2023 (9) TMI 872 - AT - Service Tax

Tribunal rules in favor of Pearls Buildwell on service tax dispute, citing lack of evidence. Time bar issue deemed inconsequential.

The Tribunal found in favor of M/s Pearls Buildwell Infrastructure Limited, holding that the Department failed to prove the collection of service tax as ... Attraction of Section 73A - collection of amount as representing service tax - requirement of actual collection from recipient to invoke Section 73A(2) - evidentiary value of recipient's certificate - insufficiency of internal calculation sheets to prove collection - adjustment or refund mechanism under Section 73A(5)-(6) - limitation not determinative where merits favour the assesseeAttraction of Section 73A - collection of amount as representing service tax - requirement of actual collection from recipient to invoke Section 73A(2) - evidentiary value of recipient's certificate - insufficiency of internal calculation sheets to prove collection - Whether the provisions of Section 73A(2) are attracted on the facts where it is alleged that the assessee collected service tax from customers but did not deposit it to the Government. - HELD THAT: - The Tribunal examined Section 73A and held that sub section (2) applies only where a person has collected an amount from any other person in any manner as representing service tax. The adjudicating authority itself recorded that no bills or invoices showing collection of service tax were raised by the appellant. A certificate from the recipient (M/s PACL) expressly stated that no service tax was charged by the appellant. The Department relied on isolated calculation sheets recovered during search, but the Tribunal found these sheets could not be corroborated with invoices or transactions and were insufficient to establish that any amount was collected from customers as service tax. In consequence, the essential factual predicate for invoking Section 73A(2) - actual collection from the recipient as representing service tax - was not established, and the demand confirmed under that provision could not be sustained.Section 73A(2) is not attracted on the facts; the demand confirmed on that basis is set aside.Final Conclusion: Appeal of M/s Pearls Buildwell Infrastructure Limited allowed; departmental appeal dismissed. Issues involved:The issues involved in the judgment are whether the provisions of Section 73A of the Finance Act, 1994 are attracted in the given circumstances, and whether the demand confirmed by the Commissioner is justified.Issue 1: Application of Section 73A of the Finance Act, 1994The case involved M/s Pearls Buildwell Infrastructure Limited, engaged in Construction Services related to road laying, where a show-cause notice was issued alleging non-deposit of service tax collected from customers. The Commissioner confirmed a demand, but the appellants contended that they did not charge any service tax to their customers. The Commissioner's findings were based on calculation sheets, ignoring a certificate from a customer confirming no service tax collection. The Tribunal found that the Department failed to prove the collection of service tax, as indicated by the certificate, and set aside the impugned order.Issue 2: Limitation on Time BarThe appellants argued that the issue was time-barred due to an audit in 2008 and the show-cause notice in 2010. However, the Tribunal, considering the strong merits of the case, deemed the time bar issue inconsequential. Consequently, the Party's Appeal was allowed, and the Department's Appeal was dismissed.Separate Judgment by Judges:The judgment was delivered by MR. S. S. GARG, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) on 19/09/2023.