2017 (1) TMI 876 - AT - Service Tax

Short payment of tax - Section 68 of the Act read with Rule 6 of the Rules - suppression of facts - demand of tax, with penalty - invocation of extended period of limitation - Held that - the Commissioner (Appeals) has examined the issue in detail along with the evidence and the same appears reasonable in the peculiar facts and circumstances of the case specially when either in SCN or in OIO, the adjudicating authority, has proceeded to segregate the portion of the work executed in the contract while confirming the demand nor he took pain to observe the nature of work while determining tax liability. In absence of any specific findings by the department, we are of the view that the service tax paid by the appellant on the basis of receipts under the contract is appropriate - demand set aside - appeal allowed - decided in favor of assessee.

Summary

Issues:
Appeal against Order-in-Appeal No.154/ST/ALLD/2013 dated 13.12.2013 passed by the Commissioner (Appeals) Allahabad regarding service tax liability and penalties.

Analysis:

1. Service Tax Liability:
The respondent received a gross value of services against taxable services provided to a corporation but allegedly suppressed the actual amount, resulting in a shortfall in service tax payment. The department issued a Show Cause Notice demanding the shortfall to be paid along with interest and imposed penalties under various sections of the Act. The respondent defended by stating that they paid the service tax honestly based on the work orders received and submitted evidence supporting their claims. The Commissioner (Appeals) examined the issue and found the service tax paid by the appellant to be appropriate based on the receipts under the contract. As the department failed to provide specific findings or segregate the work executed in the contract to determine tax liability, the differential service tax confirmed in the Order-in-Original was considered to have no legal basis. Consequently, the penalties imposed were deemed unwarranted, leading to the dismissal of the appeal by the department.

2. Penalties Imposed:
The penalties were imposed on the respondent under various sections of the Act for alleged violations related to service tax payment and suppression of material facts. However, the Appellate Tribunal found that in the absence of specific findings by the department segregating the work executed in the contract or determining the nature of work for tax liability, the service tax paid by the appellant based on receipts under the contract was deemed appropriate. Consequently, the penalties imposed were considered unjustified and not in accordance with the facts and circumstances of the case. The Tribunal upheld the order passed by the Commissioner (Appeals) and dismissed the appeal filed by the department, thereby disposing of the stay application as well.

In conclusion, the judgment by the Appellate Tribunal CESTAT ALLAHABAD upheld the decision of the Commissioner (Appeals) regarding service tax liability and penalties, emphasizing the importance of examining the specific details of the case and evidence provided by the parties involved. The Tribunal found that the service tax paid by the appellant was appropriate based on the receipts under the contract, leading to the dismissal of the appeal by the department and the disposal of the stay application.