Whether service tax can be demanded on the difference between the income entered in the balance sheet and that reflected in service tax returns?

PJ/Case Laws/2012-13/1467

Case:-MAROSHREE ENTERPRISES V/S COMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:- 2013-TIOL-352-CESTAT-MUM

Brief Facts: - The present appeal has been filed by the assessee against the Order-in-Appeal dated 19/06/2012 passed by Commissioner of Central Excise (Appeals), Mumbai - II. The issue relates to demand of service tax on the difference between the income entered in the balance sheet and in the amounts reflected in the service tax returns filed by the appellant. After considering the submissions made by both the sides and also the details given in the ledger accounts, and after giving deduction towards the amount receivables as indicated under the head ‘sundry debtors', the lower adjudicating authority has determined the service tax liability for the years 2005-06 to 2008-09 against which the appellants preferred an appeal and the lower appellate authority dismissed the same.

Appellant’s Contention: - The Appellant contended thatin their balance sheet they have indicated the amounts which are to be received from the service recipients.

Reasoning of Judgment: - The Hon’ble CESTAT held that theyhave perused the balance sheet for the assessment years 2008-09. In the assessment column under the head ‘Current Assets & Loans & Advances' certain amounts are indicated against, Exon Laboratories Pvt. Ltd., Hitkari Fibres Ltd., Hitkar Hi Tech Filters Ltd. and Kopran Ltd. These amounts were indicated under ‘Loans & Advances'. By no stretch of imagination these can be considered as amounts receivables for the services rendered. The adjudicating authority has verified from the ledger accounts maintained by the appellants and found that the amounts claimed by the appellant to be receivables are not reflected in the ledger accounts under the head ‘sundry debtors' and wherever some amounts have been reflected under the head ‘sundry debtors, benefit of the same has been given to the appellant while determining the service tax liability. Wherever ‘sundry debtors' amount reflected nil balance, he has not given any deduction. They do not find any infirmity in the determination of service tax liability by the adjudicating authority. Therefore, after perusing the records, they find that the appellant has not made out any prima facie case for complete waiver against the demands. Accordingly, they direct the appellant to make pre-deposit of 50% of the service tax demand confirmed in the impugned order within a period of eight weeks and report compliance on 29th January, 2013. On such compliance, pre-deposit of the balance amount of service tax, interest and penalty shall stand waived and recovery thereof stayed during the pendency of the appeal.

Decision: - 50% Pre deposit ordered.

Comment:-The analogy drawn from this case is that as the case was not prima facie in favour of the appellant, and considering the overall submissions made, 50% pre-deposit was ordered to be made.

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PJ/Case Laws/2012-13/1467

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