2017 (3) TMI 558 - AT - Service Tax

CUM tax benefit - the amount of mobilisation advances where tax twiced by the department while arriving at the demand - appellant claim that the department has stated that the demand is arrived after granting the CUM tax benefit, the details of calculation would show that the appellant has not been given such CUM tax benefit - Held that - the appellant has received an amount of ₹ 1,68,35,716/- during the period 2006-07 to 2010-11. The department has taken this whole amount as taxable value and calculated the service tax demand on this amount. Therefore it is clear that the appellant has not been extended the benefit of CUM tax - mobilisation advances which had been taxed twice is maintained - there is a denial of CUM tax benefit even though it is stated to be given to the appellant, the matter requires to be remanded to the adjudicating authority to the limited extent of considering the CUM tax benefit - appeal allowed by way of remand.

Summary

Issues:
Appeal against order upholding demand, interest, and penalty for failure to file ST-3 returns and pay service tax. Appellant engaged in Erection, Commissioning, or Installation Services. Dispute over calculation of service tax demand, CUM tax benefit, and reduced penalty under Section 78.

Analysis:
1. The appeal challenged the order of the Commissioner (Appeals) upholding the demand, interest, and penalty imposed on the appellant for not filing ST-3 returns and not paying service tax for taxable services provided. The original authority confirmed a demand of ?18,96,739 for the period 2006-07 and 2010-11, along with interest and penalties under Section 77 of the Finance Act, 1994.

2. The appellant's counsel argued that the appellant was not granted the CUM tax benefit and was not given the benefit of reduced penalty under Section 78. The department calculated the service tax demand without extending the CUM tax benefit, resulting in a higher demand. The counsel requested a remand for considering the CUM tax benefit and reducing the penalty.

3. The respondent's representative acknowledged that the mobilization advances were taxed twice, leading to a reduction in the demand to ?18,96,739. The respondent claimed that the CUM tax benefit was extended to the appellant and contested the appellant's error in calculation.

4. The tribunal noted discrepancies in the calculation of the taxable value and service tax demand in the show cause notice. The appellant was not granted the CUM tax benefit as claimed. The tribunal found merit in the appellant's argument and decided to remand the matter to the adjudicating authority to consider the CUM tax benefit and the reduced penalty under Section 78.

5. The tribunal allowed the appeal by way of remand, maintaining the treatment of mobilization advances taxed twice. The adjudicating authority was directed to reassess the CUM tax benefit and consider the reduced penalty of 25%. The appellant was prohibited from raising new grounds of limitation or tax liability. The appeal was disposed of accordingly.

This detailed analysis of the judgment addresses the issues raised in the appeal, focusing on the calculation of service tax demand, the CUM tax benefit, and the reduced penalty, providing a comprehensive overview of the tribunal's decision and the arguments presented by both parties.