2024 (10) TMI 1261 - AT - Service Tax

Time limitation - suppression of facts or not - Failure to pay appropriate Service Tax, in spite of collecting service charges / Service Tax from the clients - failure to file S.T.-3 Returns properly - HELD THAT - From the documents submitted by the appellant, it is observed that the Service Tax liabilities for each financial year has been included in schedule 11 under the head of current liabilities of the respective Balance sheets during the years 2009-10 and 2010-11 and for the rest of the impugned period i.e., for 2011-12 to 2013-14, the liabilities were reflected in note 7 under the head statutory liabilities. Further, the amount withheld as retention money has been reflected in note g under the head Security deposits EMD of the Balance sheets for the respective periods. The unpaid bill amounts were reflected in the sub-head Sundry debtors/Trade receivables of the head current assets of the respective Balance sheets of the impugned period. Thus, the appellant has not suppressed any information from the department. It is observed that the entire Show Cause Notice has been issued on the basis of the documents submitted by the Appellant. The gross value of taxable services provided during the material period viz. 2009-10 to 2013-14 has been taken from the Bill statement furnished by the Appellant, which tallies with the figures reflected under the account head Income from Operation in their balance sheet - the calculation of Service Tax liability has been done the basis of the Profit Loss Account and balance sheet figures reflected in their account. Thus, the Appellant has not suppressed any information from the Department. When the demand of Service Tax has been raised from the details available in the Books of Account of the Appellant, the extended period cannot be invoked to demand Service Tax. There is no suppression with intent to evade payment of tax established in this case. Accordingly, the demand of Service Tax confirmed by invoking the extended period of limitation is not sustainable and hence, the same is set aside. The matter remanded to the adjudicating authority for the purpose of calculation of the demand, if any, for the normal period of limitation i.e., 18 months, from October 2012 to March 2014 - appeal disposed off by way of remand.

Issues:
1. Demand of Service Tax and penalty for non-payment.
2. Contention of short payments and non-receipt of payments from clients.
3. Invocation of extended period of limitation for demand of service tax.
4. Submission of ST-3 returns and disclosure of service tax liabilities.
5. Allegation of suppression of facts and imposition of penalty.
6. Appropriation of payments made by the appellant.
7. Adjudication of the appeal and remand to the adjudicating authority.

Analysis:

Issue 1: Demand of Service Tax and penalty for non-payment
The Appellant, a registered entity providing taxable services, was investigated for alleged non-payment of Service Tax despite collecting charges from clients. A Show Cause Notice was issued demanding Service Tax for multiple financial years. The Ld. Commissioner confirmed the demand, imposed penalties, and appropriated partial payments made by the Appellant during the investigation.

Issue 2: Contention of short payments and non-receipt of payments from clients
The Appellant argued that short payments were due to non-receipt of payments from clients, leading to retention of bill amounts as "retention money." They contended that service tax liabilities were declared in statutory records and ST-3 Returns, reflecting unpaid bill amounts and liabilities in balance sheets.

Issue 3: Invocation of extended period of limitation for demand of service tax
The Appellant contested the invocation of the extended period of limitation, stating that there was no intention to evade tax. They maintained that bills were raised to clients with service tax, and liabilities were disclosed in statutory records and returns. The Appellant argued that demands should have been issued within the normal limitation period.

Issue 4: Submission of ST-3 returns and disclosure of service tax liabilities
The Appellant submitted ST-3 returns before the initiation of investigation, declaring service tax dues for specific periods. They argued that no suppression of facts occurred as liabilities were reflected in balance sheets and statutory records, indicating full disclosure of service tax liabilities.

Issue 5: Allegation of suppression of facts and imposition of penalty
The Revenue's Authorized Representative alleged insufficient disclosure in ST-3 Returns, justifying the extended period of limitation for demand confirmation and penalty imposition. However, the Tribunal found no suppression of information, citing precedents where demands based on publicly available documents were held unsustainable.

Issue 6: Appropriation of payments made by the appellant
The Tribunal remanded the matter for verification of payments made by the Appellant, directing the adjudicating authority to adjust verified payments against any confirmed duty liability for the normal limitation period.

Issue 7: Adjudication of the appeal and remand to the adjudicating authority
The Tribunal set aside the demand confirmed under the extended limitation period, holding no penalty applicable. The matter was remanded for calculating liabilities within the normal limitation period and verifying payments made by the Appellant for possible adjustment against any confirmed duty liability.

This comprehensive analysis outlines the key legal aspects and arguments presented in the judgment, addressing the issues raised by the parties and the Tribunal's decision in detail.

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