TaxTMI 
TaxTMI 
2025 (11) TMI 126
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....x Department for providing taxable services under the categories of "Maintenance or Repair Service" and "Consulting Engineer Service". Their main activities are operation, maintenance of power plants which may be thermal/ natural gas/ diesel/ biomass located all over India. 2.2 During the course of audit, it was found that the Appellant was paying their service tax on receipt basis only instead of billed basis, even after POTR, 2011 came into effect As per Rule 3 of the Point of Taxation Rules, 2011, service tax has to be paid on the billed basis with effect from 01.07.2011. 2.3 The Show Cause Notice No.201/2013 dated 13.6.2013 was issued by the Commissioner of Service Tax, Chennai seeking to demand Service Tax of Rs.4,19,98,007/- for the period from July 2011 to November 2012 under proviso to Section 73(1) of the Finance Act, 1994. The notice also sought to impose penalties under Section 76,77 & 78. 2.4 After the due process of Law, the demand was confirmed as detailed in Para 1 above. 2.5 Being aggrieved, the Appellant has filed this Appeal before this Forum. 3. The Ld. Advocate Mr. J. Shankarraman, appeared for the Appellant and the Ld. Authorized Representative M....
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....posed are contrary to law. 4.5 As regards demand to the extent of Rs.14,78,955/-, the service recipient reduced the same after reconciling with the actual number of labour deployed based on their own attendance/gate entry and thereby, the amount will be lesser than the amount already billed by the appellant originally. The appellant pays service tax on the lesser amount, which is arrived at after mutual understanding based on the actual man hours consumed on the maintenance work and has issued credit notes in such cases. 4.6 The appellant has informed that they paid by way of cash service tax to the tune of Rs.3,75,88,066/- even before the notice was issued and the same was also appropriated in the impugned order. The appellant had also paid Rs.15,76,586 towards interest for belated payment much prior to the SCN. However, CENVAT credit to the tune of Rs.14,84,423/- referred to in their letter dated 19-122012 was never considered by the Commissioner. Since the tax was paid much prior to the show cause notice, there was no malafide intention on the part of the appellant and the demand on credit notes issued and penalty imposed under Section 78 & 77 of the Finance Act, 1994 is n....
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....used the records. 7. The main issues in this Appeal are: - i. Whether the POTR 2011 has any impact on the Bills raised and credit Note issued for the deficiency in service, and whether the service Tax amount shown in the Credit Note is liable for deduction from the original billed amount. after 1.7.2011? ii. Whether penalties imposed in this case are justified? and, iii. Whether the Appellant is eligible for waiver of penalty under Section 80 of FA, 1994? 8. The issues are taken up in seriatim: - 8.1 We find that the SCN is dated 13.06.2013 covering the demand period from 01.07.2012 to 31.3.2013 i.e. from the date from when the date of point of Taxation Rules came into effect, service tax liability shifted from receipt basis to accrual basis. Initially, the demand was for an amount of Rs.4,19,98,007/- and after Adjudication, the demand was finalized at Rs.4,05,48,349/- after adjusting the twice demanded sum of Rs.14,49,648/-. The Adjudicating Authority has held that the entire issue came to light after the Audit of Accounts of the Appellant. 8.2 We note that the Appellant has paid the Tax amount and interest amount as follows: - SI No.....
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....8,955/- shown as bad debts Rs.3,73,977/- pertains to the period before 1.7.2011 and the balance amount of Rs. 10,75,681/- pertains to the period from July 2011 toNovember 2012 but failed to provide any documentary evidence in this regard. Hence, I cannot accept the averments of the assessee with respect this issue of short received an-amount shown as bad debts reject them." 8.5 The Appeal records indicate the Service Tax on the value of services not rendered amounted to Rs.10,75,681/- for the period from 01.07.2011 to Nov 2012 and Rs.3,73,977/- and for the services rendered Prior to 1.7.2011 i.e. pre-POTR, totaling Rs.14,49,658/-. The Appellant have enclosed copies of the Invoices and credit Notes in support of their claim. There is no dispute in respect of Rs.3,73,977/-as it is squarely covered by Rule 6(1) of Central Excise Rules 2002 i.e. prior to POTR Period. In respect of Rs.10,75,681/-, it is covered by POTR for which the Adjudicating Authority has given detailed/well-reasoned findings. The averment of the assessee that he could not pay the tax dues within the stipulated time due to financial crisis cannot be considered as a reasonable cause as the tax payment is mandated ....
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....pported by the judgement of the Hon'ble High Court of Karnataka in the case of CCE Vs. Adecco Flexione Workforce Solutions Ltd. [2012 (26) STR 3 (Kar.)] Hence the demand on credit notes issued and penalty imposed under Section 78 & 77 of the Finance Act, 1994 is not sustainable in law. 8.8.2 In this regard, the appellant has referred to the Letter dated 19.12.2012 which has been reportedly submitted to the Audit Team. However, there is no evidence that such a Letter was addressed to the Adjudicating Authority. It appears that there is no proof to verify CENVAT reversal by the Appellant, and no proof submitted of having debited the same in the CENVAT Credit Ledger nor abstracted copy of the same has been placed before the Adjudicating Authority for verification. So, we are unable to agree to the contention of the Appellant on this issue. There is a mention of Availment of CENVAT Credit, but no proof of debit. Therefore, this amount of service tax of Rs.14,84,423/- is payable by the Appellant. We have also perused the judgement in the case of CCE Vs. Adecco Flexione Workforce Solutions Ltd. [2012 (26) STR 3 (Kar.)] relied upon by the Appellant which is about applicability of p....
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.... or that they had been indulging in a parallel accounting. The appellant has been paying service tax from 1.7.2003 and has been paying service tax regularly. In the above scenario, a case of belated payment of service tax has been wrongly held to be a case of suppression with an intention to evade payment of service tax. b) It is commonly understood that the employees have to be given the salaries within due time. If the service receivers delay the payment, it would cause naturally much hardship to the service provider as they have to make the statutory payments such as salary EPF, ESI etc. Therefore, the appellant has put forward a reasonable cause for not paying the service tax within the due time and is a fit case for invoking Section 80 of the Finance Act for setting aside the penalties. c) A perusal of the ST-3 returns filed for the disputed period would show that the details of the Billed amount indicated in the annexure to the show cause notice was taken from the returns only and therefore it cannot be alleged that the appellant had suppressed any information from the Department. Therefore, it is not a case for invoking larger period and penalties imposed a....
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....nt, the department also provided for a strong compliance verification mechanism with three important prongs-Scrutiny of Returns/ Assessments, Audit and Anti-Evasion. The crucial role of scrutiny of assessments was highlighted in the Report of the Task force on Indirect Taxes, 2002, which stated that "It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers". Here we find that the Appellant has raised Invoices/Credit Notes mentioning Service Tax, the compliance of the Appellant in discharging the Tax along with interest before the issue of SCN though the Appellant was facing liquidity crisis with 50 % of the amount as receivables deserves a special mention. Further the Department has collected the details from the Appellant and the ST-3 returns and it is also an ....