The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in the matter where the demand of service tax alleging tax suppression without evidence, remanded the matter for denovo adjudication. It was evident that the reporting of income in the P &L being irrelevant for the determination of service tax payable, the basis of the impugned assessment is erroneous.
M/s Span Structure, the appellant is registered with the Department from 29.05.2007 for providing taxable services under the ‘Consulting Engineer Services’ category. Investigations were undertaken by DGGI, Lucknow Zonal Unit, based upon the intelligence that the appellant is engaged in providing taxable services and suppressing the value of taxable services, thus evading the payment of service tax.
During the search conduct a statement of Omkar Verma, Proprietor of the appellant was recorded on the spot and Shri Verma in his statement stated that estimated liability of service tax amounting to Rs.25 Lakhs was due and submitted post-dated cheques and challans amounting to Rs.25 lakhs.
After scrutiny of records and investigations, revenue viewed that the appellant has been providing services of ‘Consulting engineer services’ but has not raised the bills as stated in his statement. As per Rule 3 of Point of Taxation Rules, 2011 when the invoice is not raised within the time specified in Rule 4A of Service Tax Rules, 1944 then the point of taxation shall be the date of completion of provision of service.
As per Section 68 (1) of the Finance Act, 1994, every person providing taxable service to any person shall pay service tax at the rate specified in Section 66B in such manner and within such period as may be prescribed under Rule 6 of the Rules.
Thus, by not paying the service tax on these amounts appellant has not paid/short-paid paid service tax amount in the manner as determined by Rule 3 of Point of Taxation Rules, 2011, the appellant has thus short-paid the service tax of Rs.25,01,176/- by willfully suppressing the facts and have violated the provisions of Section 68 (1) of the Act read with Rule 6 of the Rules.
Appellant is providing services to various Government Departments and all the payments received by them are reflected in Form 26AS of the Income Tax Act, 1961. Demand is barred by limitation as nothing was misstated or suppressed. It was evident from the record that balance sheet figures, ST-3 returns and figures of Form 26AS all conformed with each other.
The demand has been made by concealing those invoices on which service tax was already paid and deposited by the appellant. It was found that no investigations were made against the persons/parties to whom these invoices were raised nor did they confirm the figures from Form 26AS.
The respondent relied upon the P and L accounts to conclude that the amounts reflected therein have not been offered for service tax. The reporting of income in the P &L being irrelevant for the determination of service tax payable, the basis of the impugned assessment is erroneous.
A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) remanded the matter to the original authority to undertake the exercises of re-conciliation.
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