Computation of demand of service tax is to be done as per audited balance sheet figures: CESTAT

Case Details: R D Contractors And Consultants v. CCE & Service Tax, Panchkula, - [2022] 137 taxmann.com 288 (Chandigarh - CESTAT)

Judiciary and Counsel Details

• • Ashok Jindal, Judicial Member
  • Vikrant Kackria, Adv. for the Appellant. 
  • Amandeep Kumar, AR for the Respondent.

Facts of the Case

The appellant is the provider of works contract service and was paying 50% service tax thereon and remaining 50% of service tax payable by the service recipients under reverse charge mechanism. An investigation was conducted against the appellant and it was found that in certain cases, it has collected the full tax instead of 50%. The Adjudicating authority had issued a Show Cause Notice under Section 73 of the Finance Act, 1994 (‘the Act’) for recovery of the excess service tax collected and has calculated the same taking higher of Form 26-AS or Balance Sheets.

The assessee argued that if any amount is collected more than the actuals, the said amount is recoverable from the assessee under Section 73-A of the Act and cannot be demanded under Section 73 of the Act. Section 73 of the Act deals with adjudication of cases where service tax not levied or paid or short-levied or short-paid or erroneously refunded and Section 73A deals with payment of service tax excess collected from any person.

CESTAT Held

The Tribunal confirmed the above argument of the assessee and held that excess amount recovered by the appellant cannot be demanded under Section 73 of the Act.

It was further held that figures of the balance sheets are more authenticate for computation, therefore, their computation of demand of service tax is to be done as per balance sheets figures. The approach taken by adjudicating authority is not correct.