2018 (5) TMI 1061 - AT - Service Tax

Demand of service tax - amount received as royalty - the entire case has been made on the basis of the data retrieved from laptops, CPUs and pen drives seized from the secret office in Gurgaon - Held that - the Department had instituted separate proceedings against the appellant under the Central Excise Act alleging evasion of central excise duty. The present proceedings relating to demand of service tax also stands initiated on the basis of the same search such proceedings and the documents recovered - The Adjudication Order passed by the Commissioner in the Central Excise case was challenged before this Tribunal and the said Order-in-Original was set aside and the matter was remanded for de novo adjudication in the case of C.G. ST C & C. E-ALWAR Versus KAMDHENU ISPAT LTD and Kamdhenu Ispat Limited Versus C.C.E. & S.T. -Jaipur-I 2018 (5) TMI 905 - CESTAT NEW DELHI . Since the findings of the Commissioner in the above proceedings will have a direct bearing on the present case, also we are of the view that the present matter also needs to be remanded with similar directions, since the demand of service tax is entirely based on the GEQD report. Appeal allowed by way of remand.

Issues:
1. Service tax demand based on recovered data from electronic devices.
2. Admissibility of electronic documents as evidence.
3. Alleged reliance on inadmissible evidence by Adjudicating Authority.
4. Computation of service tax on receipt basis.
5. Denial of cum-tax benefit.
6. Sustainability of the impugned order.

Issue 1: Service tax demand based on recovered data from electronic devices:
The appeal challenged the demand of service tax amounting to ?1,24,04,149, based on data recovered from electronic devices during search proceedings. The appellant contested the validity and authenticity of the recovered data, raising doubts about its accuracy and admissibility as evidence. The Tribunal noted that the entire case hinged on the retrieved data and directed a re-examination of the issue after cross-examining the concerned officials who retrieved the data.

Issue 2: Admissibility of electronic documents as evidence:
The appellant argued that the electronic documents were inadmissible as evidence due to non-compliance with Section 36(B) of the Central Excise Act. They contended that necessary certificates were lacking, rendering the data inadmissible. The Tribunal emphasized the need for compliance with legal requirements for electronic evidence and ordered a re-adjudication considering these concerns.

Issue 3: Alleged reliance on inadmissible evidence by Adjudicating Authority:
The appellant raised objections to the Adjudicating Authority's reliance on certain evidence from separate proceedings not made available to them. This reliance on extraneous evidence was contested as inadmissible. The Tribunal acknowledged these concerns and directed a fresh examination of the case to ensure proper consideration of admissible evidence.

Issue 4: Computation of service tax on receipt basis:
The appellant argued that the computation of service tax in the impugned order did not follow the receipt basis as required by Service Tax Rules until April 1, 2011. They contended that the tax should be calculated based on receipts, not accruals. The Tribunal directed the Adjudicating Authority to re-evaluate the computation method in line with the appellant's submissions.

Issue 5: Denial of cum-tax benefit:
The appellant claimed entitlement to cum-tax benefit, which was allegedly denied by the Adjudicating Authority. The Tribunal instructed a re-examination of this aspect to ensure proper consideration and application of relevant benefits to the appellant.

Issue 6: Sustainability of the impugned order:
The appellant challenged the sustainability of the impugned order on various grounds, including procedural irregularities and legal non-compliance. The Tribunal, after hearing both sides and reviewing the case records, set aside the order and remanded the matter for a fresh decision, considering all issues raised by the appellant and ensuring procedural fairness.

In conclusion, the Tribunal found merit in the appellant's contentions regarding the admissibility of electronic evidence, reliance on separate proceedings, computation methods, benefit entitlement, and overall procedural fairness. The case was remanded for a de novo decision, emphasizing the need for thorough examination, cross-examination of officials, and compliance with legal requirements for electronic evidence and tax computation.

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