Mere Label on Payment receipt as ‘Security Deposits’ not Relevant Evidence: CESTAT orders Fresh Adjudication on Vodafone Idea’s Service Tax Evasion Case [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ordered fresh adjudication in the case of Vodafone Idea’s service tax evasion case and observed that mere label on the payment receipt as ‘security deposits’ is not relevant evidence.

It appeared that the appellant, M/s Vodafone Idea Ltd, has not assessed and paid appropriate service tax in respect of the services being rendered by them. This is manifest when the service tax and education cess paid in respect of services rendered is juxtaposed with the gross value of service received during the financial year 2004 – 2005, 2005 – 2006 and 2006 – 2007. The appellant has incorrectly computed the service tax by not taking into account the entire gross value of service rendered and received.

It appeared that the appellant has wilfully suppressed the value of taxable services with an intention to evade payment of service tax. But for the timely investigations conducted by the department, the entire gamut of evasion of service tax by the appellant would not have come to light. Hence Show Cause Notice was issued proposing to demand service tax to the tune of Rs.8,71,60,499/- (inclusive of education cess) along with appropriate interest on a differential taxable value of Rs 77,59,83,198.06 and for imposing penalty.

Advocate Krithika Jaganathan for the appellant, submitted that the demand is based entirely on the differential value arising out of the revenue figures furnished in the Trial Balance as compared to the value of taxable services as furnished in the ST-3 returns by the appellant. 

A Two-Member Bench comprising P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “We find that the appellant has not produced any evidence to show that ‘security deposits’ were indeed refunded and not retained by them. Further whether they were refunded in full or partially, whether interest was paid to the customers for the deposit etc.”

“As per Section 73A(2) of the Finance Act, 1994 monies collected as a tax, even if wrongly done, has to be deposited to Government. We find that once again while the appellant is strong on making inferences and assertions, they were weak on submitting factual replies resulting in a decision that is adverse to them, based on charges that are uncontroverted factually” the Bench noted.

Hence the Tribunal remanded the matter back to the Original Authority for de novo adjudication.

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