Revenue appeal dismissed as service tax properly paid on mobilized advance after segregating service components

CESTAT Hyderabad dismissed Revenue's appeal challenging Commissioner's order dropping service tax demands. The assessee successfully defended against charges of non-payment on mobilisation advance by demonstrating service tax was already paid on service portions after proper segregation from material components. Exemption for SEZ services was upheld following HC precedent that procedural requirements cannot deny statutory benefits. GTA service tax demand was substantially reduced after detailed account examination. Deferred revenue under accounting standards was held not liable for service tax as no payment was received or invoices raised, constituting mere book adjustments.

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Issues Involved:
1. Non-payment of service tax on mobilisation advance received.
2. Short payment of service tax on the reconciliation of values shown in books of accounts with that declared in ST3 returns (including supplies made to SEZ).
3. Short payment of service tax on GTA (as service recipient).
4. Non-payment of service tax on deferred and unbilled revenue (under erection, commissioning or installation service).
5. Non-payment of service tax on additional revenue (under works contract service).

Summary:

1. Non-payment of service tax on mobilisation advance received:
The Revenue alleged non-payment of service tax amounting to Rs. 29,18,336/- on mobilisation advances received during 2011-12, except for Rs. 8,39,433/-. The respondent contended that the advances were primarily for material costs, supported by invoices. The Commissioner found that service tax had been paid on the service portion of the mobilisation advances and that some advances were solely for material costs. The Tribunal upheld the Commissioner's decision, finding no error in the findings.

2. Short payment of service tax on the reconciliation of values shown in books of accounts with that declared in ST3 returns:
The Revenue claimed apparent short payment of service tax based on the reconciliation of taxable values in the profit and loss account with ST3 returns for 2008-09 to 2013-14. The respondent argued that the show cause notices did not prima facie examine the books of accounts or the accounting method. The Commissioner found that VAT/sales tax was paid on the material portion, and service tax was already discharged on the service portion. The Tribunal upheld the Commissioner's findings, rejecting Revenue's ground.

3. Short payment of service tax on GTA (as service recipient):
The Revenue alleged short payment of Rs. 21,25,195/- for GTA services based on a reconciliation of the profit and loss account with ST3 returns for 2008-09 to 2011-12. The respondent explained differences due to changes in accounting systems and payment bases. The Commissioner, after examining accounts and vouchers, dropped the substantial part of the demand. The Tribunal found no dispute in the Commissioner's findings and rejected Revenue's ground.

4. Non-payment of service tax on deferred and unbilled revenue (under erection, commissioning or installation service):
The Revenue alleged short payment of service tax on deferred and unbilled revenue for 2008-09 to 2013-14. The respondent argued that additional revenue was an accounting adjustment, not consideration for services provided. The Commissioner found that deferred and unbilled revenue was recognised as accounting adjustments without payment received or invoices raised. The Tribunal upheld the Commissioner's findings, rejecting Revenue's ground.

5. Non-payment of service tax on additional revenue (under works contract service):
The Revenue alleged non-payment of service tax on additional revenue under works contract service. The respondent contended that accounting adjustments did not reflect actual service provision or payments received. The Commissioner found that additional revenue was recognised as per accounting standards without payment received or invoices raised. The Tribunal upheld the Commissioner's findings, rejecting Revenue's ground.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the impugned order in original. The Tribunal found no merit in Revenue's grounds and confirmed the Commissioner's findings on all issues.

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