ORDER
P. Karthikeyan, Member (T)
1. After hearing both sides, the requirement of predeposit is dispensed with and appeal itself is taken up for disposal. On verification of records of M/s. Siva Sakthi Security Detective and Stipulation of Manpower, Trichy, it was observed by the authorities that the party had rendered security services during the years 2000-01 to 2004-05, had not paid the service tax due and had not filed ST3 returns. Following due process of law, a show cause notice issued in this regard was adjudicated by the original authority wherein he demanded service tax of Rs. 2,00,729/-, education cess of Rs. 237/-, interest of Rs. 2,00,996 and imposed penalties under various sections of the Finance Act totalling Rs. 21,000/-. Before the original authority and first appellate authority, the appellants had taken the stand that the department’s case was made solely on the basis of records maintained by the appellants, especially their income tax returns. They had argued that they had rendered security services to M/s. TANSI and TANCEM, both State Government owned entities during the material period and that they had shown inflated revenue in the income tax returns in order to obtain a bank loan. The lower authorities rejected the above contention and the impugned order accordingly upheld the demand made and penalties imposed by the original authority.
2. In the appeal, it is claimed that they had provided security of movable properties of TANSI and TANCEM and that the said services were exempted from service tax in terms of Notification/No. 56/98-ST dated 7/10/98. This notification was in force during most of the period covered by the demand. The income shown in the income tax returns had also covered income from other sources. They had failed to satisfactorily present their case before the lower authorities due to the ignorance of the appellants as regards the statutory provisions and procedures.
3. The Ld. Counsel appearing for the appellants claimed that though the claim for exemption had not been made earlier, the appellants were entitled to claim the benefit of the notification in the proceedings before the Tribunal, the eligibility to exemption being a question of law.
4. The Ld. SDR opposed the submission and submitted that the appellants should not be allowed to urge this additional ground before the Tribunal for the first time.
5. On a careful consideration of the case records and submissions made by both sides, I find that it is the department’s case that the appellants had rendered service to TANSI and TANCEM. It was possible to make a proper verification as regards the services rendered by the appellants and gross amounts collected by them instead of going by the income tax records which they had never admitted to be correct and had claimed to have been made for the purpose of obtaining a bank loan. TANSI and TANCEM being government concerns, it should have been possible for the assessee also to establish with records, the taxable amounts received by them if their claim were correct. In the circumstances, I find that the ends of justice require that the matter is remanded to the original authority for examining their claim as regards the exemption in terms of notification No. 56/98-ST dated 07/10/98. Accordingly, the appeal is allowed by way of remand. Assessee will be at liberty to show evidence acceptable to the department as regards both their claims regarding the falsified tax returns and the eligibility to the exemption in terms of notification No. 56/98-ST dated 07/10/98. Needless to say that the appellants shall be provided adequate opportunity to present their case.
(Order pronounced in the open Court on 20.07.07)