Company fails to overturn service tax demands on security services, legal fees, and director commissions

The CESTAT New Delhi dismissed the appeal challenging service tax liability demands. The appellant, a limited company, acknowledged liability for security agency services received under reverse charge mechanism. Regarding legal fees, the court found payments were for renewal, inspection, and boiler deposits, not qualifying as advisory services. For commission payments to directors, the court held that audit balance sheet groupings had achieved finality without contrary evidence. The appellant's replies to show cause notice were considered, but absence of supporting documentation resulted in confirmation of all demands and dismissal of appeal.

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Issues:
1. Appellant's failure to discharge service tax liability.
2. Challenge to two Order-in-Originals dated 19.07.2016 and 16.12.2016.
3. Delay in filing appeal and subsequent proceedings.
4. Liability under Reverse Charge Mechanism.
5. Disputed service tax demands on various services.

Analysis:
1. The appellant, engaged in manufacturing Soya products, failed to discharge service tax liability for the years 2012-13, 2013-14, and 2014-15. Two show cause notices were issued, demanding service tax on legal services, commissions, security services, GTA services, Manpower Supply Services, and more.

2. The two challenged Order-in-Originals upheld the demands for Security Agency Service and commissions paid to directors under Reverse Charge Mechanism. The demand for legal fees was dropped in one order, while the demand for other services was confirmed in the second order, subsequently upheld by the Order-in-Appeal.

3. The appeal was filed after a delay of 101 days, which was condoned. Despite warnings and opportunities, the appellant failed to appear, leading to the dismissal of the appeal due to non-appearance. The department presented arguments, emphasizing the appellant's liability under Reverse Charge Mechanism.

4. The appellant's replies to show cause notices acknowledged liability for Security Agency Service but disputed legal fees and commissions as consultancy services. The appellant's contentions were considered, leading to the confirmation of demands for Security Agency Service and commissions paid to directors.

5. The subsequent show cause notice demanded service tax on Manpower Supply Services and GTA services. The appellant's replies were deemed insufficient, with discrepancies in labor salaries and lack of proper invoices leading to the confirmation of these demands. The liability on legal services and GTA services was also confirmed based on the appellant's responses and legal provisions.

6. With no additional evidence on record, the Tribunal upheld the orders, dismissing the appeal and confirming the demands raised in the show cause notices. The judgment was pronounced on 05.07.2024, bringing the legal proceedings to a close.

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