2020 (4) TMI 101 - AT - Service Tax

Principles of natural justice - demand alongwith interest and penalties - appellant submits that the demand against the appellant is not sustainable as no verification of documents has been done either by the Adjudicating Authority or by the audit team - HELD THAT - In this case the appellant was never asked to provide copy of invoices to verify whether the service provider has paid any service or not. Therefore, arguments advanced by the learned Authorised Representative for the Revenue is not sustainable - in this case, without co-relation / verification by the authorities below has confirmed the huge demand against the appellant which shows negligence on the part of Audit team. The matter is remanded back to the adjudicating authority to afford an opportunity to the appellant to provide all the relevant documents - Appeal allowed by way of remand.

Summary

Issues:
- Appeal against demand of service tax
- Verification of documents by Adjudicating Authority and audit team
- Contention regarding payment of service tax under reverse charge mechanism
- Lack of verification leading to huge demand confirmation
- Setting aside the impugned order and remanding the matter

Analysis:
The appellant appealed against the demand of service tax amounting to ?36,17,013/-, along with interest and penalties, confirmed by the impugned order. The case involved the appellant being registered for providing services and receiving services from service providers. It was noted during an audit that the appellant had to pay service tax under reverse charge mechanism on Legal Consultancy Services and Security Services. The appellant contended that they had paid service tax under reverse charge mechanism for services where the service provider had not paid, supported by a certificate from a Chartered Accountant. However, the Adjudicating Authority confirmed the demand without considering the certificate, leading to the appeal.

The appellant argued that the demand was unsustainable due to lack of document verification by the Adjudicating Authority or the audit team. They emphasized that proper investigation could have obviated the need for a show cause notice. The Adjudicating Authority did not request copies of invoices to verify if the service provider had paid the service tax, rendering the Revenue's argument invalid. The Tribunal found negligence on the part of the audit team as the demand was confirmed without proper correlation or verification.

Consequently, the Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority. The Adjudicating Authority was directed to correlate the service tax paid by the appellant and the service provider to determine the correct demand. The appellant was given the opportunity to provide all relevant documents, and an officer could be deputed to verify records at the appellant's premises. The appeal was disposed of by way of remand, providing a chance for further verification and reconsideration by the Adjudicating Authority to determine the actual liability of the appellant.