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<h1>Tribunal rules in favor of appellants, setting aside service tax demand</h1> The tribunal ruled in favor of the appellants, setting aside the demand for service tax and interest. The decision was based on the lack of evidence ... Demand of service tax from the erstwhile partner of the firm - allegation that appellants/partner have collected amount from a purchaser of the flat - allegation is that the firm received ₹ 1.50 lakhs as service tax on 25.7.2011 in regard to the amount of ₹ 6.60 lakhs which was the balance to be paid by Shri Gangadharan who purchased the flat - Held that:- Merely because the appellant D. Prabhu had written a letter dated 13.7.2010 requesting the purchase to pay up the balance amount, the demand has been raised against the appellants herein - there is no logic of the department to issue such a notice against the appellants herein merely basing upon the letter written by the appellant when they were partners of the firm. The records show that the balance amount was paid by the purchaser of the flat by way of demand draft in favour of Shri Thiyagarajan, who continued to be the partner of the firm. The same evidences the payment made by the purchaser to the firm / Thiyagarajan. The demand of service tax made against the appellant is without any factual or legal basis - appeal allowed - decided in favor of appellant. Issues:Appeal against demand of service tax and interest for amount collected from a flat purchaser.Analysis:The appellants, former partners of a construction firm, were alleged to have collected service tax from a flat purchaser. The demand was based on a letter written by one of the appellants to the purchaser instructing payment of the balance amount. However, the appellants had exited the partnership before the payment was made. The appellant argued that the purchaser paid the amount to the partnership firm, not to the individual partners. Evidence showed the payment was made to the continuing partner of the firm, not to the appellants. The tribunal found the demand baseless as the appellants were no longer part of the firm when the payment was made. The tribunal concluded that the demand lacked factual and legal basis and set it aside, allowing the appeals with consequential relief.Conclusion:The tribunal ruled in favor of the appellants, setting aside the demand for service tax and interest. The decision was based on the lack of evidence supporting the allegation that the appellants collected the amount from the flat purchaser after they had exited the partnership firm. The tribunal emphasized that the payment was made to the remaining partner of the firm, not to the appellants, rendering the demand unjustified and without legal merit.
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