Service tax burden of proof lies with Department when payment receipt timing disputed, Rs. 31,84,835 work-in-progress allowed

The CESTAT NEW DELHI remanded two issues to the adjudicating authority for fresh examination after providing opportunity to the appellant to submit relevant documents. First, regarding whether service tax paid by consortium partner was linked to invoice issued by consortium partner. Second, whether service tax of Rs. 6,42,177/- was paid on excess income of Rs. 51,95,614/- by the service tax recipient. However, the tribunal allowed the appeal regarding Rs. 31,84,835/- shown as work-in-progress, holding that the Commissioner (Appeals) erred in placing burden of proof on appellant when the Department failed to establish that appellant received payment in that particular year.

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Issues involved:
The issues involved in the judgment are:
1. Non-payment of service tax on an invoice dated 10.11.2013.
2. Short payment of service tax as per reconciliation of balance sheet.
3. Non-payment of service tax on an amount shown as "work-in-progress" in the books of account.

Issue 1 - Non-payment of service tax on invoice dated 10.11.2013:
The appellant contended that the invoice in question was not issued by them, but by their consortium partner. The Commissioner (Appeals) noted discrepancies in the Service Tax Registration No. mentioned in the invoice and the actual registration of the appellant. The appellant submitted a challan indicating payment of the service tax amount, but the link to the specific invoice was not established. The matter was remanded to the adjudicating authority for further verification.

Issue 2 - Short payment of service tax per reconciliation:
The appellant claimed that service tax on excess income had been paid by the service tax recipient, M/s Bihar Urban Infrastructure Development Corporation Ltd. However, the Commissioner (Appeals) found a lack of evidence establishing the link between the invoice and the service tax paid. The issue was directed to be re-examined by the adjudicating authority.

Issue 3 - Non-payment of service tax on "work-in-progress" amount:
The appellant argued that as they had not received any advance payment in that year, service tax was not required on the amount shown as "work-in-progress." The Commissioner (Appeals) upheld the demand, stating the appellant failed to prove they had not received any advance. However, the appellant contended that it was the Department's burden to prove the receipt of payment, especially when the appellant claimed no payment was received. The demand under this issue was set aside.

In conclusion, the judgment partially allowed the appeal. The first issue was remanded for further consideration, the second issue was directed for re-examination, and the demand under the third issue was set aside. Penalties and interest imposed were also set aside for reevaluation by the adjudicating authority based on the findings of the first two issues.

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