2024 (2) TMI 1310 - AT - Service Tax

Recovery of service tax with interest and penalty - entitlement to the benefit of the VCES Scheme - onus to prove - no corroborative evidences - appellant did not appear for personal hearing despite several opportunities granted and the duty demand was affirmed ex-parte - HELD THAT - The appellant had not been actively participating in the proceedings. Before issuing the show cause notice, the Deputy Commissioner, CGST vide letter dated 13.04.2018, had requested the appellant to submit the documents, i.e., IRRs, Balance Sheets, Form 26AS and ST3 returns for the period 2012 13 to 2014 15 for examination of service tax liability on the services provided by them, however, the appellant never responded thereto nor submitted the requisite documents. Even after issuance of the show cause notice, the appellant did not submit any reply and though several opportunities were granted by the adjudicating authority the appellant did not appear and accordingly proceedings were concluded ex-parte. On appeal, the Commissioner (Appeals) remanded the matter to the adjudicating authority with directions to pass a speaking order after considering the submissions of the appellant in true spirit by following the principles of natural justice and the appellant was directed to produce all related documents to the adjudicating authority. Normally, the present appeal needs to be rejected considering the conduct of the appellant in not submitting the required documents at any stage, however with all fairness and in the interest of justice, it is felt that an opportunity to produce all the relevant documents in support of the submissions made, needs to be granted to the appellant. The appellant is once again directed to produce the VCES-2 and VCES-3 as the burden of proof is on the appellant. The appellant may also produce the documents in support of his submissions that he is exempted under the threshold limit of exemption for small scale service providers and that the services rendered by them are classifiable as works contract services where discharge of 50% of service tax liability under reverse charge by JVVNL is in consonance with the notification. The adjudicating authority is at liberty to consider all the submissions in the light of the documents to be placed by the appellant and pass a speaking order. The impugned order, is therefore set aside - the appeal is allowed by way of remand.

Summary

Issues:
The judgment involves the service tax liability of an appellant registered as a Goods Transport Agency service provider under section 65(105)(zzp) of the Finance Act, 1994. The issues include non-payment of service tax amounting to Rs. 5,30,000/- on a taxable value of Rs. 42,88,026/- during the period 2012-13, failure to respond to show cause notices, non-appearance for personal hearings, and challenges to the imposition of penalty and interest.

Service Tax Liability and Non-Compliance:
The appellant, a registered service provider, was found to have not paid service tax amounting to Rs. 5,30,000/- based on third-party information. Despite requests for documents and a show cause notice being issued, the appellant neither responded nor provided the necessary documentation. The duty demand was affirmed ex-parte due to the appellant's non-appearance for personal hearings and failure to comply with directives to submit required documents.

Voluntary Compliance Encouragement Scheme (VCES) and Other Defenses:
The appellant claimed exemption from demand under the VCES for the period covered, citing provisions of section 108 and 111 of the Scheme. Additionally, arguments were made regarding the classification of services under works contract services and the liability for service tax under reverse charge. The appellant also challenged the invocation of extended limitation period and penalty imposition.

Contentions and Counter-Arguments:
The appellant's counsel argued for the appellant's entitlement to VCES benefits, exemption under the threshold limit for small-scale service providers, and the classification of services as works contract services. The Authorized Representative for the Revenue countered by stating that the appellant failed to provide crucial documents to support their claims, such as VCES-2 and VCES-3, and documents related to the 50% tax liability under reverse charge.

Judicial Observations and Remand:
The tribunal noted the appellant's lack of active participation throughout the proceedings, including non-submission of required documents and non-appearance for hearings. Despite granting multiple opportunities, the appellant failed to produce essential documents or appear for hearings. The tribunal, in the interest of justice, directed the appellant to produce all relevant documents to support their contentions, remanding the matter back to the adjudicating authority for a speaking order based on the new evidence to be provided by the appellant.

Conclusion:
The judgment set aside the impugned order and allowed the appeal by way of remand, emphasizing the importance of producing necessary documents to support the appellant's submissions. The adjudicating authority was directed to consider all submissions in light of the new evidence and pass a speaking order accordingly.