2017 (7) TMI 682 - AT - Service Tax

Quantum of penalty - reverse charge - Business Auxiliary Services - It is the contention of Revenue that the computation of the amount due for 2006-07 is incorrect arising from improper appreciation of the facts in the SCN - Held that - We do not find any evidence on record to enable us to decide the veracity of this claim of Revenue. However we observe that the confirmed demand reflects the tax computed for 2005-06 which is not consistent with the findings in the impugned order. It is therefore necessary that the value of taxable services would need to be determined afresh - matter is remanded back to the original authority for the limited purpose of computation of the tax and the interest and for imposing penalties thereon - appeal allowed by way of emand.

Issues:
1. Appeal against order confirming demand of taxes for 'business auxiliary service' and services by 'commission agents' under section 66A of Finance Act, 1994.
2. Imposition of penalties under section 78 of Finance Act, 1994 for non-payment of taxes.
3. Allegation of incorrect computation of tax amount for 2006-07 and improper appreciation of facts in the show cause notice.
4. Discrepancy in the value of taxable services and tax rates for different years.
5. Need for fresh determination of taxable services value and compliance with penalty provisions.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI pertains to an appeal filed by the Revenue against an order confirming the demand of taxes for 'business auxiliary service' and services by 'commission agents' under section 66A of the Finance Act, 1994. The impugned order also imposed penalties under section 78 of the Act for non-payment of taxes. The Revenue contended that the computation of the tax amount for 2006-07 was incorrect due to improper appreciation of facts in the show cause notice. The adjudicating authority had directed the abatement of penalty, which the Revenue argued was not in conformity with the statute.

Upon review, the Tribunal noted that the demands for the years 2004-05 and 2005-06 were dropped as section 66A was not legislated until June 18, 2006. However, the confirmed demand for 2006-07 was based on discrepancies in the value of taxable services and tax rates for different years. The Revenue claimed a short recovery of tax due to the application of the tax computation for 2005-06 in the impugned order, resulting in the adoption of a lower tax rate. The Tribunal observed that the tax computed for 2005-06 was not consistent with the findings in the impugned order, requiring a fresh determination of the value of taxable services by the original authority.

The Tribunal directed the original authority to recompute the tax amount, interest, and penalties, ensuring compliance with the statutory provisions, particularly section 78 of the Finance Act, 1994, and the circumstances for the abatement of penalties as permissible under the law. The matter was remanded back to the original authority for the limited purpose of computation and imposition of taxes and penalties, emphasizing the need for accurate determination and adherence to legal provisions.

In conclusion, the judgment highlights the importance of proper computation of tax amounts, adherence to statutory provisions, and the necessity for a fresh determination of taxable services value to rectify discrepancies and ensure compliance with penalty regulations under the Finance Act, 1994.

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