Rejection of CA certificate for want of supporting documents cannot be sustained

M/S S.S. Construction vs Commissioner Of Central Excise, … on 20 September, 2012

 IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

WEST ZONAL BENCH AT MUMBAI

COURT NO. I

Application No. ST/2085 & 2086/12       in Appeal No. ST/616 & 617/12

(Arising out of Order-in-Appeal No. BC/82-83/RGD/2012-13 dated    31.5.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III).

For approval and signature:

Honourable Shri S.S. Kang, Vice-President

Honourable Shri P.R. Chandrasekharan, Member (Technical

1. Whether Press Reporters may be allowed to see       :    No

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the  :    Yes  CESTAT (Procedure) Rules, 1982 for publication

            in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy    :    Seen  of the order?

4. Whether order is to be circulated to the Departmental     :    Yes authorities?

M/s S.S. Construction

Appellants

Vs.

Commissioner of Central Excise, Raigad

Respondent

Appearance:

Shri S.P. Agnihotri, Consultant

for Appellants

Shri M.S. Reddy, Addl. Commr. (AR)

for Respondent

CORAM:

SHRI S.S. KANG, VICE-PRESIDENT

SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL)

Date of Hearing: 20.09.2012

Date of Decision: 20.09.2012

ORDER NO.

Per: P.R. Chandrasekharan

These two appeals and stay applications arise out of a common Order-in-Appeal No. BC/82-83/RGD/2012-13 dated 31.5.2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III, therefore, both the appeals are being taken up together for disposal.

2. The appellant M/s S.S. Construction are engaged in the Commercial and Industrial Construction services and are registered with the Department under the said category. On the basis of audit of the records maintained by the appellant, two show-cause notices dated 11.5.2010 and 17.3.2010 were issued to the appellant alleging short levy of Rs.4,15,935/- during the period 2006-07 to 2008-09 and Rs.1,09,197/- during the period 2005-06 to 2008-09. The short levy was alleged on the ground that there was a difference between the income recorded in the balance-sheet of the appellant vis-`-vis the Service Tax return filed by the appellant and, therefore, the appellants are liable to pay Service Tax on the gross income shown in the balance-sheet. The appellant contended that they are maintaining the balance-sheets on the basis of accrual method, whereas the Service Tax liability is required to be discharged on the basis of actual payment received i.e. on cash basis. The show-cause notices were adjudicated and the demands were confirmed against the appellant along with interest thereon and equivalent penalty under Section 78 was imposed apart from penalty under Section 76 of the Finance Act, 1994. The appellant preferred an appeal before the lower appellate authority who observed as follows: –

Thus, Section 68 of the Finance Act, 1994 and Rule 6 of the Service Tax Rules provide recovery of the tax only when the payments are received. The appellants have contended that they have paid the Service Tax on the amount of taxable service actually received by him as reflected in his bank account including TDS deducted which are tallying with the values of the taxable services received as shown in the ST3 returns filed by him. The Adjudicating Authority has not given any findings in this regards. Moreover, nowhere in the show-cause notice it is alleged that the differential amount has actually been received by the appellant. I observe that all the documents like register and records including bank statements, ledger accounts, copies of the ST3 returns, challans showing payment of Service Tax and other relevant documents were submitted to the Range Superintendent. The Adjudicating Authority has specifically mentioned that while issuing the show-cause notices, not only the entries under the head gross sales are considered but also the overall entries in ledger account of sundry debtors including the opening and closing balance have been taken into consideration. The net sales factor after allowing deductions on account of sundry debtors account form the gross sales has been considered for raising demands. On the other hand, the appellants have also not produced the reconciliation statement either before the Adjudicating Authority or before me. If the revenue has not made efforts to quantify the amount of tax payable, it was in the appellant s interest to reconcile the Balance Sheet income vis-`-vis the income shown in ST3 returns, to defend their case with documentary evidence. Thereafter, the lower appellate authority rejected the appeal and hence, the appellant is before us.

3. The learned Counsel for the appellant submits that the basis for the alleged short levy is the difference between the balance-sheet figures and the Service Tax Return figures. The balance-sheet figures indicate the gross amount billed for the services rendered, whereas the Service Tax Return figures indicate the amounts actually received for the services rendered. Since Service Tax is payable on receipt of the consideration for the services rendered, the balance-sheet figures are not relevant and only the considerations which have been received duly supported by the Bank statements needs to be taken into account for discharging of Service Tax liability. Accordingly, he pleads for setting aside the impugned order and grant of stay. In the alternate, he pleads that the matter be remanded to the original adjudicating authority so that they could reconcile the difference in the figure and satisfy the authorities that the Service Tax payment made by them is correct.
4. The learned Addl. Commissioner (A.R.) appearing for the Revenue reiterates the findings of the lower authorities. However, he has no objection, if the case is remanded back for re-adjudication.
5. We have carefully considered the submissions. As the issue involved is in a narrow compass, we are of the view that the appeals themselves can be disposed of at this stage. Therefore, after dispensing with the pre-deposit of dues adjudged, we take up the appeals for consideration.

5.1 The short issue for consideration is whether the appellant has discharged the Service Tax liability correctly or not? The Service Tax is payable on the amounts received for the services rendered and not on the amounts billed or charged. According to the appellant, the balance-sheet figures reflect the gross amount charged, whereas the figures they have declared in the ST-3 Returns show the amount they have actually received, on which they have discharged the Service Tax liability. Thus, the issue essentially relates to a question of fact only i.e. what is the amount the appellant received for the services rendered during the impugned period. The appellant has undertaken to reconcile the figures shown in the balance-sheet vis-vis those in the Service Tax Returns. Therefore, in the interest of equity and justice, we are of the view that the matter needs to be remanded back to the original adjudicating authority for reconsideration afresh.

5.2 Accordingly, we direct the appellant to submit the reconciliation statement on the difference between the balance-sheet figures and ST-3 return figures duly certified by a Chartered Accountant. On such submission, the adjudicating authority shall consider the matter afresh and pass the order in accordance with law after giving a reasonable opportunity to the appellant to present their case.

6. Thus, the appeals are allowed by way of remand. The stay applications are also accordingly disposed of.