2018 (9) TMI 1720 - AT - Service Tax

Tribunal Remands Case for Lack of Verification Reports, Emphasizes Natural Justice

M/s. Lion 3 Protection Force Versus CCE & ST, Puducherry

The Tribunal allowed the appeal by remanding the case to the adjudicating authority due to the absence of supplied verification reports, emphasizing the ... Security agency service - appellants had shown income by way of contract amounts received in for the years 2002-03 2003-04, 2004-05 and 2005-06 which allegedly was not declared in their statutory ST-3 returns - Department took the view that the said contract amount received and shown as income in the gross amount is nothing but charges received for security agency services rendered and provided by them - principles of natural justice. Held that:- In para 9.4 the authority has referred to the fact of having sent the copies of bills produced by appellants to the jurisdictional Range Superintendent; that the jurisdictional Range Superintendent made verification with M/s. Achariya Educational Public Trust; that it has been clarified by the said institution that appellants have provided services of security force and not manpower supply. There is no indication as to whether copy of the said report was provided to the appellant to offer their response and or rebuttal of the same. This being so, it is found that the basic principles of natural justice have been given the go by. Interests of Justice will require that the appellant is given a copy of the said verification report and also given sufficient opportunity to offer their comments / rebuttals on the same within a reasonable time - appeal allowed by way of remand. Issues:1. Alleged non-declaration of income in statutory returns.2. Demand of tax with interest and penalties under Finance Act, 1994.3. Discrepancy in figures between ST-3 returns and income-expenditure accounts.4. Adjudication authority's confirmation of tax demand and penalties.5. Lack of supply of verification report and related documents to the appellant.6. Violation of natural justice principles.7. Reference to relevant case laws.8. Limitation period for proceedings.Analysis:1. The appellants, a security services provider, faced a demand for undeclared income for certain years. The department alleged non-disclosure of income from security agency services in statutory returns, leading to a show cause notice (SCN) and imposition of tax, interest, and penalties under the Finance Act, 1994.2. The discrepancy between the figures in ST-3 returns and income-expenditure accounts was attributed to amounts received for temporary labor supply services, with the appellants claiming no service tax liability for certain periods. Despite submissions, the adjudicating authority upheld the tax demand and penalties, leading to an appeal before the Commissioner (Appeals).3. During the hearing, the appellant's advocate raised concerns regarding the lack of specificity in the SCN, absence of supplied verification reports, and violation of natural justice principles. The advocate cited relevant case laws to support the appellant's arguments and highlighted the limitation period for the proceedings.4. The Tribunal found merit in the appellant's contention regarding the absence of supplied verification reports, emphasizing the need for natural justice principles to be upheld. The matter was remanded to the adjudicating authority for providing the appellant with the verification report, allowing them to respond and decide the case afresh after a personal hearing.5. The Tribunal allowed the appeal by way of remand, directing the adjudicating authority to address the appellant's comments, responses, and rebuttals in a comprehensive manner and pass a speaking order covering all aspects. The decision aimed to ensure fairness, adherence to natural justice, and proper consideration of the appellant's submissions in the adjudication process.