The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand, interest, and penalties imposed on a construction and manpower supply service provider after holding that the adjudicating authority failed to comply with the Tribunal’s earlier remand directions and merely reproduced the previous order without undertaking the required re-quantification exercise.
The Bench of P.K. Choudhary (Judicial Member) and K. Anpazhakan (Technical Member) specifically noted that the adjudicating authority had failed to follow the remand directions and had effectively issued a “copy-paste” version of the previous order rather than carrying out the exercise mandated by the appellate forum.
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The appeal arose from a de novo Order-in-Original passed by the Commissioner, CGST & Central Excise, Ghaziabad, which had once again confirmed a service tax demand of ₹32.89 lakh along with interest and equivalent penalty under Section 78 of the Finance Act, 1994. The order also imposed a separate penalty of ₹96,700 for delayed filing of ST-3 returns.
The dispute related to the period from 2011-12 to 2014-15. During the original adjudication proceedings, the department had alleged short payment of service tax based on a comparison of figures appearing in Form 26AS, balance sheets, ST-3 returns, challans, and other records. While the adjudicating authority accepted certain contentions of the assessee and took note of service tax already paid, it ultimately confirmed a demand of ₹32.89 lakh, along with interest and penalties.
The matter had earlier reached the Tribunal, which in December 2018 found merit in the assessee’s contention that the demand under the category of manpower supply service required fresh quantification after extending the benefit of Notification No. 30/2012-ST relating to the reverse charge mechanism. The Tribunal had also directed the adjudicating authority to examine the valuation of construction services in accordance with Rule 2A of the Service Tax (Determination of Value) Rules, 2006 and remanded the matter for re-quantification.
According to the appellant, it was engaged in providing works contract and manpower supply services to various builders. The assessee argued that it had already deposited approximately ₹1.50 crore towards service tax liability and had reconciled the differences between Form 26AS and its books of accounts on a year-wise basis. It further contended that after the Tribunal’s remand, the Commissioner failed to undertake any fresh quantification and simply passed another order confirming the earlier demand.
While examining the de novo order, the Tribunal observed that despite specific directions issued in the earlier remand order, the adjudicating authority had not re-quantified the demand under the category of construction services as required under Rule 2A. Instead, the authority re-confirmed the earlier findings and justified its action on the ground that the assessee had not produced any additional documentary evidence beyond what had already been submitted during the original adjudication proceedings.
The Tribunal further recorded that the assessee had already submitted a detailed reconciliation of the differences between Form 26AS and the books of accounts through its reply dated 30 August 2016. The assessee had also deposited the balance tax amount and maintained that no further tax liability survived. After reviewing the records, the Bench accepted the contention that the reconciliation had been furnished and observed that no further tax was payable.
The Tribunal remarked that appellate forums are created by statute to resolve disputes and not to prolong litigation by pushing matters to higher forums unnecessarily.
The CESTAT set aside the impugned de novo order and allowed the appeal with consequential relief in accordance with law. The decision effectively nullifies the confirmed service tax demand, interest, and penalties imposed through the impugned order.
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