2017 (7) TMI 721 - AT - Service Tax

Short payment of tax - Man Power Recruitment or Supply Agency Services - tax with interest paid by appellant on being pointed out - Held that - the SCN is bad to the extent of demand of ₹ 8,25,046/-, which was admittedly paid before the issue of SCN. Accordingly, the SCN, to this extent is not sustainable and accordingly, no penalty is also imposable on this amount, under any of the sections. So far, the balance demand of ₹ 1,25,055/-is set aside and the matter is remanded to the Adjudicating Authority, for redetermination, in accordance with law, after providing opportunity to the appellant of being heard and leading evidence. Appeal allowed in part and part matter on remand.

Issues:
- Confirmation of duty imposed
- Setting aside of penalty under Section 76
- Retention of penalty under Section 77
- Non-appearance of the appellant
- Ex-parte hearing
- Remand of the matter to the Adjudicating Authority

Confirmation of Duty Imposed:
The appellant was registered with the Department, providing Man Power Recruitment or Supply Agency Services. A show cause notice (SCN) was issued alleging that the appellant had charged service tax incorrectly on certain invoices, resulting in a short levy of service tax. The appellant had not filed the service return for a specific period and had not paid the service tax on time. The SCN proposed a demand for the short-paid amount and imposed penalties under Sections 76, 77, and 78 of the Act. Despite multiple opportunities for a defense reply and hearings, the appellant did not provide a proper defense. The Commissioner (Appeals) confirmed the demand and penalties under Sections 77 and 78, while deleting the penalty under Section 76.

Setting Aside of Penalty under Section 76:
The appellant appealed, claiming inadequate opportunity before the adjudicating authority, ignorance leading to the short payment of service tax, and difficulties in filing a defense reply due to delays in receiving necessary documents. The Tribunal found the show cause notice unsustainable for the amount already paid before the notice was issued. Consequently, no penalty was imposed on this amount under any section. The Tribunal set aside the balance demand and remanded the matter to the Adjudicating Authority for redetermination after providing the appellant with an opportunity to be heard and present evidence.

Retention of Penalty under Section 77:
The Tribunal upheld the penalties under Sections 77 and 78, directing the appellant to appear before the Adjudicating Authority with a copy of the Tribunal's order and their reply for a hearing. The appeal was allowed in part and remanded in part for further proceedings, emphasizing the importance of due process and providing opportunities for the appellant to present their case effectively.

Non-Appearance of the Appellant and Ex-Parte Hearing:
The appellant was absent during the hearing, with notices returned unserved. The Tribunal decided to hear the appeal ex-parte due to the appellant's non-appearance. The Tribunal considered the arguments presented by the revenue and the records before making its decision.

Remand of the Matter to the Adjudicating Authority:
The Tribunal remanded the matter to the Adjudicating Authority for reconsideration of the evidence and issuance of a fresh order in accordance with the law. The appellant was directed to appear before the Adjudicating Authority with a copy of the Tribunal's order and their response to seek an opportunity for a hearing, ensuring a fair and thorough review of the case.

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