TaxTMI 
TaxTMI 
2018 (11) TMI 1159
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....tair Express Pvt. Ltd., under the proviso to subsection (1) of section 73 of the Finance Act, 1994 read with section 68 of the Act and Rule 6 of the Service Tax Rules, 1994 as amended. b) Interest on the amount of demand determined at '(a)' at the appropriate rate should be paid by M/s UPS Jetair Express Pvt. Ltd., under Section 75 of the Act; c) I impose Penalty of Rs. 67, 89,17,207/- (Rupees Sixty Seven Crores Eighty Nine Lakhs Seventeen Thousand Two Hundred and Seven Only) under Section 78 of the Act on M/s UPS Jetair Express Pvt. Ltd. d) I impose Penalty of Rs. 5000/- (Rupees Five Thousand Only) under Section 77 of the Finance Act, 1994 as amended. e) Since penalty is imposed under Section 78 as above, I do not impose separate penalty under section 76 of the Finance Act, 1994. f) The remaining demand of Rs. 309,61,15,563/- (Rs 377,50,32,770/- - Rs. 67,89,17,207/-) raised in SCN F No V/ST/HQ/AE/E/145/12 dated 23.10.2012 is dropped." 2.1 Appellants are engaged in rendering services falling under "Courier Service", as defined under Section 65 (105) (f) read with Section 65 (33) of Chapter V of the Finance Act, 1994 and "Intellectual Property Services" as defined ....
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....within the prescribed time and also disclose the details of such services provided and received by them in their ST-3 return, a show cause notice invoking extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994 demanding service tax as follows: S No Reason for Demand Taxable Value Service Tax 1 Import of Service in case where UPS World Forwarding Inc has rendered service to assessee partly in India as well as partly outside India 1855,32,64,268 204,38,33,700 2 Export of service in case of import of consignments where assessee has rendered its service in India only. 148,01,93,210 16,36,35,552 3 Export of Service in case export of consignments, where assessee has rendered its services in India for foreign companies. 1430,51,57,299 156,75,63,518 4 Total 3433,86,14,777 377,50,32,770 2.5 Commissioner has adjudicated the case as per order referred in para 1 above. Aggrieved by the order, appellants have preferred this appeal before Tribunal. 3.1 Shri V S Nankani, Sr Advocate, appeared on behalf of the Appellant and Shri K M Mondal Special Counsel appeared for the revenue. 3.2 Arguing for the a....
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.... service as service recipient located outside India and consideration received in foreign currency 45.65 12.29 Import Prepaid UPS Foreign Entity and Foreign Consignor Last mile delivery Service provided by UPS India to UPS worldwide Courier Service Business Support Service Export Freight Collect UPS Foreign Entity and Foreign Consignor First mile Pickup Service provided by UPS India to UPS worldwide Courier Service Business Support Service 9.95 Import Freight Collect UPS India and Indian Consignee No Demand viii. Thus it is evident that where so ever appellants have entered into contract to provide services of door to door delivery they have paid the service tax on entire amount of freight collected. (Case of Export Prepaid and Import Collect) ix. Only the person who is engaged in providing the door to door delivery of goods/ documents can be levied to service tax under the category of Courier Agent. In the case of export prepaid they being the courier agent have paid the service tax on the entire freight collected by them. In this case the input services received by them cannot be ....
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....ay High Court in case of Mahindra & Mahindra [2018 (11) GSTL 126 (BOM)] and various circulars in his support. 3.3 Arguing on the behalf of revenue learned special counsel submitted:- i. Entire activities are performed by three participants namely UPS Jet Air, UPS Worldwide and UPS Foreign Entity, who are entities of the Courier Agency. From the definition of "Courier Agency" it is quite evident that a courier agent can utilize the services of any other person directly or indirectly to carry such time sensitive documents, goods or articles. It is not material whether the whole activity is performed by one person or three persons as above. This will not change the essential character of the service. ii. In case of Vijayanand Roadlines [2006 (1) STR 113 (T)] it was held that door to door transportation cannot be given restricted meaning. Even the customer can come to the courier agent's office. This decision has been upheld in [2006 (4) STR J 115 (SC)] iii. Courier Service has essentially three components namely pickup, transportation and delivery. Courier Service is not fully performed till the delivery of goods/ documents to the consignee. Transportation is essentially a....
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....mechanism in terms of Section 66A of Finance Act, 1994 read with rule 3(ii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. viii. In case of import, appellants collect the parcel from Indian airport and deliver the same to doorsteps of Indian Consignee with the help of another company like M/s Transmodal. For providing such services, they receive consideration from in convertible foreign exchange from UPS Worldwide. ix. In case of export "Freight Collect" basis, appellant's pickup the parcel from the doorstep of the Indian Consignor and thereafter transports and handover the same to UPS Worldwide at International Airport in India. The parcel is thereafter transported and delivered to the foreign consignee by the UPS Worldwide, who collect the freight from the consignee. In such cases also Appellants receive consideration from in convertible foreign exchange from UPS Worldwide. x. Appellants have claimed exemption from payment of service tax in both the above cases, claiming the services provided to be export of service. As per Rule 3(1) (ii) of the Export of Services Rules, 2005, to claim such exemption, services are required to be ....
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.... provides that the person could have carried the said documents, goods or article himself for delivery to consignee or could handover to some other person to accompany the said time sensitive documents, goods or article, for delivery. Another notable aspect of the definition is the absence of words "consignor" and "consignee" from the said definition. In absence of the said words in the definition, it is immaterial whether the consignment being carried is handed over by the consignor for delivery to the consignee, or by any other person. The essence is that the person should be providing the service of transportation of time sensitive documents, goods or article, by accompanying the said time sensitive documents, goods or article, either himself or by employing the service of any other person. Thus if one courier agency books the consignment and hand over the same to another courier agency for further delivery, then both the persons are providing the courier agency service. In case of Vijayanand Roadlines [2006 (1) STR 113 (T-Bang)] it was held as follows: "5. In so far as the claim of the appellants for abatement of duty paid in respect of the customers having come and delivere....
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.... the consigner and delivered in the premises of the consignees. Therefore, door-to-door transportation should be interpreted to include the cases where consigners and consignees go to the courier office for depositing the documents and taking delivery of the same." This decision of Tribunal has been upheld by the Apex Court as reported in [2006 (4) STR J115 (SC)]. The crux of the said decision is that the phrase "door to door" do not restrict the scope of definition of the "Courier Agency" to the activity of person picking up the time sensitive documents and goods from the doorstep of consignor for delivery to the doorstep of consignee. The said phrase as used in the definition is to be read vis a vis the person providing the Courier Agency service. 6.1 In view of the above, we examine the terms of "International Transportation Services Agreement" dated 30/10/2010- "UPS Jetair Express Pvt Ltd (referred to as the 'Contractor") a company organized and existing under Companies Act of 1956 (the "Act") and having its registered office at Comtrade Centre, Cambatta Building. J Tata Road Mumbai -400020 India, and, UPS worldwide Forwarding INC (referred to as "UPS") a corporatio....
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....actor 2.1 The Contractor shall perform services for UPS in the transportation of small packages in the Service Area. Guidelines for these services are set forth in the "ISPS Shipment Manual", the "IOPS Manual" and the "UPS Service Guide" (as amended from time to time), copies of which UPS shall provide the Contractor. 2.2 The Contractor shall calculate the dimensional weight of the package in accordance with the procedure set forth in the attached Exhibit C. To ensure proper processing, the Contractor shall specify the dimensional weight on the waybill prior to export of each consignment. UPS shall audit shipments for dimensional weight to ensure the Contractor's compliance with the procedure set forth in attached Exhibit C. Should there be any discrepancy between the actual dimensional weight and that specified in the waybill, the Contractor shall be held responsible for said discrepancy. In this regard, the Contractor shall be charged for the discrepancy within thirty (30) days based on the net settlement invoice. In addition, UPS shall also charge the Contractor a surcharge of five U.S. dollars (U.S. $ 5.00) as processing fee for each shipment discrepancy. 2.3 For servi....
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....with UPS. ii. After generation of the said document, Appellants get the parcel picked up from the premises of the consignor for delivery to the UPS, at International Airport. iii. On the Airway bill, appellant is indicated as shipper instead of the consignor. Thus from the documents prepared also it is quite evident that for the carriage of the said parcel, UPS Worldwide has acted as courier agency for carriage of the said parcel from the international Airport in India for delivery to the consignee. b. Import Pre Paid Sample i. Document for the transportation of the parcel is generated online and the Shipper is required to acknowledge the agreement with UPS. ii. UPS foreign entity picks up the shipment from the premises of consignor for delivery to airlines arranged by UPS WWF for delivery to International Airport in India. iii. Appellants inform the consignee on receipt of cargo arrival notice, and pick up the parcel from the International Airport for delivery to the consignee after billing him for delivery order fees for release of the said consignment and payment of requisite taxes. In this case appellants have provided the c....
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....d definition of the courier agency. Hence, the said service is liable to service tax under courier agency service [section 65(105)(f)]. 6.7 In view of discussions as above we are of the view that in case of Export Pre-paid, where the consignments are booked by the Appellant for delivery in for territory appellants receive the services from UPS Worldwide for picking up the said consignments from International Airport for delivery in foreign territory. Since Appellants have received the services from UPS Worldwide and the origin of the said services is within India, service tax required to be paid by UPS Worldwide is to be paid by the Appellant on reverse charge mechanism as provided for in Section 66A of Finance Act, 1994 read with rule 3(ii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. For ease of reference the said provisions are reproduced below: Section 66A of the Finance Act, 1994 66A. (1) Where any service specified in clause (105) of section 65 is,- (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permane....
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....zq), (zr), (zt), (zu), (zv), (zw), (zza), (zzc), (zzd), (zzf), (zzg), (zzh), (zzi), (zzl), (zzm), (zzn), (zzo), (zzp), (zzs), (zzt), (zzv), (zzw), (zzx), (zzy), (zzzd), (zzze), (zzzf), and (zzzp) of clause (105) of section 65 of the Act, be such services as are performed in India: Provided that where such taxable service is partly performed in India, it shall be treated as performed in India and the value of such taxable service shall be determined under section 67 of the Act and the rules made thereunder; (iii) specified in clause (105) of section 65 of the Act, but excluding- (a) sub-clauses (zzzo) and (zzzv); (b) those specified in clause (i) of this rule except when the provision of taxable services specified in clauses (d), (zzzc), and (zzzr) does not relate to immovable property; and (c) those specified in clause (ii) of this rule, be such services as are received by a recipient located in India for use in relation to business or commerce. 6.8 It is quite evident from the agreement that entire services provided by the appellant to UPS Worldwide for picking up the consignments in case of Export Freight Collect and for delivery in the case of....
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....dmittedly the services provided by the appellant are courier agency service defined under Section 65(105)(f), and specified by the Rule 3(1)(ii). Thus in view of the fact the no component of service has been provided by the appellant outside India, the services provided by them to UPS Worldwide cannot be termed as export of services, even if the payment against them are received in convertible foreign exchange. Thus exemption claimed by the appellant against provision of these services, by treating them as export of service is not admissible. 7.1 Now coming to the issue of limitation. Counsel for appellant has vehemently argued stating that audit of their records for the period 2005 to 2009 was undertaken on 8th February 2010. During the course of audit all the facts and financials were disclosed to the audit officers hence department is not justified in invoking extended period of limitation as provided by proviso to Section 73(1) for making the demands. On the contrary learned Special Counsel appearing on behalf of revenue submitted that audit was limited to CENVAT account. Further appellants had not disclosed the relevant facts to the department on their ST-3 return. Thus by ....
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.... such frequency as may be prescribed." Thus the appellant was operating under self-assessment procedure during the impugned period. The appellant has failed to declare in the said return the complete particulars with regard to the services rendered to the foreign advertisers. Therefore, the ratio of the decision of the Hon'ble Apex Court in the case of Madras Petrochem Ltd. (supra) relied upon by Revenue would squarely apply. In the said decision, the Hon'ble Apex Court had held as follows:- "14. The proposition of law as laid down is not in dispute. We find in the present case as aforesaid, a clear finding was recorded that the petitioner was aware and was obliged to file RG 1 Register, gate passes and also of clearances in the RT 12 returns by disclosing the particulars which was not done in the present case. The finding recorded in this case, especially in the background that this was a case of self-removal procedure in which there is obligation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then delibe....
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....tation and accordingly set aside the finding of the Commissioner (Appeals)." 7.4 In case of Pasupati Spinning and Weaving Mills [2015 (318) ELT 623 (SC)], Hon'ble Apex Court has held as follows: "...........Equally, we do not think that there is any ground for interference on the extended period of limitation being applicable inasmuch as CESTAT is again correct in saying that as the declaration and RT-12 returns being vital documents submitted by the respondent (appellant herein) did not mention the vital word "hanks", they suppressed a material fact which, to their knowledge, would not bring their sewing thread within the exemption Notification. For all these reasons, we find no merit in these appeals. The appeals are, accordingly, dismissed, without any order as to costs." 7.5 Hon'ble Supreme Court has in case of Madras Petrochem {1999 (108) ELT 611 (SC)] held as follows: "9.The contention for the revenue is that under the self removal procedure, the primary obligation of an assessee is to make proper declarations and entries in the production Register RG 1, the gate passes and RT 12 returns unlike in the Physical Control System where the Excise Inspector present in t....
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....ee knew otherwise was required before the assessee could be saddled with any liability beyond the period of six months."" 12.Learned Counsel further referred to the decision of this Court in the case of Collector of Central Excise, Hyderabad v. M/s. Chemphar Drugs & Liniments, Hyderabad [1989 (40) E.L.T. 276 (S.C.) = 1989 (2) SCC 127], which has also been referred in the aforesaid decision. 13.Another submission is with reference to the decision in the case of J.K. Cotton Spinning & Weaving Mills Ltd. v. Collector of Central Excise [1998 (99) E.L.T. 8 (S.C.) = 1998 (3) SCC 540] that this proviso should be strictly construed. It was held that the proviso to Section 11A of Central Excises and Salt Act permitting the extension time should not be stretched more than the elasticity supplied in the section itself. So, the eventuality envisaged in Section 11A for further lengthening of the limitation period must be strictly construed. 14. The proposition of law as laid down is not in dispute. We find in the present case as aforesaid, a clear finding was recorded that the petitioner was aware and was obliged to file RG 1 Register, gate passes and also of clearances in the RT 12 re....
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....11A, shall also be liable to pay a penalty equal to the duty so determined : Provided that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the duty as reduced or increased, as the case may be, shall be taken into account." 6. On the basis of the aforesaid language in the Section, the submission of Mr. Radhakrishnan is meritorious. Thus, while the penalty as demanded in respect of one Show Cause Notice had been quashed, the Tribunal could not reduce it for an amount lesser than the duty which has been upheld. The duty in respect of two demands comes to Rs. 40,44,720/-. Therefore, going by the provisions of Section 11AC of the Act, the penalty should also have been Rs. 40,44,720/- and not Rs. 20 lakhs." 9.2 In case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] Hon'ble Apex Court has held that once it is found that ingredients for invocation of section 11AC exist then tribunal do not have any jurisdiction to reduce the quantum of penalty. The relevant excerpts are reproduced below: "23. The decision in Dharamendr....
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....number 1Z2XY5260493783045 Step 2: UJEL prepares a House Airway Bill ('HAWB') 1Z2XY5260493783045 for above shipment which will be put on UPS Airlines having a master airway bill number ('MAWB') 17694804953 Step 3: UPS Airlines issues a MAWB 17694804953which will take the various HAWBS including 1Z2XY5260493783045 for transportation Document 3 Shipper's Signature FOLD HERE MA SANDER APWIDE WADHAB DERPLISES. 4 KG MUMS 4 INDIA 3180 SHIP TO: D AMAR ALDUJAIL 1 OF 1 ONE COR SHOP WT180 SHIP EWT G 318011 hzxhz x Document 4 PERFORATION PLOT NO UPS CO MUMBAI 400 060 EXPRESS PVT L Air Waybill EMIRATES 176 BOM 9480 4953 UPSAR COURIERS OF AMERICA MUMBAI INDIA PVT LTD HECHT PREPAID PLEASE DEPOSIT AT COURIER TERMINAL EMIRATES INR PP MVD NCV SADDRESS 10 TO 01/10 (TEN CARTON AND NOS PLEASE INFORM CONSIGNEE ON ARRIVAL OF CARGO. 173.35 KM 173.35-KIM Import Pre-paid Sample Step 1 - Foreign UPS entity signs Letter of Agreement (LOA) with Jaquet Technology 303220VHYAC Step 2 - Foreign UPS entity picks Shipment with waybill number 123032200497885900 ....
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....FECT MAWB 3140375 6712 2,445.00 C TRACKING NUMBER WEIGHT TOTAL INVOICE: SHARJAH TEC/10/90 Document 6 Cargo Manifest PORT OF ONGEN DUBAI Summary for MANENO Trate L 534 01754712 GH406 ww2300 FTSF425VICM 103.40 WALLCOVERING SAMPLES Cesty por 1 11.50 POWER CONTROLLER MUMBA Consignee EGO WALDECOR POT LD 5 200.00 POSTER MUMSA WALLSON 11/0 AB POWER INDIA INTL 1 11.00 SPARE PARTS FOR EGG PACKING MACHINE ADVANCED ENERGY INOM S HEAD TEDINICAL MARKETING AND 1 100 MEDICAL EQUIPMENT MUMBAI INDIAN AGRO & FOODING LTD 740447C749 W39732LMORS MUMSA $ 10.00 IMPLANTS FIRM BREAST IN SMITH & NEPHEW HEALT MUMBAI SMITHENEPHEW COH SUPPLY CHA 5.00 ELECTRONICS "P MTOCON BOMED GROUPE SEN W47368TVTNV 1 30.00.FABRICS MUMBA MUMBAI "P CONNING TECNOLOGIES INDA PR 12453047 10 VALIA ACTAL PVT LTD VARUN DEDAR SPA I 5.90 ORINGS MUMIA 567422GTMKV AMPHENOL INDIA IS DIVISION 1 14.97 ICMPULMUL 289 MUMBA " REMU ELECTRONICS PT EW7EDSHOFGW 3.30 METAL DETECTOR SPARES MUMBA DO VEDIC PAC SISTEMS PVT LTD 1....
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.... will be issued only after Cargo is forwarded to the Warehouse and the agent is not liable for any daim on warehouse charges as a result of delay on part of Air Carriers to check the Freight and D 5. delivery order not collected within 05 days from date of this nice increased revision in exchange rate would apply. 6 consignment not cleared within 21 days, please advise reason for delay and expected date or clearance 7. Please do not pay customs duty with our obtaining delivery order from 8. Delivery Of D.O to consignee or agent would only completed by UPS We are please to inform you that your cargo has arrived at Mumbai Customs, at Sahar Cargo Complex, As per details given MAWB # 514 0375 6712 DESCRIPTION IGM NO. FLT/DATE 09 406 ' 07-Jan-18 WEIGHT Shpt Term HAWB# 303220VHY9C PKGS SINGLE CHANNEL HALL EFFECT Delivery Order Charges Clearance Charges (Including D/O Fee) 8.60 Kg. 1700/R+ GST Tax Cash/D.D. 3500/-Rs + GST Tax +Actual Receipted Amount INR 500+ GST Tax per day from 3rd business day after arrival notification to customer If you wish to clear the Cargo through your appointed Clearing ....