2024 (4) TMI 908 - AT - Service Tax

Service tax recovery appeal dismissed after appellant failed to prove deduction claims despite admitting liability

M/s Yamuna Prasad & Brothers Versus Commissioner of Central Excise, Allahabad

CESTAT Allahabad dismissed the appeal in a service tax recovery case. The appellant had suppressed taxable service value and disputed only quantification, ... Recovery of service tax alongwith interest and penalty - non-payment of service tax by suppressing the value of taxable service. Demand confirmed for the reason that the appellant had accepted their liability for payment of service tax, and they had disputed the demand only on the account of quantification, in respect of which both the authorities have concluded that the appellant had failed to substantiate their claim by producing the relevant records for verification. HELD THAT:- The appellant has during the period prior to 16.06.2005, issuing invoices, claiming the service tax from their service recipient. On Invoice No 13-18/2005-06 dated 26.05.05 Service Tax of Rs 6377.00/- has been charged as per the above chart on a taxable value of Rs 189439/- and on invoice No 19/05-06 dated 26-May-05 a service tax of Rs 23,795/- has been collected. During the period prior to 16.06.2005 appellant as per his own submission has collected service tax of Rs 30,172/- on the taxable value of Rs 462239.00. As appellant was himself charging and collecting the service tax, even prior to 16.06.2005, the claim for deduction made by the appellant for deducting this value from the taxable value cannot be acceded to. Thus the gross value of taxable service on which the demand of service tax is made, after allowing the deductions in respect of PF, Bonus and Service Tax paid by M/s Hindalco, as per the chart submitted by the appellant comes to Rs 63,90,554.77/- (Rs 1,77,87,709.00 - Rs 15,16,602.00 – Rs 10,45,027.23 - Rs 88,35,525). The demand has been made by taking table value of Rs 64,41,735/-. There are not much difference in the taxable value determined by the department for making the demand and the taxable value that can be determined on the basis of the chart submitted by the appellant. In case of COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS & COMPONENTS PVT. LTD. [2004 (2) TMI 65 - SUPREME COURT] Hon’ble Supreme Court has held Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved. There are no merits in the appeal - appeal dismissed. Issues Involved:1. Confirmation of service tax demand.2. Imposition of penalties.3. Invocation of the extended period.4. Revenue neutrality and waiver of interest/penalty.Summary of Judgment:1. Confirmation of Service Tax Demand:The appeal was directed against the order confirming the demand of Rs. 7,87,427/- as service tax u/s 73(2) of the Finance Act, 1994. The appellant, engaged in providing various taxable services, was found to have not paid the service tax by allegedly suppressing the value of taxable services. The appellant contested the quantification of the demand and claimed that the show cause notice was vague. The adjudicating authority confirmed the demand, noting that the appellant failed to substantiate their claim by producing relevant records for verification. The appellant had admitted their liability but disputed the quantification.2. Imposition of Penalties:The adjudicating authority did not impose any penalty by invoking Section 80 of the Finance Act, 1994, considering the appellant's unawareness and readiness to pay the due service tax. The appellant argued against the imposition of penalties, and the adjudicating authority noted that the appellant's failure to pay the service tax was due to ignorance, thus justifying the waiver of penalties.3. Invocation of the Extended Period:The authorities invoked the extended period for the demand, noting that the appellant suppressed the value of taxable services. The adjudicating authority observed that the appellant failed to discharge the statutory burden of declaring the value of taxable service, amounting to suppression of facts, thus justifying the invocation of the extended period.4. Revenue Neutrality and Waiver of Interest/Penalty:The appellant argued that the demand was revenue neutral and that no interest or penalty could be levied. The adjudicating authority rejected the appellant's calculation chart for tax liability, noting the lack of supporting documents. The authorities found no substantial difference between the taxable value determined by the department and the appellant's computation. The appellant's arguments were considered foreclosed based on their admissions before the adjudicating authority, and raising these arguments in subsequent proceedings was deemed to be hit by the principles of Res Judicata.Conclusion:The appeal was dismissed, confirming the demand of Rs. 7,87,427/- as service tax. The adjudicating authority's decision to waive penalties under Section 80 of the Finance Act, 1994, was upheld, considering the appellant's ignorance and readiness to pay the due service tax. The invocation of the extended period was justified due to the suppression of facts by the appellant. The arguments regarding revenue neutrality and waiver of interest/penalty were rejected, as they were foreclosed by the appellant's admissions before the adjudicating authority.