2018 (10) TMI 1327 - AT - Service Tax

Principles of Natural justice - Tour Operator and Air Travel Agent Service - quantum of tax discharged is incorrect - demand on the basis of gross value shown in the balance sheet and ST.3 returns on the differential amount - Held that - All the submissions were made before the adjudicating authority as well as Ld. Commissioner (Appeals) but they have not considered the same and arbitrarily confirmed demand. The issue raised by Ld. Counsel needs to be considered, verified and thereafter, quantification of demand, if any remains to be decided. Therefore, both lower authorities have failed to arrive at the correct conclusion due to non consideration of the submission made by the appellant. Matter remanded to the adjudicating authority to pass afresh order after considering the issues raised by Ld. Counsel - appeal allowed by way of remand.

Summary

Issues:
1. Incorrect service tax liability calculation based on gross income.
2. Application of average service tax rate.
3. Lack of clarity in service tax classification.

Analysis:
1. The appellant, engaged in "Tour Operator" and "Air Travel Agent" services, faced a service tax demand due to discrepancies in their tax liability calculation. The demand was based on the gross income shown in the balance sheet, which did not align with the actual receipts against billed amounts. The appellant argued that service tax was only applicable to actual receipts, not the billing amount. The Tribunal noted that this crucial point was not considered by the lower authorities, leading to an incorrect confirmation of the demand. The issue of correct quantification of demand was deemed unresolved, prompting the Tribunal to set aside the order and remand the matter for a fresh decision by the adjudicating authority, emphasizing the need to address the appellant's submissions.

2. Another contention raised by the appellant was the application of an average service tax rate on services with varying tax rates. The Tribunal acknowledged this concern and highlighted the failure of the lower authorities to address this issue. The Tribunal emphasized the importance of verifying and considering all submissions made by the appellant before quantifying any demand. The lack of proper consideration by the adjudicating authority and the Commissioner (Appeals) led to the decision to remand the case for a correct determination of the demand based on the specific rates applicable to the services provided.

3. Furthermore, the appellant raised a valid point regarding the lack of clarity in the classification of service tax, which contributed to the disputed demand. The Tribunal recognized the significance of this issue and criticized the lower authorities for not addressing the classification concerns raised by the appellant. By remanding the case, the Tribunal aimed to ensure that all aspects, including service tax classification, were appropriately examined and resolved by the adjudicating authority to arrive at a fair and accurate decision. The appeal was allowed for remand, keeping all issues open for further consideration and clarification.