Appeal Dismissed: Tribunal Upholds Rs.6,65,716 Service Tax Demand; Penalty Reduced Under Section 78 of Finance Act, 1944.

The Tribunal dismissed the appellant's appeal, upholding the confirmed demand of Rs.6,65,716 for differential Service Tax payment. The appellant's claims of excess payment due to unaccounted challans were rejected due to insufficient evidence. The penalty under Section 78 of the Finance Act, 1944, was reduced to 25% if paid within 30 days; otherwise, it would revert to 100% of the confirmed demand. The Tribunal found it impractical to verify the appellant's claims given the lack of documentation and complexity involving transactions between the Kolkata and Bhubaneswar Units.

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Issues involved: Audit findings on differential Service Tax payment, discrepancy in turnover figures, non-accounting of challans in ST-3 Returns.

Audit Findings on Service Tax Payment: The audit team conducted an examination of the appellant's Books of Accounts for the period 2007-08 to 2009-10, comparing figures from the Balance Sheet with those in the ST-3 Returns. A demand was raised on the differential Service Tax amount, specifically focusing on the Kolkata Unit. The Department removed the turnover of the Bhubaneswar Unit, resulting in a confirmed demand of Rs.6,65,716 as per the showcause notice.

Discrepancy in Turnover Figures: The appellant contended that they had paid Rs.55,23,130 during the disputed period, exceeding the Department's claim of Rs.53,31,259. They argued that certain challans, not reflected in the ST-3 Returns, accounted for the excess payment. However, the authorities did not consider these challans as the appellant failed to provide relevant copies to substantiate their claim, leading to the confirmation of the demand.

Non-Accounting of Challans in ST-3 Returns: The appellant claimed an excess payment of Rs.1,98,871, attributing it to unaccounted challans. Despite their assertion, no copies of the challans were produced, even upon inquiry before the Tribunal. The Tribunal noted the absence of these challans in the Returns over a three-year period, expressing skepticism over the appellant's explanation for the oversight. Given the complexity of reconciling transactions between the Kolkata and Bhubaneswar Units, the Tribunal deemed it impractical for the authorities to undertake such verification at this stage.

Final Decision: The Tribunal dismissed the appeal, requiring the appellant to pay the confirmed demand along with interest. The penalty imposed under Section 78 of the Finance Act, 1944, was reduced to 25% provided the appellant complies within 30 days; otherwise, the penalty would revert to 100% of the confirmed demand.

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