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of <h1>Appellant fails to pay service tax under Reverse Charge Mechanism for recruitment services, faces upheld demand with penalties</h1> <h3>M/s. Cords Cable Industries Ltd. Versus Commissioner of CGST & Service Tax, Alwar, Rajasthan</h3> M/s. Cords Cable Industries Ltd. Versus Commissioner of CGST & Service Tax, Alwar, Rajasthan - TMI Issues:Challenge to Order-in-Appeal confirming service tax amount, interest, and penalty under Finance Act, 1994.Appellant's liability for service tax under Reverse Charge Mechanism on Manpower Recruitment or Supply Agency Service.Appellant's contention based on Chartered Accountant's Certificate and Journal Voucher.Appellant's challenge on extended period of limitation, interest, and penalty.Interpretation of revenue neutrality principle.Appellant's failure to respond to show cause notice and personal hearing.Analysis:The judgment concerns an appeal challenging the Order-in-Appeal confirming service tax liability, interest, and penalty under the Finance Act, 1994. The appellant, engaged in manufacturing Electric Wire and Cable, was found to have short paid service tax under Reverse Charge Mechanism on Manpower Recruitment or Supply Agency Service. The appellant's contention, supported by a Chartered Accountant's Certificate, was that they had not actually availed the service but only made a provision in their books, which was later reversed. The Commissioner (Appeals) noted that despite ample opportunities, the appellant failed to submit relevant documents to support their claim, leading to the confirmation of the service tax amount, interest, and penalty.Regarding the appellant's argument on revenue neutrality, it was contended that payment of service tax would have entitled them to avail Cenvat Credit, thus questioning the need to evade payment. However, the Tribunal referred to a previous decision rejecting the plea of revenue neutrality as a permissible defense, stating that accepting it would undermine the reverse charge mechanism. The Tribunal upheld the findings of the lower authorities, affirming the liability of the appellant for the service tax amount, interest, and penalty.The Tribunal emphasized the responsibility of the assessee in correctly assessing and discharging their service tax liability. It was noted that the appellant had knowledge of their liability under the reverse charge mechanism but failed to pay the full amount, which would have gone undetected if not for the audit. The Tribunal agreed with the invocation of the extended period of limitation due to the appellant's suppression of material facts to evade tax. Additionally, no interference was found necessary in the imposition of penalties on the appellant.In conclusion, the Tribunal dismissed the appeal, affirming the impugned order and holding the appellant liable for the confirmed service tax amount, interest, and penalties. The plea of revenue neutrality was rejected, and the Tribunal upheld the decision based on the appellant's failure to cooperate, respond to notices, and provide substantial evidence to counter their tax liability.
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