Invoice-wise proof governs service tax disputes; collected tax, disputed deductions, extended limitation and penalties were upheld.

Service tax collected on invoices was treated as remittable to the Government, and consolidated deductions were rejected because the records required invoice-wise scrutiny. Claims for labour services, security of movable property, dues collection charges and bad debts were not accepted on a blanket basis; the assessee was required to produce invoice-wise and contract-wise proof, with supporting agreements and confirmations to be verified by the original authority. On limitation and penalties, the Tribunal noted admissions, parallel invoices and record inconsistencies as indicators against bona fides, and held that extended limitation and statutory penalties were attracted.

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Issues: (i) Whether service tax collected on the invoices issued by the respondents was liable to be remitted to the Government and whether the Commissioner (Appeals) erred in granting deductions on a consolidated basis instead of invoice-wise scrutiny; (ii) whether the claims relating to labour services, security of movable property, dues collection charges and bad debts warranted acceptance without supporting invoice-wise and contract-wise proof; (iii) whether extended limitation and penalties under the Finance Act were attracted.

Issue (i): Whether service tax collected on the invoices issued by the respondents was liable to be remitted to the Government and whether the Commissioner (Appeals) erred in granting deductions on a consolidated basis instead of invoice-wise scrutiny.

Analysis: The demand was founded on the respondents' own invoices, tabulated invoice-wise, date-wise and year-wise in the show cause notice. The respondents did not dispute the invoice details in Annexure B, but relied on year-wise or consolidated figures which varied substantially at different stages. Since service tax is collected invoice-wise and is payable on the basis of total collection for the relevant period, the authorities were required to examine the transactions on that basis and not on general estimates. Amounts shown as collected could not be retained by the respondents without remittance merely because later disputes were raised.

Conclusion: The respondents were required to remit the service tax collected on the invoices, and the approach of granting blanket deductions without invoice-wise verification was not accepted.

Issue (ii): Whether the claims relating to labour services, security of movable property, dues collection charges and bad debts warranted acceptance without supporting invoice-wise and contract-wise proof.

Analysis: The Tribunal found force in the Revenue's case that the claim of labour services was inconsistent with the surrounding material, including parallel invoices, the abrupt rise in labour billing, and admissions indicating that security services were actually rendered. At the same time, the Tribunal considered it possible that some labour-service transactions may exist and therefore required the respondents to produce agreements, contracts and client confirmations invoice-wise. As regards movable property and other exempt or non-taxable claims, the Tribunal directed the original authority to examine each invoice and supporting agreement and to extend benefit only where the claim was proved. For bad debts, the respondents were directed to furnish invoice-wise particulars and proof of non-recovery.

Conclusion: The respondents' claims were not accepted wholesale and were made subject to strict invoice-wise proof and verification by the original authority.

Issue (iii): Whether extended limitation and penalties under the Finance Act were attracted.

Analysis: In view of the recoveries, parallel invoices, admissions of the proprietor and personnel officer, and the manner in which services were reflected in the records, the Tribunal held that the respondents had not established a bona fide case against invocation of the longer limitation period. The Tribunal also held that the facts justified penalty for non-payment and related defaults.

Conclusion: Extended period of limitation was held applicable and penalties under Sections 76, 77 and 78 were held imposable.

Final Conclusion: The Tribunal sustained the Revenue's case on limitation, penalties and remittability of collected tax, while directing invoice-wise verification of disputed deductions and exempted claims by the original authority.

Ratio Decidendi: Service tax disputes based on collected invoices must be decided invoice-wise, and deductions or exemptions cannot be allowed on broad consolidated figures without supporting documentary proof; where records and admissions indicate suppression or misdescription, extended limitation and statutory penalties are attracted.

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