ST - In absence of any documentary evidence, there cannot be any presumption in favour of appellant – Order of adjudicating authority is impeccable – appeal dismissed: CESTAT
By TIOL News Service
MUMBAI, APR 04, 2014: ON the basis of intelligence that the appellant had evaded Service Tax, an investigation was carried out by the Anti-Evasion Wing of Service Tax Commissionerate, Mumbai and records were summoned and statements recorded. Based on investigation conducted, it appeared that the appellant had received a consideration of Rs.51,49,56,282/- by way of Engineering Consultancy during the period from 1.4.2001 to 31.12.2005 and they had not discharged Service Tax liability on the consideration received.
Alleging that the Engineering Consultancy undertaken by the appellant would come under the category of Consulting Engineer's Service, a SCN was issued demanding Service Tax of Rs.4,12,93,802/-.
The appellant led evidence before the adjudicating authority by way of invoices showing that the consideration received during the year 2002-03 and upto 31.12.2005 were not on account of any Engineering Consultancy Services rendered but on account of other reasons such as Export earnings, Erection and Installation Services, Works Contract Services, supply of material and so on and, therefore, they were not liable to pay any Service Tax on this consideration received under the category of Consulting Engineers Service. This was accepted by the adjudicating authority, who dropped the Service Tax demand amounting to Rs.3,80,40,960/- for the period 2002-03 to 31.12.2005. However, since the appellant could not produce similar documentary evidence for the year 2001-02, the adjudicating authority confirmed the demand on the consideration received during the period 2001-02 classifying the service rendered under the category of Consulting Engineers' Service. Penal and interest provisions were also put into good effect.
Aggrieved by this order, the appellant is before the CESTAT.
It is submitted that since for the period 2002-03 upto 31.12.2005, the demands were dropped, there is no reason to presume that for the period 2001-02, the appellants were liable to pay Service Tax; that extended period is not sustainable; that as they have discharged the Service Tax levied along with interest thereon for the period 2001-02 vide challan dated 2.11.2013 the penalty should be waived.
The Revenue representative justified the confirmed demand by reiterating the contents of the o-in-o.
The Bench inter alia observed –
++ For the period 2002-03 onwards, the appellant has been able to furnish documentary evidence showing that the consideration received was not for Consulting Engineers Service but for other services rendered by the appellant. However, no such documentary evidence has been produced in respect of the consideration received for the period 2001-02.
++ In the absence of such documentary evidence, there cannot be any presumption in favour of the appellant that the consideration received was for other than the Consulting Engineers Service.
++ In the Books of Account, the consideration received has been shown as income under Engineering Consultancy Service. Therefore, if the appellant wanted to claim exclusion of the consideration received for the purpose of levy of Service tax, it was their responsibility to show by way of documentary evidence that the consideration received was not by way of Engineering Consultancy but for other services rendered. In the absence of such evidence, the presumption goes against the appellant and, therefore, the adjudicating authority cannot be faulted for confirming the demand for the period 2001-02. The order of the adjudicating authority is impeccable in respect of this conclusion.
The Bench further observed that once the demand of ST is upheld, the interest liability is automatic and consequent.
In the matter of penalty imposed u/s 76 of FA, 1994, it was held that no mens rea is required for imposition of penalty and moreover the appellant had discharged the Service tax liability along with interest only in 2013 after a gap of 12 years from the date of rendering of service and the due date for payment of Service tax.
As for penalty u/s 78 of FA, 1994, the same was upheld on the ground that the appellant did not disclose receipt of the consideration for the services rendered and which clearly amounts to willful misstatement of facts.
In fine, the appeal was dismissed.
Also ran: Hope there is no Revenue appeal pending against the dropped portion of demand!
(See 2014-TIOL-508-CESTAT-MUM)
