finding should have been rendered by the Tribunal. We find and repeatedly that the Tribunal in undue haste and uncalled hurry proceeds to pass the orders which have to be often set aside by this Court. This Court has repeatedly reminded the Tribunal that it is the last fact finding authority and which the Assessee and the Revenue approaches so as to have complete adjudication on facts and law. In these circumstances it was bounden duty of the Tribunal to have referred to the findings of the Adjudicating Authority and in their entirety. - Matter remanded back to tribunal - Decided in favor of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Applicability of service tax on design services provided by a foreign party.
3. Evidence of receipt of services prior to specific dates.
4. Payment timing and its relevance to service tax applicability.
5. Tribunal's failure to consider documentary evidence.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The High Court condoned a 4-day delay in filing the Central Excise Appeal, citing reasons stated in the affidavit. The Notice of Motion was disposed of without costs.

2. Applicability of Service Tax on Design Services Provided by a Foreign Party:
The Assessee challenged the Tribunal's order upholding the service tax demand on payments made to a foreign party for design services during 2004-2005 and 2005-2006. The High Court admitted the appeal on several substantial questions of law, including whether the demand for service tax on these payments was correct in law.

3. Evidence of Receipt of Services Prior to Specific Dates:
The Assessee argued that the Tribunal failed to consider documentary evidence proving that the design services were received prior to 18.04.2006 or 01.06.2007. The Tribunal's finding that there was no evidence of service performance before these dates was contested by the Assessee, who claimed that invoices and ledger accounts were overlooked.

4. Payment Timing and Its Relevance to Service Tax Applicability:
The Assessee also disputed the Tribunal's conclusion that the payment made in 2008-2009 for services provided in 2004-2005 and 2005-2006 indicated the date of service provision. The High Court noted that the Tribunal failed to apply its mind to the applicability of the taxing provision to the services rendered and did not consider the presumption or basis on which the Adjudicating Authority proceeded.

5. Tribunal's Failure to Consider Documentary Evidence:
The High Court found that the Tribunal did not adequately consider the documentary evidence, including the Audit Report, letters from the Assessee, ledger accounts, and bills. The Tribunal's brief and inconsistent findings, particularly in paragraph 8 of the impugned order, were criticized. The High Court emphasized that the Tribunal, as the last fact-finding authority, should have thoroughly examined the entire record and rendered a comprehensive finding.

Conclusion:
The High Court quashed and set aside the Tribunal's order to the extent it dealt with the Assessee's appeal. The Assessee's appeal was revived and remanded to the Customs, Excise, and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai, for fresh adjudication on merits within four months. The Tribunal was directed to consider all contentions and documentary evidence without being influenced by its earlier conclusions. The appeal was allowed with no order as to costs.