Fox Mandal & Co approached the Supreme Court of India challenging a Rs 3.9-crore service tax demand from the pre-GST regime; a bench of PS Narasimha and Alok Aradhe granted two weeks to file missing documents.
NEW DELHI: The law firm Fox Mandal & Co has approached the Supreme Court to contest a service tax demand of Rs 3.9 crore stemming from proceedings conducted under the pre-GST regime.
The matter was briefly heard by a bench of Justices PS Narasimha and Alok Aradhe. During the proceedings, the petitioner’s counsel informed the bench that a key annexure related to a reconciliation matter was missing from the special leave petition (SLP) and requested additional time to submit this document.
The Court acknowledged this request and granted the petitioner two weeks to present further documents, thereby adjourning the case.
ALSO READ: Individual Lawyer’s Services to Law Firm Exempt from Service Tax: Bombay High Court
The dispute originates from service tax proceedings initiated against Fox Mandal & Co for the period from 2010 to 2015. Initially, a show cause notice was issued, proposing a total demand of approximately Rs 6.9 crore, which included service tax and recovery of allegedly erroneous CENVAT credit. However, the adjudicating authority later dismissed part of the demand amounting to around Rs 3.01 crore.
Tax authorities alleged that the firm had improperly claimed CENVAT credit, failed to pay service tax on certain transactions, and that there were inconsistencies between the figures reported on service tax returns and those shown in its financial statements.
As a result, an adjudication order was issued, confirming a service tax liability of Rs 2.99 crore against the firm, along with a recovery of Rs 89.63 lakh in CENVAT credit, plus interest and a minor penalty for late filing of returns.
Altogether, the liability from these proceedings was estimated to be around Rs 3.9 crore, leading to the current dispute.
Another aspect of the case involves the firm’s argument that certain legal services provided to overseas clients should be classified as “export of services,” making them exempt from service tax under the Finance Act, 1994. The department contested this assertion, claiming that the firm failed to provide adequate documentary evidence to prove that the services met the criteria for exports.
Furthermore, the department raised objections to some sponsorship expenses recorded in the firm’s accounts, classifying them as taxable under the reverse charge mechanism.
The matter was then taken to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad Bench.
In its ruling, the tribunal partially granted the firm’s appeal and remanded several issues for further consideration by the adjudicating authority.
Notably, the tribunal observed that the denial of CENVAT credit had been primarily based on the firm’s inability to present original invoices during the audit, even though photocopies were submitted later in the proceedings. It ruled that the documents should be verified before rejecting the credit claim.
The tribunal also remanded the issue concerning the export of services, noting that the demand had been largely based on a departmental verification report that was not disclosed to the firm during adjudication.
However, the tribunal upheld a limited portion of the demand regarding service tax on sponsorship expenses, pointing out that the firm had categorized the payments as sponsorships in its accounts and had not provided evidence to demonstrate that these were merely donations.
Dissatisfied with certain aspects of the tribunal’s ruling in this Rs 3.9 crore tax dispute, Fox Mandal & Co has now turned to the Supreme Court for relief.
Case Title: Fox Mandal & Company v. Commissioner
FOR MORE LEGAL UPDATES FOLLOW US ON YOUTUBE