2017 (9) TMI 97 - AT - Service Tax

Business Auxiliary Service - payment towards the services received by the said foreign company for promotion of the appellant s products - reimbursement of expenses - Held that - the Revenue, apart from making a bald allegation that such expenses were for promoting their business from India, have also not referred to any basis for entertaining the above view. If the Revenue is making an allegation, the onus to establish the allegation is upon them. We note that there is no reference to any services having been provided by the holding company for promoting the assessee s business from India - both the sides are lacking in establishing their stands by production of sufficient evidences. In such a view, we are of the opinion that the matter requires re-adjudication - matter is being remanded for re-adjudication on merits.

Summary

Issues:
Adjournment request for the Appellant, Confirmation of service tax demand, Nature of payments made to foreign company, Sufficiency of documentary evidence, Allegations by Revenue, Burden of proof, Contestation of demand on limitation

Analysis:
The judgment by the Appellate Tribunal CESTAT CHANDIGARH dealt with various issues arising from a case involving the confirmation of a service tax demand against the Appellant. The Tribunal rejected the request for adjournment as the matter had been repeatedly adjourned at the Appellant's requests. The service tax amounting to approximately ?7.63 Lakhs was confirmed against the Appellant for the period 2008-09 due to payments made in foreign currency to their holding company and related parties, which were deemed to fall under Business Auxiliary Service, making the Appellant liable for service tax.

During the proceedings, the Appellant contended that the payments were made for travel expenses of their employees visiting the foreign country and were reimbursement amounts to their holding company. However, the authorities found the documentary evidence produced by the Appellant insufficient to prove their stand. The Appellate authority observed that the single document produced by the Appellant did not provide details of the total payment and was not enough to support their claim. The Tribunal noted that both sides lacked in establishing their positions with sufficient evidence, leading to the conclusion that the matter required re-adjudication.

The Revenue alleged that the expenses were for promoting the Appellant's business from India but failed to provide any basis for their claim. The Tribunal emphasized that the burden of proof lies with the Revenue to establish such allegations. As the matter was remanded for re-adjudication on merits, the Tribunal directed the adjudicating authority to reconsider the issue of limitation as well. Ultimately, the Tribunal set aside the impugned order, remanding the appeal for a fresh decision based on the observations made during the proceedings.