At, Customs Excise Service Tax Appellate Tribunal Regional Bench Allahabad
By, THE HONORABLE JUSTICE: ASHOK JINDAL
By, MEMBER AND THE HONORABLE JUSTICE: ANIL G. SHAKKARWAR
For Petitioner: Tarun Gulati, Vipin Upadhyay and Prasant Tahiliani, Advocates And For Respondents: Pradeep Kumar Dubey, Supdt. (A.R.)
1. The appellants are in appeal against the impugned orders wherein demand of Service Tax has been confirmed under the category of Business Auxiliary Service.
2. The facts of the case in both the appeals are identical. Therefore both the appeals are taken up for final disposal.
3. The brief facts of the case are that appellant is a manufacturer of electronics goods. The appellant is paying certain amounts to their foreign corroborator. During the impugned period the appellant paid several amounts under the head of advertisement and sale promotion actual expenditure incurred in Sri Lanka and Bangladesh which were reimbursed on account of purchase of goods, on account of holding exhibition, events, accommodation outside India. Certain provisions of expenditure. The said amounts have been paid by the appellant in foreign exchange. For provisions of expenditure no actual amount has been paid by the appellant. He had made only made in their books of account for those expenditure. The Revenue obtained the balance sheet of the appellant for the respective periods on the basis of the payments sought in the balance sheet for foreign exchange were taken as the appellant has received taxable services from outside India and on the basis of that it was alleged against the appellant that they have received taxable services under the category of business auxiliary service and has not paid Service Tax under reverse charge mechanism, therefore proceedings were initiated against the appellants by issuance of the show cause notices. The matter were adjudicated converted into the impugned demands along with interest and various penalties under the Finance Act were also imposed. Against the said orders appellant are before us.
4. The Ld. Counsel for the appellant submits that the appellants are registered with the Central Excise department and clearing their goods on payment of duty filing regular returns. Their returns were not examined and merely on the figures shown in the balance sheet show cause notices have been issued. In fact it was not ascertained how much amount has been paid by the appellant under which head and whether that amount paid by the appellant amounts to a service or payments towards some other things. Without ascertaining those facts show cause notices have been issued to them which is contrary to the law. It is his submission that the amount produced of the record before the adjudicating authority or the investigating authority, but they did not try to co-relate the figures from balance sheet with their ST-3 returns and the documents produced by them. The allegation against the appellant has made that they have not produced whole of the record. It is his contention that they are bulky records that if Revenue feels aggrieved with non-production of the documents, the person of the department may be deputed to investigate each and every record with them. It is his submission that appellant has provided C.A. Certificate and same has been discarded without assigning any reason. In that circumstances impugned orders are to be set aside.
5. On the other hand the Ld. AR supported the impugned order and submits that as per balance sheet figures it is shown appellant has made payment in foreign currency and that amount has been paid by the appellant towards certain services therefore demand has been confirmed rightly against the appellant.
6. Heard the parties and considered the submissions.
7. On careful consideration of the submissions we find that in this case the basis of demand is balance sheet figures obtained by the department from the balance sheets of the appellant. It is a fact on record that appellant is registered with their Central Excise department as well as under Service Tax and filing their regular returns. No effort has been made to find out how much amount they have paid towards Service Tax and under which head. Moreover appellant has produced CA certificate, no credence has been given to the CA certificate produced by the appellant. Moreover merely on the figures shown in the balance sheet without assigning actual amount demand is not sustainable. We also take note of the fact that Service Tax has been demanded from the appellant under reverse charge mechanism being service recipient. If appellant is required to pay the said service tax on the services received by them same is admissible as Cenvat credit to the appellant. That issue has already been discarded by the adjudicating authority while adjudicating the case. In these circumstances we do not find merit in the impugned orders. Further we hold that demands cannot be raised merely on the basis of the figures and no amounts mentioned in the balance sheet in terms of decision of this Tribunal in the case of GSP Infratech Development Ltd. v. CCE, C & ST, Belgaum : 2015 (39) STR 327 (Tri-Bang.)], wherein this Tribunal has observed as under:-
3. Unfortunately learned Commissioner has forgotten the fact that merely going by the Balance Sheet and Ledger figures to arrive at the service amount received is not correct. More so because many times we have found that Balance Sheet is prepared on accrual basis whereas Service Tax is levied on receipt basis. In any case for demand of Service Tax, first of all the nature of services rendered has to be considered, thereafter it has to be examined whether the service is covered by definition of services in the Finance Act, 1994 and classified under a particular service category, thereafter it has to be seen what is rate of tax and consideration received and the tax has to be calculated. This is the process to be followed for assessment of tax and in the absence of any assessment by the assessee when the Commissioner proceeds for adjudication this process has to be followed. In the absence of such a process it would not be possible to apply any law and decide the matter. Therefore we find that the preliminary objection raised by the learned counsel is valid and therefore the matter is required to be remanded to the original authority at this stage itself. Accordingly the impugned order is set aside and the matter is remanded to the original adjudicating authority to proceed in accordance with law after giving reasonable opportunity to the appellant to present their case. The Commissioner may provide details service wise and party wise separately and the consideration received and the tax payable before proceeding further. Stay petition as well as appeal gets disposed of in the above manner.
8. We further hold that it is the burden on the Revenue to come with evidence that the appellants are receiving taxable service which Revenue has failed to discharge. The decision of Hon'ble Apex Court in the case of Hindustan Ferodo Ltd. v. CCE, Bombay [1997 (89) ELT 16 (SC)]. Further the certificate issued by CA cannot be discarded without assigning any reason as held by this Tribunal in the case of CCE, Indore v. SRF Ltd. [2008 (223) ELT 508 (Tri.-Mum)]. In view of the analysis we set aside the impugned orders and remand back the matter to the adjudicating authority for fair adjudication after considering all the records placed by the appellant and to give finding in detail on each aspects, if Revenue wants that the documents is required to produce, in that circumstances the adjudicating authority shall depute th
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eir officers at the premises of the appellant to examine the documents as documents being bulky. The appellants are also directed to provide necessary assistance to the officers visiting their office for examining documents. 9. In view of this appeals are disposed of by way of remand. As directed hereinabove it is pertinent to mention here that appellant shall be provided reasonable opportunity to present their case before the adjudicating authority. Appeals are disposed of in the above terms. The adjudicating authority shall consider the issue appellant being service recipient and paying Service Tax under reverse charge mechanism is entitled to avail Cenvat Credit, in that circumstances whether it is a situation of revenue neutrality or not. (Dictated and pronounced in the court.)