2017 (1) TMI 1190 - AT - Service Tax

Telecom service - rate of tax - The appellant did not discharge service tax with enhanced rate and as such, proceedings were initiated against them for recovery of short paid tax amount - Held that - the appellants could not categorically establish the dates of receipt of various taxable considerations during the impugned period to support their claim that some of these considerations were pertaining to the period when lesser rate of tax was applicable. The impugned order also notes that the appellant did not produce the records for post-paid SIM, details of bill collection and sale of pre-paid SIM before the authorities. We note that the rate of tax was enhanced with due announcements by the Government and the appellant as one of the regular and large tax payers under the category of telephone services, is expected to discharge correct tax liability after the enhancement - The service tax as per the statutory rate should have been discharged by the appellant - appeal dismissed - decided against assessee.

Issues:
Enhanced rate of service tax applicability, Calculation errors in duty liability, Invocation of demand for extended period, Failure to produce evidence of service period and receipts.

Enhanced Rate of Service Tax Applicability:
The appeal involved a dispute regarding the enhanced rate of service tax applicable to telecom services provided by the appellants. The rate of service tax had been increased from 5% to 8% w.e.f. 14.05.2003. The appellant contended that the enhanced rate applied only to services rendered after the enhancement, and they were liable for the lower rate for services provided before that period. However, the tribunal noted that the liability arose based on the effective rate at the time of service provision. The tribunal also addressed calculation errors in duty liability, emphasizing that even if amounts were shown incorrectly, the tax liability was calculated accurately. The appellant's argument regarding the rate of tax was deemed unsustainable given the clear announcements by the government regarding the rate enhancement.

Calculation Errors in Duty Liability:
The tribunal examined the appellant's claim of errors in calculating duty liability. It was observed that specific errors, such as incorrect amounts shown for certain months, did not impact the overall tax liability as it was calculated correctly. The tribunal highlighted that discrepancies in the amounts received versus claimed did not absolve the appellant from discharging the correct tax liability based on the statutory rate.

Invocation of Demand for Extended Period:
The issue of invoking the demand for an extended period was raised by the appellant, arguing that there was no suppression of facts to warrant such action. However, the tribunal found that the appellant failed to provide concrete evidence regarding the dates of receipt of taxable considerations during the disputed period. The tribunal noted that the appellant did not produce essential records before the authorities, such as details of bill collection and SIM sales, which could have supported their claim. Despite the appellant's plea, the tribunal upheld the demand for the extended period due to the lack of substantiating evidence.

Failure to Produce Evidence of Service Period and Receipts:
The tribunal emphasized that the appellant's failure to establish the dates of receipt of taxable considerations during the disputed period weakened their claim of liability based on the lower tax rate. The appellant's inability to provide crucial records and documents to support their assertions, such as details of post-paid SIM and bill collection, worked against their case. The tribunal underscored that as a significant taxpayer in the telephone services category, the appellant was expected to accurately discharge the service tax liability following the rate enhancement announcements. The tribunal dismissed the appeal, citing the appellant's lack of justification or evidence to warrant interference with the impugned order.

In conclusion, the tribunal upheld the decision of the lower authorities, dismissing the appeal and affirming the demand for the correct service tax liability based on the enhanced rate.

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