2025 (2) TMI 1056 - AT - Service Tax

No-payment of service tax - appellants were treating the services provided to various institutions like Administrative Training Institute MCRHRD etc. as Educational Institutions and they have not paid the requisite Service Tax - Section 11B of the Central Excise Act 1944. Non-payment of Service Tax - HELD THAT - The issue about the non-payment of Service Tax on various exempt services has already reached finality. The Department has quantified the same as Rs. 6, 48, 577/- which has been paid by the appellant before the issue of show-cause notice along with interest of Rs. 1, 27, 119/-. The appellant has not litigated this amount at the lower appellate stage. Since the amount has been paid along with interest before the issue of show-cause notice there are no reason to apply Section 78 provisions to impose the penalty on them. The penalty of Rs. 6, 48, 577/- in respect of this demand set aside. Quantification of CENVAT reversal - HELD THAT - Revenue has taken the stand that the appellant is providing taxable service and they have paid Service Tax of Rs. 6, 48, 577/- towards the same after being pointed out by Audit team. In such cases the appellant would be eligible for cenvat credit. Therefore there are force in the submissions of the appellant that while quantifying the cenvat reversal the turnover towards such taxable service (which was earlier treated as exempt by the appellant) have to be considered to come for the final quantification. For this purpose the matter is required to be remanded to the adjudicating authority. The appellant is directed to file all their documentary evidence and calculation sheets to fortify their arguments as to what should be the quantification for cenvat reversal. The final quantification if held to be taxable has to be paid by the appellant along with interest. However considering the facts of the case the penalty on such Service Tax set aside. Payment of excess Service Tax during the previous period - it is submitted that appellant has paid some excess Service Tax during the previous period and Department has to adjust the net Service Tax liability is concerned - HELD THAT - There are no reason to entertain this submission of the appellant. In case they had paid more Service Tax during the earlier years it was for them to quantify the same and to file a proper refund claim within the framework specified under Section 11B of the Central Excise Act 1944. The adjudicating authority has correctly held that there is no statutory provision to carry out this kind of adjustment at the adjudication stage. Therefore this prayer of the appellant is rejected. Conclusion - i) The appellant had already paid the demanded Service Tax along with interest before the show-cause notice was issued leading to the penalty under Section 78 being set aside. ii) The appellant should be eligible for cenvat credit. The matter was remanded to the adjudicating authority for a proper quantification of the cenvat reversal considering the turnover of taxable services previously treated as exempt by the appellant. iii) The appellant s claim of having paid excess Service Tax in previous periods and seeking an adjustment was rejected by the Tribunal emphasizing the need for proper refund claims under the Central Excise Act 1944. The matter is remanded to the adjudicating authority. The adjudicating authority should follow the principles of natural justice and pass a considered decision within 4 months from the date of this order - appeal disposed off by way of remand.

Summary

The case involves an appeal regarding the non-payment of Service Tax by an appellant providing catering services to various Educational and Non-Educational Institutions. The audit revealed discrepancies in the treatment of services provided to these institutions, leading to a demand for unpaid Service Tax and a requirement to reverse cenvat credit. The appellant contested the quantification of cenvat credit reversal, leading to a show-cause notice and subsequent penalties imposed by the adjudicating authority. The Commissioner (Appeals) partially upheld the appellant's arguments, remanding the matter for further consideration. The Revenue also filed an appeal against the penalty decision. The Tribunal considered the issues raised and made the following determinations:1. The Tribunal found that the appellant had already paid the demanded Service Tax along with interest before the show-cause notice was issued, leading to the penalty under Section 78 being set aside.2. Regarding the disputed cenvat credit reversal, the Tribunal acknowledged that in cases where the Revenue had identified certain services as taxable, the appellant should be eligible for cenvat credit. The matter was remanded to the adjudicating authority for a proper quantification of the cenvat reversal, considering the turnover of taxable services previously treated as exempt by the appellant. The penalty on such Service Tax was also set aside.3. The appellant's claim of having paid excess Service Tax in previous periods and seeking an adjustment was rejected by the Tribunal, emphasizing the need for proper refund claims under the Central Excise Act, 1944.In conclusion, the Tribunal remanded the matter to the adjudicating authority with directions to follow principles of natural justice and make a decision within four months. The appeal was disposed of accordingly.