Tribunal remanded case for demand verification & computation due to unsustainable prior demand, rejected basis change plea.

The Tribunal allowed the appeal by remanding the case to the adjudicating authority for verification and computation of the demand. The demand prior to the partners' demise was deemed unsustainable due to the firm's reconstitution, and the inclusion of refunded amounts in taxable services required verification. The plea to change the basis of service tax payment was rejected as the option had already been exercised for the financial year. The impugned order was set aside, providing the appellant with an opportunity for a personal hearing.

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Issues:
1. Discharge of service tax liability by air travel agent service provider.
2. Validity of demand of service tax and penalty.
3. Dissolution of partnership firm due to partners' demise.
4. Inclusion of refunded amount in total taxable service.
5. Option to pay service tax on commission basis.
6. Remand to adjudicating authority for verification and computation of demand.

Analysis:

1. The case involved the appellants, registered with the Service Tax Department for providing air travel agent service, facing a show cause notice for alleged short-payment of service tax. The original authority confirmed a demand of &8377; 5,65,188/- along with interest and imposed a penalty under sections 76 and 78 of the Finance Act, 1994. The Commissioner (Appeals) set aside the penalty but upheld the demand of service tax along with interest, leading the appellants to appeal before the Tribunal.

2. The appellant's counsel argued that the original partnership firm ceased to exist after the demise of the partners and was reconstituted with new partners, thus contesting the demand prior to the partners' demise. Additionally, the inclusion of an amount refunded to customers in the taxable service was disputed. The appellant also sought the option to pay service tax on a commission basis, which was rejected as the option had already been exercised.

3. The Tribunal, considering the legal position, held that the demand prior to the partners' demise was not sustainable due to the firm's reconstitution and new service tax registration. The matter of the refunded amount was deemed to require verification and remanded to the adjudicating authority. The plea for changing the basis of service tax payment was rejected as the option had already been chosen for the financial year.

4. Ultimately, the Tribunal set aside the impugned order and allowed the appeal by way of remand to the adjudicating authority for verifying and computing the demand of service tax based on the discussed issues. The adjudicating authority was directed to consider the non-sustainability of the demand prior to the partners' demise and the inclusion of the refunded amount in the taxable services, providing the appellant an opportunity for a personal hearing.

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