Service tax demand case remanded for fresh consideration of Rs. 84 lakh deduction claim for tangible goods supply

CESTAT Allahabad remanded the case to the original authority for reconsideration of service tax demand. The appellant disputed quantification of taxable services, claiming deduction of Rs. 84,17,327.67 for Supply of Tangible Goods services provided before becoming taxable on 16.05.2008. The appellant submitted chartered accountant-certified charts showing invoices for truck, tractor, and dumper hiring charges. Since neither the adjudicating authority nor first appellate authority made specific findings on this substantial deduction claim, the matter was remanded for fresh consideration. Appeal was partly allowed for remand purposes only.

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Issues Involved:
1. Demand of Service Tax
2. Invocation of Extended Period
3. Revenue Neutrality
4. Interest and Penalty

Summary:

1. Demand of Service Tax:
The appellant was engaged in providing taxable services and was alleged to have not paid service tax amounting to Rs. 12,88,132/- for the period 2005-06 to 2009-10. The appellant contested the quantification of the demand. The authorities confirmed the demand as the appellant failed to substantiate their claim with relevant records. The appellant's plea for deduction of certain amounts from the gross turnover was not accepted due to lack of evidence.

2. Invocation of Extended Period:
The adjudicating authority invoked the extended period u/s 73(1) of the Finance Act, 1994, citing suppression of facts by the appellant. The appellant did not contest the show cause notice on merits and admitted liability for service tax but disputed the quantification.

3. Revenue Neutrality:
The appellant argued that the demand was revenue neutral. However, the authorities did not find merit in this argument as the appellant failed to provide substantial evidence to support their claim.

4. Interest and Penalty:
The adjudicating authority, invoking Section 80 of the Finance Act, 1994, did not impose any penalty on the appellant due to their ignorance of law and unawareness. The demand for interest was upheld as per Section 75 of the Finance Act, 1994. The appellant's contention regarding the waiver of penalties and exclusion of service tax component from the gross receipts was not substantiated with evidence.

Remand:
The matter was remanded back to the original authority for reconsideration of the issue of allowing deduction of Rs. 84,17,327.67/- claimed by the appellant for services provided prior to the levy of service tax on "Supply of Tangible Goods service" from 16.05.2008. The adjudicating authority was directed to adjudicate the matter within three months following the principles of natural justice.

Conclusion:
The appeal was partly allowed, with the matter remanded to the original authority for reconsideration on specific issues, while upholding the demand for the remaining amount.

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