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2025 (3) TMI 332 - AT - Service TaxShort payment of Service Tax - technical inspection and certification service - Written off the advances received for the period prior to 31.03.2003 - demand for Service Tax on services rendered by the appellant s Japan branch to an Indian client - Non-inclusion of electricity charges collected from the tenants - maintenance charges collected from tenants - calculation of Service Tax liability under renting of immovable property service - Extended period of limitation. Demand of Service Tax of Rs.34, 07, 106/- confirmed under the category of technical inspection and certification service - HELD THAT - The appellant has made excess payment during the years 2007-08 and 2011-12 and short payment during the years 2008-09 2009-10 and 2010-11. However it is noted that the Department has only taken into account the short payment made and ignored the excess payment done by the appellant. If the excess payment is taken into consideration the actual short payment would be Rs.18, 54, 859/- as per the work-sheet submitted by the appellant. Written off the advances received for the period prior to 31.03.2003 - HELD THAT - In the present case since the appellant has written off an amount of Rs.1, 75, 55, 398/- on which the Service Tax liability works out to Rs.18, 08, 206/- This written off amount cannot be considered as income of the appellant in the year of write off and service tax cannot be demanded on this amount. Thus the matter is remanded for recalculating the demand on this count. Whether the demand for Service Tax on services rendered by the appellant s Japan branch to an Indian client is sustainable? - HELD THAT - The amount has been wrongly mentioned towards the services exported by the appellant s Kolkata branch. The service has been actually rendered by the Japan branch of the appellant to the Indian company namely M/s. MMTC Ltd. In such circumstances Service Tax if at all payable shall be payable under reverse charge mechanism by M/s. MMTC Ltd. Therefore the demand of service tax on this count from the appellant is not sustainable. Non-inclusion of electricity charges collected from the tenants - HELD THAT - The appellant has been collecting the electricity charges as a pure agent . Thus these expenses amount to reimbursement of electricity charges paid by the appellant to the electricity company. Accordingly there is no liability to pay Service Tax by the appellant on such electricity charges. Thus the demand of Service Tax of Rs.8, 17, 482/- confirmed on this count is set aside as being unsustainable. Demand of Service Tax of Rs.1, 28, 962/- on maintenance charges collected from tenants - HELD THAT - The appellant have accepted this liability and already paid the tax. Thus the amount paid by the appellant is to be appropriated against this liability. Whether the calculation of Service Tax liability under renting of immovable property service was accurate and if the appellant s recalculated liability should be accepted? - HELD THAT - In this regard the appellant has submitted a CA certificate which needs to be considered and the liability of service tax on this count needs to be re-worked on the basis of the CA certificate. As the appellant has questioned the calculation of Service Tax liability the issue needs to be remanded back to the adjudicating authority for verification of correctness of the claim made by the appellant. Extended period of limitation - HELD THAT - The appellant has been filing returns regularly and they have not suppressed any information from the Department. Thus suppression of facts with the intention to evade the payment of tax has not been established in this case. Consequently the demand confirmed by invoking the extended period of limitation is not sustainable. Conclusion - i) Regarding the demand of Rs.34, 07, 106/- confirmed in respect of technical inspection and certification service the issue is remanded to the adjudicating authority for the purpose of re-computing the demand. ii) The written off amount cannot be considered as income of the appellant in the year of write off and service tax cannot be demanded on this amount. iii) Service Tax if at all payable shall be payable under reverse charge mechanism by M/s. MMTC Ltd. iv) There is no liability to pay Service Tax by the appellant on such electricity charges. Thus the demand of Service Tax of Rs.8, 17, 482/- confirmed on this count is set aside as being unsustainable. v) The appellant have accepted this liability and already paid the tax. Thus the amount paid by the appellant is to be appropriated against this liability. vi) The appellant has submitted a CA certificate which needs to be considered and the liability of service tax on this count needs to be re-worked on the basis of the CA certificate. As the appellant has questioned the calculation of Service Tax liability the issue needs to be remanded back to the adjudicating authority for verification of correctness of the claim made by the appellant. v) Suppression of facts with the intention to evade the payment of tax has not been established in this case. Consequently the demand confirmed by invoking the extended period of limitation is not sustainable. The appeal filed by the appellant is disposed by way of remand.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Technical Inspection and Certification Service The relevant legal framework involves the Finance Act, 1994, particularly the provisions relating to Service Tax. The appellant contends that the excess payments made in certain years were not considered, and if accounted for, the actual short payment would be significantly less. The Court noted that the Department failed to consider the excess payments and agreed that the calculation should be revised. Additionally, the appellant claimed CENVAT Credit, which was not allowed by the Department. The Court found merit in the appellant's contention and remanded the issue for recalculation, considering the CENVAT Credit and the non-receipt of certain amounts written off. Services Rendered by Japan Branch The appellant argued that the services were rendered by their Japan branch to an Indian client, and thus, any Service Tax liability should be borne by the recipient under the reverse charge mechanism. The Court agreed with this interpretation, finding that the demand against the appellant was not sustainable. Electricity Charges Collected from Tenants The appellant claimed that they acted as a 'pure agent' in collecting electricity charges, which were then paid to the electricity authorities. The Court found that these charges amounted to reimbursement and were not subject to Service Tax. Thus, the demand was set aside. Maintenance Charges Collected from Tenants The appellant accepted the liability for Service Tax on maintenance charges and had already paid the amount. The Court confirmed this demand but adjusted the amount already paid against the liability. Renting of Immovable Property Service The appellant contended that the demand was wrongly calculated and provided a Chartered Accountant's certificate supporting their recalculated liability. The Court remanded the issue for verification and re-quantification based on the appellant's submission. Extended Period of Limitation The Court observed that the appellant regularly filed returns and did not suppress information, thus the invocation of the extended period of limitation was not justified. SIGNIFICANT HOLDINGS The Court remanded the issue of Service Tax under 'technical inspection and certification service' for recalculation, considering excess payments and CENVAT Credit. It set aside the demand for services rendered by the Japan branch and the electricity charges collected from tenants. The demand for maintenance charges was upheld, with adjustments for payments already made. The issue of Service Tax on renting of immovable property was remanded for re-quantification. The Court held that the extended period of limitation was not applicable.
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