Cum-tax benefit must be granted where service tax was not separately collected from recipients.

Yaduveer Singh, proprietor of M/s Simen Tech, held service-tax registration but allegedly neither paid service tax nor filed returns.

Based on the appellant’s income-tax returns and other records, the Department alleged taxable receipts of ₹26,59,22,065 for 2014–15 to 2017–18 and issued a show-cause notice proposing service-tax demand of ₹3,62,51,923, along with interest and penalties under the Finance Act, 1994.

The Commissioner ultimately confirmed service-tax demand of ₹1,26,07,164, with interest and penalties.

The appellant did not appear at the hearings before the Tribunal despite repeated opportunities.

Whether the Tribunal could decide the appeal on merits despite the appellant’s repeated non-appearance.

Whether the appellant was entitled to cum-tax benefit where service tax had not been separately collected from service recipients.

Whether the service-tax demand for 2017–18, based on contractual amounts in the absence of income-tax returns or balance sheets, was sustainable.

The Tribunal applied Sections 73(1), 75, 77 and 78 of the Finance Act, 1994, concerning recovery of service tax, interest and penalties.

It relied on the principle that where the gross consideration received does not show separate collection of service tax, the amount must ordinarily be treated as cum-tax consideration, and the tax must be backed out from the gross receipts.

The Tribunal also followed the Supreme Court’s decision in Balaji Steel Re-rolling Mills v. Commissioner of Central Excise and Customs, 2014 (310) E.L.T. 209 (S.C.), which held that the Tribunal has a statutory duty to dispose of an appeal on merits and cannot dismiss it for default or want of prosecution.

In the absence of reliable financial records, a tax liability may be determined on the basis of the best material available to the Department.

Applying Balaji Steel Re-rolling Mills, the Tribunal proceeded to examine the appeal notwithstanding the appellant’s absence.

It accepted the appellant’s claim for cum-tax treatment for the relevant years because there was no evidence that service tax had been separately recovered from customers; consequently, the gross receipts had to be treated as inclusive of service tax.

For 2017–18, the Department lacked income-tax returns and balance sheets and therefore relied on the contractual amounts.

Although the appellant challenged that basis, it produced no alternative figures showing the services actually rendered or consideration received during the period.

The Tribunal accordingly upheld the use of the available contractual figures as the basis for best-judgment assessment, while holding that cum-tax benefit was nevertheless required for that year as well.

The Tribunal upheld the determination of liability for 2017–18 on the available contractual material but directed that cum-tax benefit be extended wherever service tax had not been separately collected.

The matter was remanded to the Commissioner for the limited purpose of recalculating the service tax, interest and mandatory penalty after granting cum-tax benefit for the years identified in the final order.

The judgment records those years as 2013–14, 2016–17 and 2017–18, although the preceding computation table concerns 2014–15, 2016–17 and 2017–18.