By TIOL News Service

MUMBAI, JUNE 05, 2013: THE appellant provided taxable services of “GTA service, erection, commissioning and installation services, manpower recruitment or supply agency service” during the period April 2008 to March 2011. However, they did not discharge the service tax liability on these services, even though they had recovered the service tax from their customers.

A demand notice was issued for recovery of ST of Rs. 1.30 Crores. Another service tax demand of Rs. 47,51,362/- was made on account of advances received by the appellant.

The CCE, Nagpur confirmed the demands and imposed penalties and interest.

Before the CESTAT, the appellant submitted that although they are not disputing the ST demand of Rs.1,30,32,514/-, their claim of CENVAT credit on inputs and input services, which amount is Rs. 1,14,04,823/-, has not been considered by the adjudicating authority. In respect of the second demand, the appellant submitted that advances received have been adjusted in the subsequent bills issued but nonetheless the ST was not discharged when the bills were issued. The only plea taken by the appellant is that they are facing financial hardship and, therefore, leniency should be shown to them.

The Revenue representative submitted that there was no question of showing any leniency as the appellant had already collected the service tax from their customers and as regards the CENVAT credit claim, they are yet to prove eligibility by submitting documentary evidence; hence the appellant should be put to terms.

The Bench observed that the matter has to go back to the adjudicating authority for consideration of the CENVAT claim made by the appellant.

On the plea made by the appellant for showing leniency, the Bench held -

"5.2 It is a fact on record that the appellant had collected the service tax from their customers but has not remitted the same to the department. In that scenario, the question of showing any leniency would not arise at all as the appellant has played a fraud on the exchequer and any leniency would send wrong signals which should be avoided…"

The Bench then directed the appellant to make a pre-deposit of Rs.64.19 lakhs and report compliance to the adjudicating authority, who would thereafter examine the eligibility to CENVAT credit and pass an order in accordance with law.

The appeal was disposed of in above terms.

In passing - One wonders as to whether the CBEC Circular 967 showed its leniency. As for the pre-deposit amount of Rs.64.19 lakhs, it is computed thus - Rs.1,30,32,514/- minus Rs.1,14,04,823/- plus Rs.47,51,362/- …okay leave it!

(See 2013-TIOL-840-CESTAT-MUM )