Tribunal Overturns Decision on Unlawful Service Tax Retention; Rs.38,53,951 Demand Set Aside, Case Remitted for Review.

The Customs, Excise & Service Tax Appellate Tribunal's decision regarding the appellant's retention of service tax was overturned. The Tribunal initially found the appellant retained Rs.15,75,182 unlawfully. However, evidence showed the appellant had paid the disputed amount to the Department by 2013. Consequently, the demand of Rs.38,53,951 was set aside. The matter concerning business auxiliary service was remitted for further adjudication, with the Tribunal's findings on the retention issue quashed. All pending miscellaneous applications were closed without costs.

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Issues involved:
The issues involved in the judgment are the retention of service tax collected on behalf of the principal by the petitioner/assessee and the business auxiliary service for the commissioner received by the appellant.

Retention of Service Tax:
The appellant challenged the order passed by the Customs, Excise & Service Tax Appellate Tribunal, Regional Branch, Hyderabad, regarding the retention of service tax collected on behalf of the principal. The Tribunal found that the appellant had not remitted the service tax collected to the exchequer and had illegally retained an amount of Rs.15,75,182. However, the appellant provided a document showing that the disputed amount had been paid to the Department through a challan from Axis Bank in 2013. The Tribunal's finding was deemed unsustainable as the entire service tax collected by the appellant had been paid either to the Principal or to the department by 2013, thereby setting aside the demand of Rs.38,53,951.

Business Auxiliary Service:
Regarding the business auxiliary service for the commissioner received by the appellant, the appellate tribunal remitted the matter for adjudication. The proceedings related to this issue had been finalized, with the demand confirmed and subsequently challenged by the appellant in a separate appeal. The current appeal was confined to the retention of service tax collected by the petitioner for the principal. The Tribunal's finding on this issue was set aside due to the appellant having paid the disputed amount to the Department in 2013, leading to the quashing of the demand. Miscellaneous applications pending in this appeal were ordered to be closed with no costs imposed.

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