No intention to treat consideration received as Cum-Tax Amount: CESTAT disallows Benefit of Quantification of Service Tax Demand [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) disallowed the benefit of quantification of service tax demand as there was no intention to treat consideration received as cum-tax amount.

Invoking the extended period provisions, the Show Cause Notice was issued on 02.09.2009 for the period April 2004 to March 2009. After due process the Service Tax demand of Rs.10,92,313 along with interest and penalty was confirmed by the Adjudicating authority. On appeal, the Commissioner (Appeal) upheld the Order in Original and dismissed the Appeal. Being aggrieved the appellant is before the Tribunal.

In the normal course, if the Service Tax is not separately collected, the benefit under Section 67(2) should be granted. But in this case, the appellant has carried a firm belief that Service Tax is not payable in terms of Section 64(1) and did not pay the same. They also treated the transactions as exports in their ST 3 Return showing the full Invoice value as turnover and did not pay the Service Tax, on a clear belief that no Service Tax is payable. The Invoice has been raised for the full consideration.

 A Two-Member Bench comprising R. Muralidhar, Member ( Judicial ) and K. Anpazhakan, Member ( Technical ) observed that “Therefore, in view of these factual details, we cannot hold that the appellant had any intention to treat the consideration received as cum-tax amount. They have realized the amount purely for the services rendered only.”

“Hence, the provisions of Section 67(2) cannot be applied in this case. Therefore, we are unable to extend this benefit for quantification of demand” the Bench concluded.

To Read the full text of the Order CLICK HERE

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