9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 971 - AT - Service TaxLevy of service tax on GTA services under reverse charge mechanism - demand confirmed on the ground that no documents were furnished to substantiate the Appellant s claim - HELD THAT - It is observed that the demand of service tax in this case has been confirmed solely on the basis of comparison of books of accounts with service tax returns without analyzing the reasons for the difference. It is observed that during the underlying period the books of accounts of the appellant record the expenses on accrual basis whereas under reverse charge mechanism the service tax is payable on payment basis. Hence service tax cannot be calculated on the basis of the figures reported under the head Freight Charges . The Appellant furnished various certificates from Chartered Accountants to substantiate that in those specific cases demand of service tax does not arise. It is observed that such certificates were provided by independent chartered accounts after verification of books of accounts for obtaining an independent and unbiased opinion regarding correctness of the demand of service tax thereon. In the impugned order however the ld. adjudicating authority without commenting upon the correctness of such certificates completely brushed them aside on the ground that such certifications ought to have been obtained only by such Chartered Accountants who are Statutory Auditors of the Appellant without providing any legal basis for such requirement. The reason given by the ld. adjudicating authority to reject the CA certificate not agreed upon. Also the independent CA Certificates have been issued based on verification of books of accounts of the Appellant and they certify that the demand is not sustainable. Interest and penalty - HELD THAT - Since the demand of service tax is not sustainable the question of demanding interest and imposing penalty does not arise and accordingly the same is set aside. Conclusion - The demand confirmed vide the impugned order solely based on comparison of books of accounts with service tax returns without analyzing the reasons for the difference is not sustainable. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment were:
2. ISSUE-WISE DETAILED ANALYSIS Demand Based on Comparison of Books and Returns - The relevant legal framework includes the Finance Act, 1994, particularly the provisions related to service tax under the Reverse Charge Mechanism. - The Court observed that the demand was confirmed solely on the basis of comparing the appellant's books of accounts with service tax returns, without analyzing the reasons for discrepancies. The appellant argued that their accounts were maintained on an accrual basis, while service tax under RCM is payable on a payment basis. - The Court found that service tax cannot be calculated based on figures reported under 'Freight Charges' without considering the basis of accounting differences. Exempt Consignments - The appellant claimed exemptions for consignments with values below specified thresholds, as per Notifications No. 34/2004-ST and No. 25/2012-ST. - The Court acknowledged the exemptions and the Chartered Accountant's certification of the exempt amount, supporting the appellant's claim. Transportation by Rail - The definition of GTA services under Section 65(105)(zzzp) of the Finance Act, 1994, excludes transportation by rail from its ambit. - The Court agreed with the appellant that such services should not be taxable under RCM for GTA services, thus supporting the appellant's claim. Incidental Expenses - The appellant argued that incidental expenses, such as handling and loading, were not within the ambit of GTA services, and service tax was already paid by the service provider under the forward charge mechanism. - The Court found the appellant's argument valid, noting that service tax should not be paid twice on the same service. Provisions in Books of Accounts - The appellant contended that provisions in the books of accounts were not actual expenses and thus not subject to service tax. - The Court agreed, recognizing that these were merely accounting provisions and not actual transactions liable for service tax. Validity of Chartered Accountant Certificates - The appellant provided certificates from Chartered Accountants to substantiate their claims. - The Court emphasized the evidentiary value of expert certificates and criticized the adjudicating authority for dismissing them without a legal basis or contrary expert opinion. 3. SIGNIFICANT HOLDINGS - The Court held that the demand based solely on the comparison of accounts and returns, without analyzing discrepancies, was unsustainable: "We hold that the demand confirmed vide the impugned order solely based on comparison of books of accounts with service tax returns, without analyzing the reasons for the difference, is not sustainable." - The Court recognized the validity of the appellant's claims regarding exempt consignments, transportation by rail, incidental expenses, and accounting provisions, as supported by Chartered Accountant certificates. - The Court set aside the demand for service tax, interest, and penalties, allowing the appeal with consequential relief: "Since the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise and accordingly, we set aside the same."
|
