2018 (11) TMI 359 - AT - Service Tax

Revenue appeal rejected, penalties set aside for exempted services pending verification

The Revenue's appeal was rejected, affirming the decision of the Commissioner (Appeals) to partially allow the appeal by setting aside penalties and the ... Non-payment of Service Tax - Construction of complex service - allegations were made on the basis of the balance sheet and profit and loss account of the assessee - Held that:- The assessee’s stand that during the period in question they have provided exempted services does not stand considered by the Original Adjudicating Authority. If the assessee has actually provided exempted services no tax can be demanded in respect of the same. Setting aside of the demand on the exempted services is after verification of the entries made by the assessee, by the Adjudicating Authority. Revenue cannot be held to be aggrieved with the said order inasmuch as admittedly exempted services cannot be taxed and such as setting aside of the demand by Commissioner (Appeals) is subject to verification by the Original Authority. Appeal dismissed - decided against Revenue. Issues:1. Taxability of services under the category of 'construction of complex service' without payment of service tax.2. Confirmation of service tax, interest, and penalty by the Original Adjudicating Authority.3. Appeal filed by the Revenue against the order passed by the Commissioner (Appeals).4. Exemption claimed by the assessee for certain services and the verification of payments submitted.Analysis:1. The judgment dealt with the taxability of services provided by the respondent under the category of 'construction of complex service' without payment of service tax. The demand was raised based on the balance sheet and profit and loss account of the assessee for the relevant period. The Original Adjudicating Authority confirmed the service tax, interest, and penalty. On appeal, the Commissioner (Appeals) considered the exemption claimed by the assessee for certain services and the payments submitted. The appeal was partially allowed, setting aside the penalties and the demand of service tax for exempted services subject to verification by the Adjudicating Authority.2. The Commissioner (Appeals) observed that the appellant had taken a stand that some services provided were exempted, and the consideration received for those services should not be taxed. Despite producing a reconciliation statement, the Adjudicating Authority did not consider it. The Appellate Authority set aside the demand for exempted services pending verification of the payments submitted. The judgment emphasized that if the assessee had indeed provided exempted services, no tax could be demanded for those services. The setting aside of the demand was subject to verification by the Original Adjudicating Authority.3. The judgment highlighted that the Revenue was not justified in being aggrieved by the order setting aside the demand for exempted services, as exempted services cannot be taxed. The decision to set aside the demand was contingent upon the verification of entries by the Adjudicating Authority. Additionally, the judgment found no valid reasons to interfere with the Commissioner (Appeals)'s decision to set aside the penalty imposed.4. Ultimately, the Revenue's appeal was rejected, affirming the decision of the Commissioner (Appeals) to partially allow the appeal by setting aside penalties and the demand for service tax on exempted services pending verification. The judgment provided a comprehensive analysis of the taxability of services, the exemption claimed by the assessee, and the procedural aspects of verification and penalty imposition in the context of the appeal.