2024-VIL-285-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 65(94) and 72 of Finance Act, 1994 – Providing of security agency services – Demand of tax – Appellant is registered with service tax department for providing Security Agency Services as defined under Section 65(94) of the Act – Based on information received to effect that Appellant had not paid its full liability of service tax, department issued show cause notice to Appellant by invoking best judgment assessment under Section 72 of the Act – After due process of law, Adjudicating Authority confirmed demands proposed in both show cause notices – Whether demand raised in first show cause notice is sustainable – HELD – First SCN was issued invoking best judgment assessment under Section 72 of the Act based on information available on record – Once all information was provided in reply to SCN including contracts which Appellant had entered into with its clients, it was incumbent on Commissioner to classify services appropriately and confirm service tax – At that stage, Commissioner may not have a clear idea of exact nature of services provided – There is no justification for Commissioner to confirm a demand without specifying any head – Said vagueness in impugned order makes it impossible for Appellant to defend itself against confirmed demand – Part of demand raised in first SCN cannot be sustained and needs to be set aside on ground of vagueness – Rest of demand is on account of security services rendered to Mauritius High Commission – Appellant could not produce any documents to establish that these services were exempted – Confirmation of demand of service tax on security agency service rendered to Mauritius High Commission by Appellant is upheld – Appeal partly allowed - Cancellation of services – Issuance of credit notes – Confirmation of demand – Whether Commissioner is justified in confirming demand raised in second show cause notice – HELD – Only demand in this SCN is on account of credit notes issued by Appellant to its clients for cancellation of services – Commissioner considered it as amounts received by Appellant towards providing taxable services and confirmed demand of service tax – Issue of a credit note means paying someone and issue of a debit note means receiving from someone – Commissioner has clearly erred and mis-understood the credit notes as amounts which Appellant had received, when, in fact, these are the amounts which Appellant had paid and therefore, service tax cannot be charged from Appellant on amount which it had paid to other parties – Matter remanded to Commissioner to consider credit notes and re-determine service tax, if any, is payable for period covered by this SCN.
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