In a significant case, the New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax cannot be determined without clarifying the category of service under which the said amount can be attributed.
M.P. Audyogik Kendra Vikas Nigam (Indore) Ltd, the appellant/assessee faced a discrepancy during an audit and reconciliation of figures of amounts received against various financial services shown in the profit and loss accounts and ST-3 returns pertaining to the year 2012–13. A difference was found between the taxable value in the profit and loss account and the ST-3 returns. A show cause notice was issued demanding service tax for various charges totalling ₹30,215/-, which was later confirmed by the adjudicating authority.
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An appeal was filed by the assessee before the Commissioner (Appeals) and the matter was remanded back for fresh adjudication. On remand, the adjudicating authority dropped the demand of ₹2,89,086/-, but confirmed the demand of ₹30,215/- along with interest and penalty in terms of section 78 of the Finance Act, 1994. Against this demand, the assessee filed an appeal before the Commissioner (Appeals), who rejected the appeal. The assessee has challenged the order passed by the Commissioner (Appeals) before the Tribunal.
The assessee contended that the nature of service on which demand of service tax has been confirmed are either exempted services or no service element is involved and therefore the service tax demand on Road Cutting Charges, Land Application Processing Charges, and Street Light Charges are liable to be set aside.
The Tribunal observed that differential value of service tax has been included by the revenue on the ground that the assessee had justified sum of ₹25,27,169/- only out of the total taxable value shown as Rs.25,83,338/- and therefore on the amount of ₹56,169/-, service tax is leviable. It appears that amount of Rs.25,83,338/- has been directly taken from Note 16 of the balance sheet, whereas the assessee had taken the amount as per the Ledger records.
The assessee contended that no service tax can be determined without clarifying the category of service under which the said amount can be attributed. Consequently, the service tax on account of differential value cannot be sustained, added the Tribunal.
The single Bench of Binu Tamta (Judicial Member) has observed that the amount of Rs.25,83,338/- has been directly taken from Note 16 of the balance sheet, whereas the assessee had taken the amount as per the Ledger records. The revenue was required to clarify the service under which the differential amount of ₹56,169/- was chargeable.
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The Tribunal viewed that the revenue has taken the details of the valuation from the balance sheet and the profit and loss account maintained by the assessee. Since there is no suppression justifying the invocation of the extended period of limitation. The Tribunal allowed the appeal. Ankur Upadhyay appeared for assessee and Rohit Issar appeared for the respondent.
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