TaxTMI 
TaxTMI 
2024 (3) TMI 406
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....s of the advances received vide letters dated 12.04.2010 and 20.05.2010; alleging that no reply has been received from the appellant a show cause notice dated 14.09.2010 was issued to the appellant demanding service tax of Rs. 64,06,240/- on the advances received by them for provision of various services. The show cause notice was adjudicated by the Commissioner, vide Order Impugned Order dated 30.09.2015, confirming the demand along with interest while imposing equal penalty under Section 78 of the Finance Act, 1994;a penalty of Rs. 2,97,000/- under Section 76 and a penalty of Rs. 5,000/- under Section 77(2) ibid. Hence, this appeal. 2. Shri B.L. Narasimhan, Learned Counsel for the appellant submits that the said advances from customers were amounts required to be adjusted towards outstanding liabilities of customers on account of i) cancellation of service ii) multi branch invoices iii) extension of discounts etc; they have explained to Adjudicating Authority that the nature of services rendered by the appellant did not warrant collection of advances and on the contrary in many cases credit was extended for recovery of the consideration. Learned Counsel submits that to be exigib....
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....eir financial statements; merely because some payments received were accounted under the head "advance from customers", service tax cannot be levied without first establishing the nature of the amounts and the purpose of the payment; in the absence of any concrete allegation towards the taxability of the amounts, the demands cannot be sustained; service tax cannot be fastened on the basis of difference between the accounts maintained by the appellant and ST-3 returns. He relies on the following: Prakash Road Lines Vs CCE, C & ST, Allahabad [2022-TIOL-928-CESTAT-ALL] Firm Foundation & Housing Pvt Ltd., Vs Principal Commissioner, ST [2018 (4) TMI 613 - Madras High Court] Commissioner of ST, Ahmedabad Vs Purni Ads Pvt Ltd., [2010 (19) STR 242 (Tri-Ahmd) Go Bindas Entertainment Pvt Ltd., Vs CST, Noida [2019 GSTL (397) (Tri-All)] 4. Learned Counsel further submits that the advances reflected in their books of account are on various grounds like cancellation of tickets, closure of the customer's account, reconciliation of various branch accounts, discounts and time lagging receipts from corporate credits against invoices to the customers. Learned Counsel submits that the impugne....
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.... shown in their books of accounts are not necessarily towards the provision of services and the same were on account of various reasons explained therein; in fact in respect of air travel service which constitutes 90% of their activity no advance is being taken and on the contrary credit time is allowed to the customers to pay after the services availed by them. The Adjudicating Authority relies on the statement of the appellants themselves that air travel service accounts for 90% of their activity. However, Commissioner construes that if 90% of the activity is towards air travel agent service and if advances were not taken for that particular service rest of the 10% is necessarily for the other services rendered or to be rendered by the appellant. We find that Learned Commissioner observed as follows: "35.3 As it is seen that it is not necessary that the "advance for customers" ledger is not containing the advance from customers involving in that 10% business with the assessee in the services other than "Air Travel Agents Service", so going by the assesses's version that 90% of their business is related to "Air Travel Agent Service" and 10% attributed to other services provided ....
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....in the present case. The real issue is whether any advances were taken from the customers or not in transactions with the customers during the year by the assessee, which can only be ascertained through the billing and its receipts in the account of particular case. No documents has been produced before me to establish that and hence, I am not convinced that the assessee has not accepted any advances from their customers, and hold that the amount appearing under the head "Advance from Customer" is in fact represents the advances accepted by the assessee from their customers and as no service tax is paid by the assessee on that, the same is recoverable from them. Thus, the amount of service tax of Rs. 64,06,240/- on the "advances from customers" is liable to be recovered from the assessee." 9. We find that the Adjudicating Authority fails to understand that in demanding the service tax, the twin conditions i.e. identification of the particular service rendered and the payment received for such service, either before, during or after providing of such service, were to be satisfied. We find that Learned Commissioner has considered the appellant submission that 90% of their income is ....
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....a taxable service." 15. In NR Management Consultants, the Tribunal observed as follows:- "It is clear that there is no categorical finding as to how the expenditure incurred in foreign exchange can be considered as a payment towards specific category of taxable service and thereafter can be subjected to tax at the hands of the appellant on reverse charge basis. We find considerable force in appellant-assessee's plea with reference to presumptive nature of the demand for service tax attributable to expenditure in foreign currency. In fact, the nature of services received by the appellant-assesses with supporting evidence has not been analyzed at all. In such situation, the finding recorded by the impugned order suffers from serious legal infirmity." (emphasis supplied) 16. The confirmation of demand on the basis of such a vague show cause notice cannot, therefore, be sustained." 11. Further, Tribunal has held in the case of Shubam Electrical (supra) which was upheld by Supreme Court in [2016 (42) STR J312 (Delhi)] "13. We have noticed earlier that the show cause notice itself adverts to the fact that the appellant had provided copies of 20 work orders executed in relati....