2024 (11) TMI 924 - AT - Service Tax

Service provider's gross receipts include service tax under Section 67(2), demand must be recomputed as cum-tax value

Shri Rajendra Prasad Versus Commissioner of Central Excise & CGST, Varanasi

CESTAT Allahabad held that gross amounts received by service provider for taxable services are inclusive of service tax payable under Section 67(2) of ... Valuation of taxable services for charging service tax - Benefit of partial reverse charge and cum-tax value - Eligibility for threshold exemption - HELD THAT:- From the plain reading of the sub section (2) & (3) it is evident that gross amount received for the taxable service by the service provider is inclusive of the service tax payable. Emphasis is on the phrase “payable” used in the sub section (2). The use of word “payable” raises the presumption in the favour of appellant. No agreement has been relied upon in the present case the demand has been made on the basis of the third party information received from the income tax department As demand need to be recomputed by treating the gross amount received by the appellant as inclusive of service tax payable in terms of Section 67 (2) of the Finance Act, 1994. As regards the impugned order whereby the benefit on threshold exemption has been sought to be denied. We do not find anything on record to show that the said exemption under Notification No.33/2012 was available to the Appellant. Appeal is partly allowed to the extent that the taxable value should be computed treating the amounts received from the service recipient to be cum-tax price as per the Section 67(2) of the Finance Act, 1994. Original Authority should re-compute the demand after allowing the said benefit. Issues:1. Request for adjournment due to non-receipt of relevant documents.2. Limit of maximum adjournments as per Section 35C(1).3. Benefit of partial reverse charge and cum-tax value.4. Eligibility for threshold exemption.5. Interpretation of Section 67(2) and (3) of the Finance Act, 1994.Detailed Analysis:1. The learned counsel for the Appellant sought an adjournment citing non-receipt of relevant documents from the service recipient, a Central Gov. Undertaking. However, the Tribunal noted that the reason provided for the adjournment did not seem proper as the dispute period was from 2012-13 to 2015-16. The Tribunal also highlighted that the number of adjournments granted had already exceeded the limit permissible under Section 35C(1). Therefore, the request for further adjournment was denied as the amount in question was deemed insufficient to justify prolonging the matter.2. The impugned order addressed the Appellant's contentions regarding the benefit of partial reverse charge, cum-tax value, and threshold exemption. The Commissioner (Appeals) had previously ruled on these issues. The Tribunal analyzed each contention in detail. Regarding the cum-tax value benefit, the Tribunal referred to relevant legal provisions and case law to determine the Appellant's eligibility. The Tribunal emphasized the importance of evidence to support claims for cum-tax value benefit and threshold exemptions. Ultimately, the Tribunal partly allowed the appeal, directing the Original Authority to recompute the demand after considering the amounts received as cum-tax price in accordance with Section 67(2) of the Finance Act, 1994.3. The Tribunal extensively discussed the interpretation of Section 67(2) and (3) of the Finance Act, 1994 in relation to the cum-tax value benefit claimed by the Appellant. Various judgments and legal principles were cited to support the Tribunal's decision. The Tribunal distinguished previous cases to clarify the Appellant's entitlement to the cum-tax benefit. The Tribunal emphasized the significance of considering the gross amount received by the service provider as inclusive of the service tax payable, unless proven otherwise. The Tribunal's analysis included references to decisions by different benches and courts to support the conclusion reached in the present case.4. The Tribunal's decision was based on a comprehensive review of the impugned order, submissions made during the appeal, and relevant legal provisions. The Tribunal carefully examined the Appellant's arguments regarding partial reverse charge, cum-tax value, and threshold exemption. By considering the findings of the Commissioner (Appeals) and applying legal principles, the Tribunal partly allowed the appeal and directed the re-computation of the demand to account for the amounts received as cum-tax price. The Tribunal's detailed analysis of the issues raised by the parties and the legal framework involved ensured a thorough and reasoned decision.5. In conclusion, the Tribunal's judgment addressed the issues raised by the parties regarding the benefit of partial reverse charge, cum-tax value, and threshold exemption. By interpreting relevant legal provisions and citing case law, the Tribunal provided a detailed analysis to support its decision. The Tribunal's consideration of the evidence presented, legal principles, and previous judgments ensured a comprehensive and well-founded resolution of the appeal.