2018 (12) TMI 732 - AT - Service Tax

Short payment of service tax - Construction services - the entire case of the Revenue is based upon the payment made by Obra Thermal Power Station, without actually finding out as to whether the said payments are against any taxable services or are against the exempted services, as contended by the assessee - Held that - There is no category of services disclosed in the show cause notice. Merely because the respondents have received certain payments from the said M/s Obra Thermal Power Station does not lead to the inevitable conclusion that the said consideration was on account of taxable services having been provided by the assessee. There is no evidence for the same, in the absence of which, the demand should not have been upheld against them. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the demand for short payment of service tax is valid based on the payments made by M/s Obra Thermal Power Station to the respondent.
2. Whether the consideration received by the respondent from M/s Obra Thermal Power Station was solely for taxable services or included exempted services and supply of goods.
3. Whether the show cause notice was specific and classified the services for which the demand was raised.

Analysis:
Issue 1:
The Revenue alleged a short payment of service tax amounting to ?38,23,591/- by the respondent based on the payments made by M/s Obra Thermal Power Station. The Original Adjudicating Authority confirmed the demand, but the Commissioner (Appeals) examined the documents and found that the liability was fixed solely based on the payments made by the service receiver. The Commissioner sought verification of receipts of non-taxable/exempted services provided by the respondent, but the concerned officer did not respond. The Commissioner concluded that the demand could not be confirmed solely based on the payments without specific classification of services.

Issue 2:
The respondent argued that besides taxable services, they also provided exempted services and supplied goods to M/s Obra Thermal Power Station. The Commissioner found that the consideration received by the respondent included non-taxable activities such as construction of road, cleaning services, civil foundation work, transportation of steel, and supply of goods. The Commissioner also considered abatements and certifications obtained by the respondent, concluding that the demand could not be upheld without evidence that the payments were solely for taxable services.

Issue 3:
The Tribunal noted that the Revenue's case was solely based on payments made by M/s Obra Thermal Power Station without categorizing the services in the show cause notice. The Tribunal emphasized that the absence of evidence linking the payments to taxable services meant that the demand should not have been upheld. Therefore, the Tribunal rejected the Revenue's appeal, upholding the Commissioner (Appeals) decision to set aside the demand except for a nominal amount of ?6,214/-, which the appellant did not contest.

In conclusion, the Tribunal found that the demand for short payment of service tax was not valid as the Revenue failed to establish that the payments received by the respondent were solely for taxable services. The lack of specific classification of services in the show cause notice and absence of evidence linking the payments to taxable services led to the rejection of the Revenue's appeal.