2024 (4) TMI 907 - AT - Service Tax

Non-payment of service tax - suppression of value of taxable service provided - demand confirmed for the reason that the appellant had accepted their liability for payment of service tax and they had disputed the demand only on the account of quantification in respect of which both the authorities have concluded that the appellant had failed to substantiate their claim by producing the relevant records for verification. HELD THAT - The major deduction which has been claimed by the appellant from the gross value of taxable services is on the account of services provided by them before the same became taxable specifically the services under the category of Supply of Tangible Good services. These service became taxable with effect from 16.05.2008. Appellant have claimed that the value of the taxable services provided by them under this category for the period prior to levy of service tax. Was about Rs 84, 17, 327.67. If the claim of the appellant is admitted the gross value of taxable service will be reduce substantially. Appellants had made this claim before the adjudicating authority and the first appellate authority and had submitted a chart duly certified by a Chartered Accountant showing that the during the entire period of dispute the invoices issued by the appellant were in respect Truck Tractor Dumper Hiring Charges on some of the invoices even the registration number of vehicle was also mentioned. The coverage of the services under the category of taxable service was gradually widened every year. Appellants have claimed that the major chunk of the services provided by them were within this category and specified as taxable service only from 16.05.2008. As no finding has been rendered by the adjudicating authority or the first appellate authority on this aspect while adjudicating the case the matter needs to be remanded back to the original authority for recording specific findings on this issue. The matter remanded back to the original authority for reconsideration of the issue to the extent of allowing deduction of Rs. 84, 17, 327.67/- which appellant claim were received by them against the services of Supply of Tangible Goods service prior to 16.05.2008 the date from which the service was made taxable - Appeal is partly allowed to the extent of remanding the matter to original authority.

Summary

Issues Involved:
1. Demand of Service Tax
2. Invocation of Extended Period
3. Revenue Neutrality
4. Interest and Penalty

Summary:

1. Demand of Service Tax:
The appellant was engaged in providing taxable services and was alleged to have not paid service tax amounting to Rs. 12,88,132/- for the period 2005-06 to 2009-10. The appellant contested the quantification of the demand. The authorities confirmed the demand as the appellant failed to substantiate their claim with relevant records. The appellant's plea for deduction of certain amounts from the gross turnover was not accepted due to lack of evidence.

2. Invocation of Extended Period:
The adjudicating authority invoked the extended period u/s 73(1) of the Finance Act, 1994, citing suppression of facts by the appellant. The appellant did not contest the show cause notice on merits and admitted liability for service tax but disputed the quantification.

3. Revenue Neutrality:
The appellant argued that the demand was revenue neutral. However, the authorities did not find merit in this argument as the appellant failed to provide substantial evidence to support their claim.

4. Interest and Penalty:
The adjudicating authority, invoking Section 80 of the Finance Act, 1994, did not impose any penalty on the appellant due to their ignorance of law and unawareness. The demand for interest was upheld as per Section 75 of the Finance Act, 1994. The appellant's contention regarding the waiver of penalties and exclusion of service tax component from the gross receipts was not substantiated with evidence.

Remand:
The matter was remanded back to the original authority for reconsideration of the issue of allowing deduction of Rs. 84,17,327.67/- claimed by the appellant for services provided prior to the levy of service tax on "Supply of Tangible Goods service" from 16.05.2008. The adjudicating authority was directed to adjudicate the matter within three months following the principles of natural justice.

Conclusion:
The appeal was partly allowed, with the matter remanded to the original authority for reconsideration on specific issues, while upholding the demand for the remaining amount.