RCM

RCM: The unending saga of Compliance & Controversy!

Hello Everyone,

Do you agree that when the RCM remains revenue-neutral, the penalties or interest for late compliance or non-compliance might seem excessively severe?

Thoughts, Insight and Research by: Abhishek Raja Ram, 9810638155

1. Shree Saibaba Chemicals Industries - CESTAT Ahmedabad

(2025) 28 CENTAX 158

When service tax on GTA services has already been paid by service provider, even though legally payable by service recipient under reverse charge mechanism, department cannot recover service tax twice on same service from service recipient.

2. Cords Cable Industries Ltd. - CESTAT Delhi

(2024) 25 CENTAX 214

Admission of liability - Assessee admitted short payment of service tax during audit but later relied on CA certificate claiming reversal of provision -

HELD: Admission made during audit is binding - What is admitted need not be proved - CA certificate has no potential value against audit report accepted by assessee - Journal voucher showing reversal not foolproof being hand-written without authentication - Revenue neutrality plea that CENVAT credit would be available rejected as it would make reverse charge mechanism otiose - Extended period of limitation and penalties justified as assessee suppressed facts to evade tax.

3. Sulphur Mills Ltd. - CESTAT Ahmedabad

(2024) 25 CENTAX 385

Commission paid to Directors by company which was given treatment as salary in books of accounts and on which TDS was deducted under salary head is not liable to service tax under reverse charge mechanism as it falls outside purview of “service” under Section 65B(44) of Finance Act, 1994.

4. M.P. Audyogik Kendra Vikas Nigam (Indore) Ltd. - CESTAT Delhi

(2023) 8 CENTAX 219

Reverse charge mechanism - Impugned order held that service tax was payable under RCM and that appellant had suppressed taxable value of service - Contention of appellant was that though service tax was collected by service provider, tax was demanded again from appellant under RCM - Tribunal in previous round had remanded matter for verification of documents and invoices and had passed de novo order.

HELD : SCN did not contain gist of allegations for raising demand on RCM basis - Service tax provisions do not provide for raising demand based on aparent difference in figure of expenses in balance sheet and amount offered for Service Tax in ST-3 Returns - Demand of service tax under RCM was to be calculated transaction-wise and invoice-wise and in absence of such exercise SCN was vague and fit to be held misdirected.

Hope you will find this useful.

Thanks

Abhishek Raja Ram

9810638155