2025 (3) TMI 269 - AT - Service Tax

Appeal dismissed for service tax evasion through misrepresentation of taxable services as exempted under Notification 25/2012

Saisun Outsourcing Services Private Limited Versus Commissioner of Central Goods, Service : Respondent Tax, Jabalpur

CESTAT Delhi dismissed the appeal against recovery of service tax with interest and penalty for April 2015 to June 2017. The appellant misrepresented ... Recovery of service tax with interest and penalty - correctly determination and declaration of taxable value of services provided during the audit period from April 2015 to June 2017 - exempted services under the Notification No. 25/2012 dated 20.06.2012 - evasion of service tax by misrepresenting the nature of services provided - legal fees expenses. Exemption of services - HELD THAT:- As per Agreements of the appellant, the nature of services were exempted from service tax viz. Distribution of SIM cards, Recharge Coupons, Supply of Farm Labour for agriculture operation, business facilitator etc. However, as per the copies of Agreements provided by the clients of the appellant, the services related to manpower supply services and other taxable service. The impugned order goes on to note that the appellant had submitted agreement dated NIL of farm labour supply with Gujrat Tea Processors und Packers Ltd., Ahmadabad in which scope of work was mentioned as 'Supply of contract Farm labour/workers for agricultural operations and agricultural produce' and contract period was mentioned as 1st April 2015 to 31 March 2017. The impugned order has established that during the period 2015-16, 2016-17 and 2017-18 (up to June, 2017), the appellant had rendered taxable services which was deliberately suppressed resulting in the evasion of service tax of Rs. 19,81,97,629/-(including cess). We find that in their grounds of appeal, the appellant has stated that as per audited accounts, gross receipts for 2015-16 is Rs. 15,67,08,892/-, for 2016-17 is Rs. 62,16,63,588/- and for first quarter of 2017-18 is Rs. 10,83,21,412/- - apart from merely stating that the impugned order has added the amount shown in 26AS statement with the amount shown in Books of Accounts no evidence has been adduced by the appellant in support of their contention. No one even appeared on the day this case was posted for hearing, nor any written submissions have been filed. It has been clearly established that the services provided by the appellant are covered under the definition of Taxable Services in the light of the changed provisions of the Finance Act, 1994 made applicable with effect from 01.07.2012. We find that the impugned order has given evidence that the appellant had received Rs. 1,52,54,53,781/- from its service recipients against provision of the said taxable services and was liable to pay service tax on said amount. The impugned order notes that the appellant failed to provide any relevant authentic documents like invoices in original work orders in original etc to justify their claim of duplication of demand in case of few of their clients. In the absence of any authentic evidence in the form of original invoice etc showing the actual value of taxable services provided by the appellant during the relevant period, it is found that there is no reason to interfere with the computation of service tax liability against the appellant in the impugned order. Hence, there is no merit in the above contention of the appellant and the same is rejected. Legal fees expenses - HELD THAT:- The appellant has shown Legal fees expense of Rs. 2,12,000/-in 2016-17. In this regard, no submission was made by the appellant nor have they contested the applicability of Service Tax on the said expense. In absence of any reply or any supporting documents, it is held that Legal fees expense incurred by the appellant are expenses towards Legal services. Accordingly, Service Tax amounting to Rs. 31800/- on Legal Fee expense incurred by the appellant during the period F.Y. 2016-17 is upheld. Conclusion - i) The appellant's deliberate misrepresentation of service nature and forgery of documents constituted a clear intent to evade service tax. ii) The imposition of interest and penalties was justified given the appellant's failure to deposit collected service tax and misrepresentation of taxable services. iii) The appellant's claims of duplication in service tax computation were unsupported by evidence, leading to the rejection of these claims. iv) The service tax liability on legal fees under RCM was upheld due to the lack of contestation or evidence from the appellant. There are no infirmity in the impugned order - appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the appellant, M/s Saisun Outsourcing Services Private Limited, correctly determined and declared the taxable value of services provided during the audit period from April 2015 to June 2017.Whether the appellant had deliberately evaded service tax by misrepresenting the nature of services provided as exempted under Notification No. 25/2012 dated 20.06.2012.Whether the imposition of interest and penalties under Sections 75, 76, and 78 of the Finance Act, 1994, was justified.Whether the appellant provided sufficient evidence to support their claim of duplication in the computation of service tax liability.Whether the appellant was liable for service tax on legal fees expenses under reverse charge mechanism (RCM).2. ISSUE-WISE DETAILED ANALYSISDetermination of Taxable Value and Misrepresentation of ServicesThe relevant legal framework includes the Finance Act, 1994, and Notification No. 25/2012 which exempts certain services from service tax. The Department's audit revealed discrepancies between the appellant's submitted agreements and invoices and those provided by their clients. The appellant claimed services were exempt, but evidence from clients indicated taxable manpower supply services.The Tribunal found that the appellant deliberately forged agreements and invoices to misrepresent the nature of services and evade service tax. The appellant's contention that the taxable value was incorrectly determined was unsupported by evidence, as no original documents were presented to substantiate their claims.Imposition of Interest and PenaltiesSections 75, 76, and 78 of the Finance Act, 1994, provide for the recovery of interest and penalties in cases of service tax evasion. The Tribunal upheld the imposition of interest and penalties, noting the appellant's deliberate misrepresentation and failure to deposit collected service tax.Competing arguments regarding the duplication of demand were dismissed due to the appellant's failure to provide credible evidence. The Tribunal emphasized the appellant's responsibility to substantiate claims with authentic documents.Service Tax on Legal FeesThe appellant incurred legal fees expenses during the fiscal year 2016-17. The Tribunal found no submissions contesting the applicability of service tax on these expenses under RCM. Consequently, the service tax demand on legal fees was upheld in the absence of any contrary evidence or argument from the appellant.3. SIGNIFICANT HOLDINGSThe Tribunal's significant holdings include:The appellant's deliberate misrepresentation of service nature and forgery of documents constituted a clear intent to evade service tax.The imposition of interest and penalties was justified given the appellant's failure to deposit collected service tax and misrepresentation of taxable services.The appellant's claims of duplication in service tax computation were unsupported by evidence, leading to the rejection of these claims.The service tax liability on legal fees under RCM was upheld due to the lack of contestation or evidence from the appellant.The Tribunal concluded that the appellant had not provided sufficient evidence or arguments to warrant interference with the Commissioner's order. The appeal was dismissed, and the order confirming the service tax demand, interest, and penalties was upheld.