2024 (2) TMI 1306 - AT - Service Tax

SVLDR Scheme - whether the Appellant has discharged the amounts specified under SVLDRS-3? - whether SVLDRS-4 Certificate was issued by the Department or not? - HELD THAT - The Department has not issued the SVLDRS-4 Certificate since Rule 7 of SVLDRS Rules, 2019 very clearly states that the amount arrived at under SVLDRS-3 should be paid within 30 days from the date of its issue - there is no provision to extend this time limit and no powers have been conferred to any authority to do so. Therefore, the Appellant is not eligible to get the benefit of SVLDR Scheme. The Appellant was issued Show Cause Notice based on the Income Tax Returns filed by them. By taking into account the TDS deducted by the clients under Form 26AS, Show Cause Notice has been issued to the Appellant. The Appellant has been maintaining that they have undertaken the services falling under Works Contract Service wherein they have provided the materials and also provided the services towards construction services - From the Show Cause Notice, it is seen that the quantification of demand has been made without considering the fact that the Appellant is providing the Works Contract Service. The Service Tax has been demanded @ 10% of the consideration received by them. Admittedly, the evidence provided by the Appellant shows that they were carrying Works Contract Service only. Matter remanded to the Adjudicating Authority with the following directions - (i) The demand should be quantified by taking the Service Tax rate as per the Composition rate applicable for Works Contract, during the period under dispute. (ii) The Appellant should be granted opportunity to present all their documentary evidence towards their submission along with details of payments made by them. (iii) The Pre-deposit amounts paid and the amount paid in terms of SVLDRS-3 Certificate should be taken as part of the Service Tax payment against the quantified demand. (iv) In respect of the balance quantified demand, if any, the Appellant should be directed to pay the same. (v) For all the payments done, the interest is to be paid by the Appellant as per the applicable provisions. The penalties imposed under Section 77 78 of the Finance Act, 1994 set aside. The Fine imposed under Rule 7(C) of the Service Tax Rules, 1994 is upheld and is required to be paid by the Appellant - appeal disposed off.

Summary

Issues involved:
The judgment deals with the eligibility of the Appellant to benefit from the SVLDR Scheme and the quantification of demand for Works Contract Service.

Eligibility under SVLDR Scheme:
The Appellant had opted for the SVLDR Scheme and made a payment beyond the specified time limit. The Department did not issue the SVLDRS-4 Certificate within the stipulated 30 days from the issue of SVLDRS-3. The Tribunal held that the Appellant is not eligible for the scheme as there is no provision to extend the time limit and no authority has the power to do so.

Quantification of demand for Works Contract Service:
The Appellant, engaged in Works Contract Service, was issued a Show Cause Notice based on income tax returns and TDS deductions. The lower authorities confirmed a demand of Rs. 2,15,509/- along with interest and penalties. The Appellant opted for the SVLDR Scheme to close the litigation. The Tribunal remanded the matter to the Adjudicating Authority to quantify the demand considering the Works Contract Service composition rate, allowing the Appellant to present documentary evidence and payment details. Pre-deposit amounts and payments under SVLDRS-3 Certificate were to be considered against the quantified demand. The Appellant was directed to pay any remaining quantified demand along with applicable interest.

Penalties and Fine:
The Tribunal set aside penalties under Section 77 & 78 of the Finance Act, 1994 but upheld the fine imposed under Rule 7(C) of the Service Tax Rules, 1994, requiring the Appellant to pay it. The Appeal was disposed of accordingly.