2019 (11) TMI 835 - AT - Service Tax

Tribunal confirms tax liabilities, penalties reduced under Finance Act. Legal services subject to service tax.

The Tribunal confirmed the rejection of the declaration filed under the VCES Scheme, evasion of service tax, disallowance of Cenvat Credit, demand on a ... Rejection of declaration filed in terms of the VCES Scheme - Business Auxiliary Service - imposition of penalty u/s 78 - HELD THAT:- The appellant is not disputing the service tax liability of ₹ 2,26,560/-. Penalty - HELD THAT:- Inasmuch as the appellant declared the wrong information in VCES declaration, they are liable to penalty in terms of the Section 78 of the Finance Act. However, they had deposited an amount of ₹ 4,63,307/- in terms of VCES declaration even prior to the show cause notice and as such, we accept the learned advocate’s contention that the penalty amount should be reduced to ₹ 2,26,560/- - As such while upholding the confirmation of the said demand, we reduce the penalty equivalent to ₹ 2,26,560/-. CENVAT Credit - HELD THAT:- In the absence of any dispute about the receipt and utilization of the input services in providing output services, the denial on the grounds of non availability of complete address etc. cannot be upheld - demand set aside. Liability of service tax - legal services - HELD THAT:- Learned advocate submits that the same is not being contested and they have also deposited the same alongwith interest. Accordingly the same is confirmed as not contested. As regards penalty of ₹ 10,000/-(ten thousand) imposed under Section 77 of the Act, we set aside the same as the appellant has already been penalized to the extent of 100% in terms of the Section 78 of the Act. Appeal disposed off. Issues:1. Rejection of declaration filed under VCES Scheme2. Evasion of service tax3. Disallowance of Cenvat Credit4. Demand on reverse charge basis5. Confirmation of total demand and penalties6. Imposition of penalty under Section 78 of the Finance Act7. Denial of Cenvat Credit based on technical procedural infirmities8. Confirmation of service tax liability for legal services9. Imposition of penalty under Section 77 of the ActIssue 1: Rejection of declaration filed under VCES SchemeThe appellant filed a declaration under the VCES Scheme in 2013, disclosing additional service tax liability. However, the authorities rejected the declaration and found further evasion of service tax, leading to a show cause notice proposing the rejection of the declaration and confirming the additional tax liability.Issue 2: Evasion of service taxThe authorities found a further evasion of service tax, resulting in a show cause notice against the appellant for rejecting the VCES declaration and confirming the additional tax liability, primarily based on disclosures in the Income Tax Returns.Issue 3: Disallowance of Cenvat CreditThe authorities proposed to disallow Cenvat Credit on the grounds of incomplete invoices, leading to a denial of credit amounting to Rs. 1,76,945, despite no dispute regarding the receipt and utilization of input services for output services.Issue 4: Demand on reverse charge basisAn amount of Rs. 7,253 was demanded on a reverse charge basis for legal services procured and received by the appellant.Issue 5: Confirmation of total demand and penaltiesThe Commissioner confirmed a total demand of Rs. 6,97,120, including penalties imposed on the appellant, along with the denial of Cenvat Credit and confirmation of the reverse charge demand for legal services.Issue 6: Imposition of penalty under Section 78 of the Finance ActThe appellant was penalized under Section 78 of the Finance Act for declaring wrong information in the VCES declaration, leading to a penalty reduction based on the amount already deposited prior to the show cause notice.Issue 7: Denial of Cenvat Credit based on technical procedural infirmitiesThe Tribunal set aside the denial of Cenvat Credit amounting to Rs. 1,76,945, as there was no dispute regarding the receipt and utilization of input services despite technical procedural discrepancies in the documents.Issue 8: Confirmation of service tax liability for legal servicesThe confirmation of the service tax liability of Rs. 7,253 for legal services received by the appellant was upheld as uncontested, with the amount already deposited along with interest.Issue 9: Imposition of penalty under Section 77 of the ActThe Tribunal set aside the penalty of Rs. 10,000 imposed under Section 77 of the Act, considering that the appellant had already been penalized under Section 78, resulting in the disposal of the appeal with the specified penalty reductions and confirmations.