CESTAT, NEW DELHI BENCH
Hajee A.P. Bava & Co.
Commissioner of Central Excise
FINAL ORDER NO. 55192 OF 2013
STAY ORDER NO. 55385 OF 2013
APPLICATION NO. ST/STAY NO. 2878 OF 2012
APPEAL NO. ST/2211 OF 2012
DATE OF PRONOUNCEMENT : JANUARY 9, 2013
D.N. Panda, Judicial Member – Heard this matter extensively.
2. When page 6 of the show cause notice making reference to IAR-52/09, not filed earlier by appellant was provided in the course of hearing that enabled to appreciate contention of both sides. The report forming part of paper book of Appeal folder No. 2212 of 2012 by the appellant having relevance to the present Appeal No. 2211 of 2011, that was referred to.
3. Para 3 of the IAR deals with service tax demand of Rs. 83,48,183/- which is subject matter of this appeal. Relevant part of the said audit report for the purpose of present order is extracted as under:-
“During the course of audit it was found that the assessee is providing fabrication, erection & commissioning services as per contract made with the different service receiver. On perusal of contract it was found that as per terms & conditions of contract the assessee is receiving advance payment from the service receiver for the service to be provided. The said advance payment is being adjusted against the bills raised by the assessee in subsequent period. However, they are not paying service tax on the said advance payment on due dates. Whereas as per section 67 of the Finance Act, 1994, and rule 6 of Service Tax Rules, 1994, they are liable to pay service tax on the advance payment on the 5th day of the month immediately following the quarter in which the payments are received, towards the value of taxable services.” (Emphasis supplied)
4. The contention of the appellant is that the advances appearing under different categories at page 7 of the show cause notice (forming part of paper book of Appeal folder No. 2211/2012), in the cause of execution of contract resulting in provision of taxable service have been adjusted to characterise the same as receipt from taxable service and that has suffered tax. But such proposition was not acceptable to Revenue in absence of proper reconciliation. That confused both the sides. But from para 3 of the show cause notice itself (Ref: page 12 of the appeal paper book of E/2212/2012) it appears that Revenue was aware that the advances were adjusted by the assessee subsequently. Revenue’s only anxiety is that whether the advances giving raise to tax demand of Rs. 83,48,189/- has really suffered tax in subsequent period and disclosed in service tax returns filed. To contend so Revenue gets support of Section 67(3) of the Finance Act, 1994 and submits that gross amount charged for taxable service provided includes any amount received towards providing such taxable service before, during or after provision thereof. It appears that Revenue has correctly conceived that amount attributable to taxable service even received in advance should not escape taxation in terms of provision of section 67(3) of the Finance Act, 1994.
5. From various documents enclosed to paper book it exhibits that the appellant has made effort to satisfy the authority below making reconciliation of the advance received with adjustment thereof towards taxable service received in future. But that does not pin point in which year and under which head that was adjusted filing returns under Finance Act, 1994. Although contain documents appear in pages 22 to 26 of the paper book in Appeal No. 2211/2012 that needs thorough scrutiny. What that is required is that both sides should make effort to reconcile with reference to receipt and disclosure in the returns of relevant year to reach to a rational conclusion in respect of the amounts stated at page 7 of the show cause notice. If any of the part of the advance attributable to taxable service and that did not form part of returns filed subsequently that amount shall be brought to tax without escapement. Law does not permit postponement of liability because of specific provision under section 67(3) of the Finance Act. To such proposition of law, appellant says that for the default, appellant shall compensate Revenue with interest. But learned Adjudicating Authority shall take appropriate decision in the matter since we propose to remand the matter for proper reconciliation to serve interest of justice and we do not express any opinion on the consequence or postponement of liability by Appellant.
6. We dispose of the stay application and send the matter back to the ld. adjudicating authority to fix the date of hearing as expeditiously as possible. As we find the reconciliation statement forming part of the paper book, it would be preferable for the revenue to send copies thereof to the ld. Adjudicating Authority for his assistance and verification and to ascertain whether that formed part of his record and complete the readjudication.
7. Keeping the matter open for argument on the facts and law, appellant shall get proper opportunity of hearing. At this stage, revenue says that what that has not suffered tax, Revenue shall tax the same in readjudication proceedings, since the show cause notice has proposed appropriate taxation. We have no difference to such a proposition.