By TIOL News Service

MUMBAI, AUG 19, 2013: THE appellant is registered with the department under the category of "Manpower Recruitment of Supply Agency Service" and "Security Agency Services.

Investigation of books of accounts and records maintained revealed that the appellant had not correctly discharged their service tax liability inasmuch they were liable to pay service tax under "Manpower Supply Agency" service amounting to Rs. 49,61,166/- for the period 2007-08 to 2009-10 and Rs. 3,49,224/- under "Security Agency" service during the period 2007-08 to 2009-10.

The appellant admitted non-discharge of service tax liability and attributed the same to non-receipt of service tax from some of the customers. It was also stated that they had given Rs.20 lakhs cash to their Tax Consultant for payment of service tax but this was denied by the Consultant.

A SCN came to be issued in June 2011 demanding service tax of Rs. 53,10,390/-.

The appellant failed to appear for the personal hearings granted but in their reply to the SCN submitted that they were not providing "Manpower Supply Services" but were engaged in job work such as removing, shifting, stacking of raw material and housekeeping activities, etc. and therefore, in terms of Notification No. 8/2005-ST they are exempted from payment of service tax.

An order-in-original came to be passed by the CCE, Pune confirming the demand and imposing interest and penalties.

Against this order an appeal was filed before the CESTAT contending therein that the principles of natural justice were not followed; cross examination of the Tax Consultant was not provided and the adjudicating authority had not considered their claim of exemption notification 8/2005-ST. The appellant requested that the matter be decided on merits after considering the submissions made in the appeal memorandum.

The Bench observed -

"6.1 From the records it is seen that the appellant was given sufficient opportunities to defend their case. Five opportunities of personal hearing were granted and the appellant did not avail any one of them. Even after the submissions over fax on 11/09/2012 an opportunity for personal hearing was granted between 9th to 11th October 2012 which also the appellant did not avail. Therefore the contention of the appellant that they were not given sufficient opportunities to defend their case has no merits. Even before this Tribunal though in the appeal memorandum, the appellant sought personal hearing while considering the appeal and stay petition but the appellant has not availed the said opportunity and the Counsel, on behalf of the appellant, has requested this Tribunal to decide the case on merits. In the appeal memorandum, the only ground urged is denial of natural justice. In the statement given before the investigating agency, the appellant has clearly admitted that they have not discharged the service tax liability during the impugned period and they sought to blame the lapse on the consultant to whom they have alleged to have given a sum of Rs. 20 lakhs to discharge the service tax liability. The said consultant has denied receipt of Rs. 20 lakhs. The service tax demand has been made on the basis of the figures given in the books of accounts maintained by the appellant and invoices issued by them to their clients and therefore, there is sound basis for computation of such demand. As regards the claim of the appellant that they are eligible for the benefit of Notification No. 08/2005-ST, as per appellant's own version the activity undertaken by them involved shifting of raw materials and housekeeping activities. Notification No. 08/2005-ST grants exemption on job work carried out by service provider on the materials supplied by the clients. Such job work envisages processing of material supplied by the clients. Shifting of raw material or cleaning factory premises, by no stretch of imagination, can be considered as job work, so as to be eligible for the benefit of Notification No. 08/2005-ST. Therefore, the appellant's submission in this regard lacks merit. The appellant has also not pleaded any financial hardship in the appeal memorandum."

In fine, the Bench held that the appellant had not made out any case for grant of any stay and hence directed the appellant to make a pre-deposit of the entire amount of Service Tax confirmed and report compliance.

(See 2013-TIOL-1235-CESTAT-MUM)