2013 (6) TMI 799 - AT - Service Tax

Summary

Issues involved:
The issues involved in the judgment are the time bar for demand, liability for service tax, financial difficulties of the appellant, misdeclaration by the appellant, and the requirement for pre-deposit.

Time Bar for Demand:
The appellant argued that the demand is time-barred as the show cause notice was issued after a significant period. However, the Tribunal stated that the question of time bar can only be decided at the final hearing. It was noted that there was a mis-match between the figures in the returns and the books of accounts. The appellant's failure to discharge the service tax liability on the gross amount received was highlighted. The Tribunal emphasized that the liability to pay service tax arises from receiving consideration for services rendered, regardless of whether the service recipient paid the tax. Therefore, the contention regarding time bar was rejected as unsustainable.

Liability for Service Tax:
The appellant contended that they are not liable to pay service tax on the consideration received where the recipient did not pay the tax. However, the Tribunal clarified that if consideration has been received for services, the appellant is liable to pay service tax. They explained that the entire amount received must be treated as cum-tax, and the liability apportioned accordingly. The Tribunal rejected the appellant's argument, stating that the liability to pay service tax is based on receiving consideration, irrespective of the recipient's tax payment.

Financial Difficulties of the Appellant:
The appellant raised concerns about their financial position, requesting leniency due to financial difficulties. The Tribunal acknowledged the financial challenges but noted that the appellant had received consideration for services rendered. Even if the entire amount received was considered cum-service tax, the tax liability would be lower. The Tribunal declined to accept the plea of financial hardship while passing the interim order, emphasizing the need to consider the interests of the Revenue and the balance of convenience.

Misdeclaration by the Appellant:
The Revenue argued that the case involved a clear misdeclaration by the appellant, citing discrepancies between the ST-3 return figures and the books of accounts. They referred to previous Tribunal decisions to support their position on the payment of service tax on the total amount charged for services. The Tribunal agreed with the Revenue's stance and emphasized that expenses incurred for service provision cannot be excluded for the purpose of service tax levy.

Requirement for Pre-deposit:
Considering the lack of a prima facie case against the service tax demand, the Tribunal directed the appellant to make a pre-deposit of a specified amount within a set period. Compliance with the pre-deposit requirement would result in the waiver of the balance of service tax, interest, and penalties, with the recovery stayed during the appeal's pendency. The decision aimed to protect the interests of the Revenue and maintain the balance of convenience.