Pearls Buildwell Infrastructure Limited Vs Commissioner of Central Excise And Service Tax (CESTAT Chandigarh)
In a recent case, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Chandigarh addressed a significant issue concerning service tax demands based on calculation sheets. The case of M/s. Pearls Buildwell Infrastructure Limited vs. Commissioner of Central Excise & Service Tax, Chandigarh – I revolves around whether the tax authorities can impose service tax based solely on calculation sheets. The CESTAT’s decision provides clarity on this matter.
The CESTAT set aside the demand confirmed by the Commissioner for Service tax on the basis of calculation sheet only. The Tribunal found that the appellants did not collect any service tax from their customers, substantiated by the absence of invoices and a certificate from their customer confirming this. Consequently, the Commissioner’s reliance on calculation sheets to establish service tax collection was considered insufficient. As a result, the impugned order was deemed unsustainable, and the appeal was allowed. Simultaneously, the Department’s appeal against the dropped demand was dismissed.
Facts:
M/s Pearls Buildwell Infrastructure Limited (“the Appellant”) is engaged in Construction Services related to road laying. An intelligence report indicated that the Appellants had collected service tax from their customers but had not deposited it with the exchequer. Consequently, a show-cause notice was issued on April 23, 2010, demanding service tax of Rs. 97,71,146.68/- along with interest. The notice also proposed penalties under Sections 76, 77 & 78 of the Finance Act, 1994 (“the Finance Act”). The Appellants had already deposited Rs. 10,20,994/- as Service Tax and Rs. 55,731/- as interest, which was sought to be adjusted.
The Commissioner, through the impugned order dated March 25, 2011, confirmed a demand of Rs. 10,24,928/- and the related interest but dropped the rest of the demand. The Appellants appealed against this confirmation, and the Department appealed against the dropped demand.
The Appellant further contented that the Commissioner’s findings relied on calculation sheets discovered during a search, overlooking a certificate from the Appellant and its customers vide letters dated September 03, 2008 and October 06, 2008 confirmed that no service tax had been charged.
Issue:
Whether the provisions of Section 73A of the Finance Act is applicable to the case?
Held:
The CESTAT, Chandigarh in Service Tax Appeal No. 1196 of 2011 held as under:
