2022 (10) TMI 381 - AT - Service Tax

Appellate tribunal grants relief on tax liability appeal, corrects calculation, and overturns penalties.

M/s. Dhrubashish Biswas Versus Commissioner of CGST & Central Excise Jabalpur (M.P.)

The appellate tribunal ruled in favor of the appellant, allowing the appeal regarding tax liability on the abated turnover, incorrect tax calculation, and ... Levy of service tax - abated portion of turnover or incorrect calculation along with penalty - HELD THAT:- The rejection of the claim of abatement for material component by the court below is against Valuation Rules and facts on record. Further, it is found that the appellant had provided calculation of their admitted tax at Rs.2,24,763/-, which has been taken notice of, in para 12 of the impugned order-in-appeal. However, calculation has been rejected on flimsy ground. This calculation of tax payable at Rs.2,24,763/-, which has been calculated as per Service Tax (Determination Value) Rules, 2006, as amended from time to time, is accepted. Further, liability to pay tax has been correctly calculated as per notification no.30/2012-ST, under which the appellant is required to pay only 50% of the service tax liability and the balance 50% is payable by the recipient of the service being Corporate entity. The appeal is allowed. Issues involved: Determination of tax liability on abated portion of turnover, incorrect calculation, penalty imposition.Analysis:1. Tax Demand on Abated Turnover:The issue in this appeal revolved around the correctness of the tax demanded concerning the abated portion of turnover. The appellant, engaged in works contract/repair and maintenance services for Public Sector Undertakings, availed abatement for the material component as per Service Tax Rules. The dispute arose due to an amendment in the rules merging certain categories and changing taxable values. The appellant contended that the rejection of abatement for the material component was against the Valuation Rules and the facts on record. The appellant provided evidence supporting the use/supply of materials in their work, which the lower court allegedly ignored. The appellate tribunal found merit in the appellant's arguments, accepted their tax calculation at Rs.2,24,763/-, and set aside the impugned order, allowing the appeal.2. Incorrect Calculation and Penalty Imposition:The appellant also challenged the incorrect calculation of tax liability and the imposition of penalties. The show cause notice alleged non-payment of service tax, failure to file ST-3 Returns, and proposed penalties under various sections and rules. The lower authorities confirmed the tax demand, imposed penalties under Section 78, and levied additional penalties for non-filing of periodical returns. The Commissioner (Appeals) modified the original order, confirming the demand and penalties under Section 78 and Section 77(1)(c), respectively. However, the penalty under Section 77(2) was not imposed, and the penalty under Section 77(1)(d) was set aside. The appellate tribunal, after considering the evidence and legal provisions, allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits.In conclusion, the appellate tribunal ruled in favor of the appellant, allowing the appeal regarding tax liability on the abated turnover, incorrect tax calculation, and penalties imposed. The tribunal found the rejection of abatement for the material component unjustified, accepted the appellant's tax calculation, and set aside the penalties imposed by the lower authorities. The decision provided relief to the appellant and highlighted the importance of adhering to valuation rules and factual evidence in tax assessments.