The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand on Construction Services and observed that calculation sheets are not proof to assume the collection of service tax.
M/s Pearls Buildwell Infrastructure Limited, the appellants are engaged in Construction Services related to road laying.
On receipt of an intelligence that the appellants have collected service tax from their customers and have not deposited the same to the exchequer. A show-cause notice, was issued demanding duty of Rs.97,71,146.68/- along with interest while seeking to impose penalty under Sections 76, 77 and 78 of Finance Act, 1994 and proposing to adjust Rs.10,20,994/- of duty and Rs.55,731/- of interest already deposited by the Party.
The counsel for the appellant submitted that entire findings of the Commissioner were based on few calculation sheets found with the appellant during the search; the Commissioner has completely ignored the Certificate by their customers M/s PACL India Limited; during the investigation stage itself, they have clarified to the authorities vide letters that they have not charged any amount representing as service tax.
The Representative for the Department reiterated the findings of the impugned order as far as the duty confirmed is concerned and reiterated the grounds of appeal in respect of the portion of the demand dropped vide the impugned order.
A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “It is not clear from the case records whether the Department has challenged the certificate issued by M/s PACL. The allegation is sought to be established on the basis of loose calculation sheets. During the hearing, Counsel for the appellants has demonstrated that the said sheets cannot be corroborated with the invoices issued. Moreover, the sheets are isolated and cannot be extrapolated to assume that service tax has been collected by the appellants.”
The facts of the case and the case records indicate that the appellants have not collected any amount representing as service tax from their customers i.e. M/s PACL. In addition to the above, there is a categorical certificate given by M/s PACL indicating that the appellants have not charged any service tax and have not paid any amount representing as service tax to the appellants. Thus, we are of the considered opinion that the impugned order cannot be sustained and is liable to be set aside” the Bench concluded.
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