2018 (11) TMI 1084 - AT - Service Tax

Tribunal overturns service tax demand due to lack of evidence supporting customer connections.

The Tribunal ruled in favor of the appellant in a case concerning the demand of service tax on cable operator services without factual basis. The ... Non-discharge of service tax - demand of service tax has been confirmed by the Commissioner in the revision order merely basing upon the documents recovered from SCV - Held that:- There is no evidence brought out that the appellant has provided services to 550 customers and no investigation has been done at the level of customers’ end. So also there is no document to show that the appellant has received charges for all the connections provided by him. Service tax can be demanded only on a consideration received by the service provider - Since there is no evidence to establish that the appellants have received consideration for all 550 connections, the demand raised by assuming that the appellant has provided 550 connections to various subscribers is without any factual basis. Appeal allowed - decided in favor of appellant. Issues:Demand of service tax without factual basis.Analysis:The case involved an appeal regarding the demand of service tax on cable operator services provided by the appellant without a factual basis. The officers visited the premises based on instructions to verify details of cable operators receiving television signals from a specific provider. It was found that the appellant was receiving services but not discharging service tax. A show cause notice was issued, and after due process, the original authority confirmed a demand along with penalties. A revision notice was then issued as the original authority had dropped a major portion of the demand. The revisionary authority confirmed a balance service tax demand and imposed penalties. The appellant challenged this before the Tribunal.The appellant argued that the demand was baseless as the evidence showed a lower amount due. The revision order relied on documents seized from the service provider to calculate the total taxable value, assuming the appellant provided 550 connections. The appellant contended that there was no proof of providing services to 550 customers or receiving charges for all connections. The appellant's counsel prayed for setting aside the demand.The respondent supported the findings, stating that the registers from the service provider indicated the appellant had taken 550 connections and paid for them, justifying the demand and penalties. The respondent argued that the appellant suppressed facts to evade tax, justifying the penalties.After hearing both sides and reviewing the records, the Tribunal found that the demand was based solely on documents from the service provider, assuming the appellant provided 550 connections without evidence of services to customers or receiving charges for all connections. As service tax can only be demanded on consideration received, and lacking evidence of consideration for all connections, the demand was deemed without factual basis. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief.In conclusion, the Tribunal ruled in favor of the appellant, finding no merit in the demand raised without factual basis. The order was set aside, and the appeal was allowed with any consequential relief.