CESTAT Disallows Cum-Tax Benefit Claim u/s 67 (2) of Finance Act on Non-Payment of Service Tax to Clients [Read Order]

In a recent case, the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) disallowed thecum-tax benefit claim under section 67 (2) of the Finance Act, 1994 on non-payment of service tax to clients.

M/s. SBM Udyog, the Appellant has not enclosed a copy of the Order in original (OIO) because of which the Tribunal is not able to make out how the Adjudicating Authority has confirmed the demands and what evidence was placed by the Appellant before him and whether they were considered or not considered by the Adjudicating Authority.

The appellant stated that they are claiming that in many cases they did not receive the full payment from their clients because of which they treated only the part received amount as liable for Service Tax and paid the Service Tax. They also claimed that in some cases, they have not charged any Service Tax on their clients. In such cases, they are seeking cum-tax benefit in terms of Section 67 (2) of the Finance Act, 1994.

Section 67(2) provided for treating the amount charged by the service provider as inclusive of service tax payable unless it is specifically mentioned in the documents. The benefit can be allowed when the appellant discharged the entire service tax along with interest.

Since all this exercise to arrive at the quantum of Service Tax cannot be taken up by the Tribunal at this stage, the single-member bench comprising Mr R Muralidhar, (Judicial) remanded the matter to the Adjudicating Authority. 

The CESTAT directed the appellant to submit all their documentary evidence before the Adjudicating Authority which will follow the principle of natural justice and pass a considered order within 4 months.

To Read the full text of the Order CLICK HERE

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