2018 (2) TMI 1319 - AT - Service Tax

Business Auxiliary Service - reverse charge mechanism - the basis of demand is balance sheet figures obtained by the department from the balance sheets of the appellant - Held that - It is a fact on record that appellant is registered with their Central Excise department as well as under Service Tax and filing their regular returns. No effort has been made to find out how much amount they have paid towards Service Tax and under which head. Moreover appellant has produced CA certificate, no credence has been given to the CA certificate produced by the appellant. Demands cannot be raised merely on the basis of the figures and no amounts mentioned in the balance sheet in terms of decision of this Tribunal in the case of GSP Infratech Development Ltd. v. CCE, C & ST, Belgaum 2015 (12) TMI 331 - CESTAT BANGALORE . It is the burden on the Revenue to come with evidence that the appellants are receiving taxable service which Revenue has failed to discharge. The matter remanded to the adjudicating authority for fair adjudication after considering all the records placed by the appellant and to give finding in detail on each aspects - appeal allowed by way of remand.

Summary

Issues:
Appeal against confirmed demand of Service Tax under Business Auxiliary Service category based on balance sheet figures.

Analysis:
The judgment pertains to an appeal against the confirmation of Service Tax demand under the Business Auxiliary Service category based on balance sheet figures. The appellant, a manufacturer of electronics goods, made payments to foreign collaborators for various purposes. The Revenue alleged that these payments constituted taxable services under the reverse charge mechanism, leading to the initiation of proceedings and imposition of penalties. The appellant contended that the show cause notices were issued without proper examination of their returns and records, emphasizing the need to correlate balance sheet figures with actual payments. The appellant provided a CA certificate, which was disregarded without justification. The Tribunal noted that demands cannot be solely based on balance sheet figures and must consider the nature of services, classification, and tax calculation. The burden of proof lies with the Revenue to demonstrate that taxable services were received, as per the decision in Hindustan Ferodo Ltd. v. CCE, Bombay. The Tribunal set aside the impugned orders, emphasizing the need for a fair adjudication process and detailed findings on all aspects.

The Tribunal highlighted the importance of evidence and proper assessment procedures in determining Service Tax liability. It emphasized the necessity of a thorough examination of services received, classification, and tax calculation, rather than relying solely on balance sheet figures. The decision underscored the burden on the Revenue to provide concrete evidence of taxable services received by the appellant. Additionally, the Tribunal stressed the significance of CA certificates and the requirement to justify their dismissal. The judgment concluded by remanding the matter to the adjudicating authority for a fair assessment, directing the appellant to assist in document examination. The appellant was granted a reasonable opportunity to present their case, with a specific focus on the applicability of Cenvat Credit in the context of revenue neutrality.