Balaji Manpower Services Vs Union of India & Ors. (Punjab and Haryana High Court)
The petitioner, a proprietorship concern engaged in providing manpower supply services, filed a writ petition under Article 226 of the Constitution challenging the Settlement Commission’s order dated 28.12.2017 to the extent it denied the benefit of “cum tax.” During the period 2011-12 to 2014-15, the petitioner collected service tax from its clients but deposited only part of the amount. Following an investigation and issuance of a show cause notice dated 24.10.2016, the petitioner approached the Settlement Commission, which settled the tax liability, granted immunity from prosecution and imposed a penalty of Rs.3.5 lakh, but rejected the claim for cum tax benefit. The petitioner contended that the show cause notice itself had treated the value appearing in Form 26AS as cum tax value and that sample invoices along with a Chartered Accountant’s certificate established that the invoices were inclusive of service tax. The Revenue argued that the petitioner had failed to produce all invoices and that the Settlement Commission had therefore rightly denied the benefit. The High Court examined the show cause notice and the Settlement Commission’s findings. It noted that the show cause notice calculated service tax liability after treating the value reflected in Form 26AS as cum tax value and that the Settlement Commission itself found the petitioner entitled to cum tax benefit on the basis of the sample invoices, though it ultimately declined the relief for want of all invoices. The Court further observed that the Settlement Commission had also recorded that the petitioner had collected but not deposited service tax, but found nothing on record to show that tax had been collected over and above the value shown in the balance sheet or Form 26AS. Referring to the decisions relied upon by the petitioner, the High Court held that there was no reason to deny the benefit of cum tax value once the value in Form 26AS had been accepted as cum tax price. Accordingly, the writ petition was allowed, the Settlement Commission’s order dated 28.12.2017 was modified, and the respondents were directed to recalculate the petitioner’s service tax liability after granting the benefit of cum tax value within two months from receipt of the certified copy of the order.
