2012 (4) TMI 381 - AT - Service Tax

Tribunal overturns Service Tax liability decision, emphasizes fair assessment

The Tribunal set aside the order confirming the Service Tax liability as Business Auxiliary Service and remitted the matter back to the adjudicating ... Stay Petition for waiver of Service Tax demand,interest thereof and equivalent amount of penalty - Service Tax liability on the ground that they have been providing Business Auxiliary Service – assessee submitted produced a Chartered Accountant’s certificate giving various details before lower authorities to indicate that the entire amount as indicated in the balance sheet as an income has not come from the services rendered by them but could be loan and other income – Held that:- the adjudicating authority should have given a finding on records and the documents supplied by the assessee, the entire issue needs to be re-considered by lower authority - set aside the impugned order and remit the matter back to re-consider it afresh Issues:Stay petition for waiver of Service Tax, interest, and penalty - Confirmation of Service Tax liability as Business Auxiliary Service - Consideration of submissions and documents by lower authorities - Discrepancy in income source - Appellant's activities as recovery agent - Need for re-consideration by adjudicating authority.Analysis:The appellant filed a Stay Petition seeking waiver of Service Tax, interest, and penalty amounting to Rs.40,79,590/-, along with additional interest and penalty. The adjudicating authority and the first appellate authority upheld the Service Tax liability, considering the appellant to be providing Business Auxiliary Service. The appellant argued that their activities as recovery agents and business support services were misinterpreted, supported by a Chartered Accountant's certificate indicating a discrepancy in the income source reported in the balance sheet. The lower authorities allegedly failed to properly evaluate these submissions.The Revenue contended that the appellant's own admission of being engaged by banks for verifying loan applicants' antecedents classified them under Business Auxiliary Service, as reflected in their Service Tax registration. The issue of the appellant's liability under various heads was raised for the first time during the proceedings before the appellate authority. The Tribunal noted the Chartered Accountant's certificate provided by the appellant and the acknowledgment of the same by the adjudicating authority. However, it was observed that a definitive finding on this crucial issue was lacking, necessitating a re-consideration by the lower authority.After considering both parties' submissions, the Tribunal decided to set aside the impugned order and remit the matter back to the adjudicating authority. The purpose was to re-evaluate the issue afresh, taking into account all evidence, including the appellant's submissions and the Chartered Accountant's certificate. The Tribunal emphasized the importance of a thorough assessment of the factual matrix surrounding the appellant's income source and activities as a recovery agent. The re-consideration was deemed necessary to ensure a fair examination of the case in line with the principles of natural justice.