Order date – 28 July 2022

Facts

• The appellant, SPML Infra Limited, is providing services under the taxable category of Maintenance and Repair Services, Erection, Commissioning or Installation Services, Construction of Residential Complex Services, Work Contract Services etc.
• During the audit, it was observed that appellants had not paid the service tax on unbilled revenue, over availed CENVAT Credit availed as compared from trial balance.
• A show cause notice dated 29.01.2015 was issued to the appellant.
• Aggrieved, the appellant has appealed before the Tribunal.

Issue

• Whether the appellant is liable to pay service tax on the unbilled revenue amount and over availment of Cenvat credit?

Order

• The Tribunal observed that the revenue should have undertaken the exercise of reconciliation of the revenue realized against each of the projects with the entries made in the ST-3 return and should arrive at any conclusion in respect of the demand for service tax. In case the revenue realized is not reflected in the service tax returns filed over the period of time, then only revenue demand can be sustained otherwise the demand needs to be set aside.
• Further, the entries recorded in the book of accounts are toward the expected revenue and expense recognition and not on the basis of the actual amounts realized against the contracts undertaken by the appellant. The Service tax is paid on the basis of the revenue realized towards the provision of the taxable services and not on the basis of the revenue recognition.
• The authorities held that the Revenue should reconcile the revenue realized contract wise, with the service tax return, and if there all the revenues realized either as advance or on the completion of the contract can be reconciled with the ST-3 returns then demands need to be set aside or restricted to the unexplained amounts realized and not reflected in the ST-3 return.
• The authorities remanded the matter to the original authority for reconciliation of issues and the impugned order is set aside and appeals are partially allowed.