2018 (6) TMI 808 - AT - Service Tax

Jurisdiction - security agency service - cum-tax benefit - whether impugned adjudication order passed by Commissioner Raipur which also determines liability for their office at Nowrozabad within Bhopal jurisdiction whether the demand to that extent is without jurisdiction? - Held that - So far the demand raised in the impugned order relating to Bhopal Commissionerate of the Amlai office of the appellant in respect of services in the state of M.P. is concerned the said demand hit for jurisdiction and accordingly set aside. Cum-tax benefit - Held that - The gross amount taken by Revenue for raising the demand in the facts and circumstances the element of services tax was included and accordingly we hold that the appellant is entitled to cum-tax benefit for calculation of service tax liability. Valuation - quantification of taxable value on the receipt basis - Held that - Tax demanded on gross value of bill raised during the financial year which is apparently erroneous as tax was required to be demanded and/or calculated on receipt basis as per applicable law till 31/03/2011 - gross demand raised is set aside - matter remanded to the Original Adjudicating Authority for recalculation of demand on receipt basis with respect to the services provided under the Raipur Commissionerate. Penalties - Held that - There is no case for deliberate default on the part of the appellant as they have disclosed their turnover and liability towards service tax in their balance-sheet - Further there is no case by Revenue that there has been diversion of funds from the business of the appellant for non-business use - penalties set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Jurisdiction of the Commissionerate in determining liability for services provided under different offices
2. Entitlement to cum-tax benefit
3. Adjustment of taxable value on receipt basis
4. Imposition of penalties under Sections 76, 77, 78, and late filing fee for returns under Rule 7C of Service Tax Rules, 1994

Jurisdiction Issue:
The appellant, a security service agency, contested an adjudication order passed by the Commissioner, Raipur, determining liability for services provided under the Bhopal jurisdiction. The Tribunal found the demand relating to services in M.P. under the Bhopal Commissionerate to be without jurisdiction and set it aside. The appellant's argument that the demand was beyond the Commissionerate's authority was accepted.

Cum-Tax Benefit Issue:
The Tribunal acknowledged the appellant's entitlement to cum-tax benefit for calculating service tax liability. It was established that the gross amount considered by the Revenue for the demand included the service tax element, leading to the appellant's eligibility for cum-tax benefit.

Taxable Value Adjustment Issue:
Regarding the reworking of the taxable value on a receipt basis, the Tribunal noted that the tax demanded on the gross value of bills raised was erroneous. The demand was required to be calculated on a receipt basis until March 31, 2011. The matter was remanded to the Original Adjudicating Authority for recalculation based on the receipt basis for services provided under the Raipur Commissionerate.

Penalties Imposition Issue:
The Tribunal found no deliberate default by the appellant in disclosing turnover and service tax liability. The penalties under Sections 76 and 78 were set aside due to reasonable cause for default. Penalties under Section 77 and Rule 7C of Service Tax Rules were remanded for reconsideration based on the redetermination of liability. The Tribunal clarified that penalties were set aside due to genuine reasons for non-payment of the service tax demand.

In conclusion, the appeal was partially allowed, and the case was remanded for further proceedings. The appellant was directed to appear before the Original Adjudicating Authority within 60 days to seek an opportunity for a hearing and submit relevant documents.