2019 (1) TMI 777 - AT - Service Tax

Refund of service tax paid on cancellation of booking of flats - refund amount not shown separately by the assessee in their returns - Held that - There is enough evidence on record to prove compliance of above said Rule 6 (3) on the part of the appellant. Thus, the finding of Commissioner (Appeal) about lack of document is apparently wrong. Rejection of appeal also on the ground that the amount of credit has not been separately shown in Return Form - Held that - Since the documents on record prove that these is no revenue loss, the alleged act is nothing more than the procedural lapse - The law has been settled that Lapses in technical procedures are condonable - In the present appeal, it is not the case of department that appellant has availed credit in excess of the requisite proportion. Admittedly tax stands paid. Resultantly, the procedural lapse is mere technical for no substantial loss to the department. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Assessment of Service Tax on construction services, consideration of sundry debtors, abatement eligibility, refund amount not shown in returns, compliance with Rule 6(3) of Service Tax Rules, 1994, procedural lapse in not separately showing credit in return form.

Analysis:

1. Assessment of Service Tax on Construction Services:
The appellant, engaged in providing construction services, faced a demand for service tax based on a search revealing discrepancies in their ST-3 returns. The issue arose from not considering the quantum of sundry debtors for tax assessment and not accounting for book adjustments in service tax calculations. Additionally, the eligibility for abatement was questioned due to the area of flats exceeding 2000 sq. ft. The demand was made for the period 2011-12 to 2012-13, leading to a Show Cause Notice and subsequent orders confirming the demand.

2. Refund Amount Not Shown in Returns:
The primary contention of the appellant was that the demand was based on the refund amount not separately reflected in their returns. The appellant argued that they had started the project before the imposition of service tax on builders and had refunded advance amounts due to customer cancellations. The appellant cited Rule 6(3) of the Service Tax Rules, 1994, which allows adjustment of excess service tax paid against future liabilities in case services were not provided.

3. Compliance with Rule 6(3) of Service Tax Rules, 1994:
The appellant provided detailed refund details, demonstrating compliance with Rule 6(3) by refunding advance amounts to customers who had cancelled their bookings. The documents presented by the appellant, along with payment challans, supported the claim of refund adjustments made against the gross value. The Tribunal found sufficient evidence to prove compliance with the rule, contrary to the Commissioner (Appeals)’s assertion of lack of documentation.

4. Procedural Lapse in Not Separately Showing Credit in Return Form:
The Tribunal acknowledged that while the credit adjustment was not separately shown in the return form, it was a procedural lapse rather than a substantive issue. Citing legal precedent, the Tribunal highlighted that technical procedural lapses are condonable, especially when no revenue loss occurs. As the appellant had not availed credit in excess and had paid the tax due, the procedural error was considered inconsequential, leading to the appeal being allowed and the order set aside.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that technical procedural lapses should not result in the denial of substantial benefits when no revenue loss is incurred. The judgment highlighted the importance of compliance with legal provisions and the distinction between substantive and procedural issues in tax matters.