2024 (10) TMI 1347 - AT - Service Tax

Recovery of service tax with interest and penalty - quantification of service tax liability and deductions claimed by the appellant - suppression of taxable value - HELD THAT - Interestingly, appellant in the present case even before the Original Authority also did not contested anything in the show cause notice except for certain computations. The appellant do not dispute the liability to pay the service tax and has in fact admitted the liability to pay the service tax. In view of the admission of liability to pay the service tax as per show cause notice, we are left with only one issue. Appellant has before the original authority submitted a calculation chart computing the tax liability. However no supporting document were produced before the adjudicating authority. When the said chart was sent for verification to the range office, appellant had failed to produce any of the supporting documents and the said chart could not be verified for its correctness. As appellant has not produced any document to establish their claim for further deduction of Rs 40,896.45/- paid a service tax by Hindalco, the said deduction has not be allowed by the authorities below. No such document evidencing payment of this amount as service tax by Hindalco to appellant has been produced before us, hence we do not find any merits in this claim also. In view of the specific admissions made by the appellant, there are no infirmities in the impugned order. There are no merits in this appeal - appeal dismissed.

Issues Involved:
1. Demand and recovery of service tax along with interest.
2. Imposition of penalties for various violations under the Finance Act, 1994.
3. Quantification of service tax liability and deductions claimed by the appellant.
4. Alleged suppression of taxable service value by the appellant.

Issue-wise Detailed Analysis:

1. Demand and Recovery of Service Tax:
The primary issue in the judgment was the confirmation of a demand for service tax amounting to Rs. 11,40,046/- against the appellant under Section 73(2) of the Finance Act, 1994. The appellant was engaged in providing taxable services such as Cargo Handling Services, Maintenance & Repair Service, Man Power Recruitment Agency Service, and Construction (Commercial & Industrial) Services. The appellant admitted liability to pay the service tax as per the show cause notice but contested the quantification of the demand. The adjudicating authority confirmed the demand based on the appellant's admission and failure to provide supporting documents for their calculation chart.

2. Imposition of Penalties:
The Order-in-Original did not impose any penalty on the appellant by invoking Section 80 of the Finance Act, 1994, citing the appellant's lack of awareness and the prevalent mass unawareness among service providers in the area. The adjudicating authority observed that the appellant was a petty contractor with limited knowledge of service tax provisions and had been regularly depositing tax and returns post-registration, which constituted a reasonable cause for the waiver of penalties. This approach was consistent with precedents where penalties were waived due to ignorance of law.

3. Quantification of Service Tax Liability:
The appellant contested the quantification of the service tax demand, arguing that the gross payments received included amounts not subject to service tax, such as PF contributions and amounts related to services not taxable prior to a certain date. The adjudicating authority, however, found that the appellant failed to provide relevant records or supporting documents to verify the correctness of their calculation chart. The First Appellate Authority also noted that the appellant did not substantiate their claims with evidence, leading to the dismissal of their appeal.

4. Alleged Suppression of Taxable Service Value:
The department alleged that the appellant suppressed the gross value of taxable services provided to M/s Hindalco Industries Ltd., resulting in short payment of service tax. The appellant did not contest the show cause notice on merits and admitted to providing taxable services. The First Appellate Authority held that the appellant's contention regarding deductions for PF contributions and service tax paid by Hindalco lacked evidence and credibility. The authority confirmed the demand, noting that the appellant failed to demonstrate any miscalculation in the demand raised.

Conclusion:
The appeal was dismissed on the grounds that the appellant failed to provide documentary evidence to support their claims regarding the quantification of service tax liability. The adjudicating and appellate authorities found no infirmities in the impugned order, as the appellant admitted liability and did not contest the merits of the case. The adjudicating authority's decision to waive penalties was upheld due to the appellant's demonstrated unawareness and willingness to comply with tax obligations. The order was pronounced in open court on October 24, 2024.

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