TaxTMI 
TaxTMI 
2018 (1) TMI 1463
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....d 78 of the Finance Act, 1994 and demanding late fee for belated filing of ST-3 returns. The SCN also proposed appropriation of Rs. 68,73,813/- paid by the applicant towards Service Tax liability. 1.2. Briefly stated the facts of the case are as follows : • The applicant is a partnership firm with Shri Sunil R.M. and Shri Sanjay R.M. as partners engaged in laying of Optical Fibre Cable (OFC) for various telecom companies by using Horizontal directional drilling machines. • The applicant is registered with Service Tax department vide Registration No. ABQFS5172ASD003 for rendering "Maintenance or Repair services", "Erection, Commissioning or Installation Services" and "Business Auxiliary services". • Based on third party information that the applicant received substantial amounts as contract receipts and did not pay Service Tax during 2012-13, the Superintendent of Central Excise, Headquarters Preventive Unit (HPU) vide letter dated 15-3-2014 requested the applicant to furnish financial documents/details relating to the services rendered by them for the periods 2008-09 to 2012-13. • Shri R. M. Sunil, partner appeared before ....
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....oices. • Though the activity of laying cables under or alongside roads is not taxable vide Circular No. 123/5/2010-TRU dated 24-5-2010, the applicant had charged and collected Service Tax on such services rendered to telecom companies and L & T during the period 1-10-2010 to 30-6-2012 and the amount of Rs. 14,18,525/- collected by the applicant reflecting as Service Tax in their invoices is liable to be paid to the Government in terms of Section 73(2) of the Finance Act, 1994. • Further, the activity of boring and jacking of MS pipes under railway track classifiable under "Commercial or Industrial Construction Services" is not taxable in view of the Board's Clarification No. 116/10/20109-S.T., dated 15-9-2009. However, as the applicant has charged and collected Service Tax amounting to Rs. 31,187/- during the period, they are required to be paid to the Government in terms of Section 73(2) of the Finance Act, 1994. • For the period from 1-7-2012 to 31-3-2015, the applicant has provided taxable services by charging and collecting Service Tax on the invoices raised to various telecom operators, M/s. Railtel, & M/s. PGCIL amounting to Rs. 54,37,34....
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.... 78 of the Act. The Notice also sought recovery of applicable late fee for belated filing of ST3 returns. Applicant's disclosure : 2.1 The applicant filed application before the Customs, Central Excise & Service Tax Settlement Commission, Additional Bench, Chennai on 24-3-2017 which was numbered as SA (ST) 33/2017. As the applicant did not pay the admitted interest liability of Rs. 15,93,021/-, the application was rejected under Section 32F(1) of the Central Excise Act made applicable to Service Tax vide Section 83 of the Finance Act, 1994 as non-maintainable vide Order No. 01/2017-S.T., dated 13-4-2017. 2.2 The applicant filed application again on 2-5-2017 which was numbered as SA (ST) 49/2017 and based on the reply to the first notice dated 13-5-2017, the application was allowed to be proceeded with by the Bench vide order dated 19-5-2017. 2.3 The applicant, in their application admitted a liability of Rs. 72,19,719/- as against Rs. 80,15,272/- demanded in the show cause notice along with interest of Rs. 32,46,589/- and disputing the balance amount of Rs. 7,95,553/- as being eligible for exemption. 2.4 The applicant in the application submitted,....
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....tigations vide statements and accepted by the department in the SCN, the demand on irrigation and water supply projects is based on assumption that the applicant had collected Service Tax from the customers as per work orders even though no Service Tax was collected in the invoices. • The applicant pleaded that the demand of Service Tax on services rendered to M/s. JUSCO be set aside. • In respect of services rendered to M/s. Krishna Bhagya Jalanigam Ltd. (KBJNL), a wholly owned company of Govt. of Karnataka, engaged in irrigation projects, the applicant is eligible for exemption under clauses (d) and (e) of Sl. No. 12 of the Mega exemption Notification No. 25/2012-S.T., dated 20-6-2012 and demand of Service Tax be set aside. • As regards laying of underground pipes for M/s. STS Private Limited and M/s. BSNL, Goa, the applicant has not collected any Service Tax for the period 1-10-2010 to 30-6-2012 as mentioned in para 7.1.2 of the SCN and wherever it is collected, the same has been paid by the applicant. • The demand of Rs. 11,59,583/- is grossly overstated and as no Service Tax has been collected by them separately, the gross am....
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....ection 78 of the Finance Act, 1994 and hence no penalty is imposable under Section 78 of the Finance Act, 1994. • The penalties under Section 77(1)(a) for not taking registration under Works contract service and under Section 77(2) for failure to pay the Service Tax collected cannot be imposed as they had rectified the defect by subsequent registration and made good the payment of Service Tax prior to issue of show cause notice besides paying the late fee for belated filing of ST3 returns. • The applicant also prayed for immunity from imposition of penalty and prosecution. Report of the jurisdictional Commissioner : 3.1 A copy of the application was forwarded to the jurisdictional Commissioner of Service Tax for comments/report on the application. The Commissioner of Central Excise and Service Tax, Mangaluru vide his report dated 23-6-2017 while confirming the payment of admitted Service Tax and interest liability by the applicant pointed out that the applicant had not accepted total liability of Rs. 7,96,008/- without specifying the amount disputed in each category. 3.2 The jurisdictional Commissioner in his report, inter alia, made the....
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....hagya Jala Nigam Ltd., a Govt. of Karnataka undertaking. • PAs regards services provided to M/s. JUSCO, though exempted in terms of Notification No. 25/2012-S.T., since Service Tax component is included in the work order, Service Tax has been rightly demanded even though Service Tax has not been separately shown in the invoices and demand of Rs. 54,977/- is sustainable. • PSimilarly the demand of Service Tax of Rs. 7,15,879/- for services rendered to M/s. KBJNL towards irrigation projects is rightly sustainable. • PThe applicant has not produced any document to prove that they had not charged and collected Service Tax on services rendered to M/s. STS Private Limited and M/s. BSNL Goa for the period 1-10-2010 to 30-6-2012. • PThe cum-tax-benefit may be extended to the applicant wherever the applicant is able to prove with documentary evidence that Service Tax has not been charged and collected. • PThe applicant did not disclose the full Service Tax liability in their initial statements and only in the statement dated 16-10-2015, they accepted that during the periods 2010-11 to 2014-15, they charged and collected Servic....
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....besides reiterating the rebuttal submissions made in their grounds of settlement, has further submitted that the applicant was engaged in the work of laying of underground Optical Fibre Cable for various telecom service providers and laying of underground pipelines for irrigation and drinking water purposes; that in some cases they did not collect Service Tax as the services rendered to them was exempt from payment of Service Tax. 4.3 He drew attention of the Bench to para 12 onwards or the paper book and stated that in the case of services to BSNL, Goa they had charged Service Tax in the invoice but no Service Tax was actually collected. The quantification of demand of Service Tax of Rs. 80,15,727/- in the show cause notice is without considering the benefit of exemptions and non-taxable service rendered by them. Also, the demand of Service Tax towards the services rendered to M/s. Jamshedpur Utilities and Service Company Ltd. (JUSCO) is untenable in law; though work order initially indicated the Service Tax liability to be charged by them, no Service Tax was actually collected by them and the same is evidenced by way of invoice raised. This fact has been agreed by the Dep....
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....emption under clause 12(d) and (e) of Notification No. 25/2012 dated 20-6-2012, although the same was undertaken towards irrigation works. The demand on M/s. JUSCO is also correct, as the Service Tax component is included in the work order, even though the same has not been separately shown in the invoices. Hence, demand of Rs. 54,977/- is sustainable. Similarly, the demand of Rs. 7,15,879/- raised on M/s. KBJNL and demand raised on M/s. STS Private Limited and M/s. BSNL, Goa for the period 1-10-2010 to 30-6-2012 correctly raised as the applicant had failed to prove that they had not charged and collected Service Tax. However, Commissioner has stated that the cum-duty benefit may be extended wherever the applicant is able to prove with evidence that Service Tax has not been charged and collected. 4.10 Commissioner has confirmed payment of Rs. 72,19,719/- towards Service Tax and Rs. 32,46,589/- towards interest including Rs. 1,80,000/- towards late fee, as against late fee of Rs. 1,89,900/- resulting in short payment of Rs. 9,900/-. Since the applicant had raised invoices charging Service Tax at applicable rates and not paid the amount so collected to the Government, it has ....
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....xemption vide Sl. No. 12(a) of the mega exemption notification No. 25/2012-S.T., dated 20-6-2012 even if the services rendered are considered as "original works" and not "Erection, Commissioning and Installation service" as alleged by the department in the SCN. • As regards Service Tax demand of Rs. 54,977/- on services rendered to JUSCO, during 2012-13, it is submitted that the services rendered are treated as not taxable in the SCN itself though the allegation for demand was on the assumption that the applicant has charged Service Tax in the work order No. 2500003993, dated 14-6-2012 wherein Service Tax component was shown. The Invoice No. Space/JUSCO/ 002, dated 7-7-2012 however was issued in respect of the above work order without charging/collecting Service Tax. • With regard to services rendered to M/s BSNL, Goa for the period 2014-15 demanding Service Tax of Rs. 3,88,997/-, the applicant had charged Service Tax on the exempted/non-taxable service but not collected the same and hence no Service Tax is payable by them. • Without prejudice, it is submitted that despite discharging the Service Tax dues, the SCN has demanded Service Tax on e....
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....period 2012-13 and Rs. 7,15,879/- in respect of services rendered to M/s. KBJNL during 2013-14 and 2014-15 on the ground that the same were eligible for exemption under Notification No. 25/2012-S.T., dated 20-6-2012. The applicant has also claimed cum-tax benefit in respect of services rendered to BSNL, Goa on the ground that they have not collected the Service Tax charged by them although the activity was not taxable. 7.3 Perusal of the application and the submissions made by the applicant and the jurisdictional Commissioner revealed that the issues left to be decided in the case is whether the applicant is eligible for exemption in respect of Erection, Commissioning or Installation services which is sought to be classified under the Works Contract Services in the SCN as it involved transfer of property in goods so as to deny the benefit of exemption under Notification No. 25/2012-S.T. for the period after 1-7-2012. The applicant's contention that Sl. No. 12 of the mega exemption Notification No. 25/2012-S.T., dated 20-6-2012 clearly excludes services provided to Government authority by way of construction, erection, commissioning, installation of canal, dam or other irrig....
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..... Ltd. v. Dir. General of Central Excise Intelligence reported in 2014 (307) E.L.T. 438 (All.) and also by the Hon'ble Madras High Court in the case of Australian Foods Ltd. v. Commissioner of Central Excise, Chennai-II reported in 2010 (254) E.L.T. 392 (Mad.). 7.6 In the Amrut Ornaments case, the Hon'ble High Court of Bombay observed as below : 8. '.........The proceedings before the Commission is not an [adjudication] proceedings where it is for the other side to prove its case. In settlement proceedings a party seeks to end the dispute and is meant for a person who is sorry about his conduct and wants to make amendments. It is not an alternative [adjudication] forum. A person approaching the Settlement Commission must show utmost good faith. ...." 7.7 In the Dharampal Satyapal case [2013 (298) E.L.T. 653], the Delhi High Court lucidly stated the scope of Settlement Commission, when the Hon'ble Court observed : "49. The other principle which has been set down in several judgments of this Court is that the Settlement Commission is not a substitute for adjudication proceedings before the Central Excise authorities and where complex issues of fact and....
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....of Section 32E of the Central Excise Act, 1944. "14. From this Section, it is seen that the assessee may approach the Settlement Commission, before adjudication to settle the case, disclosing his duty liability which has not been disclosed before the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as the applicability of the provisions of law like the one in hand where in the issue centres around the applicability of whether Section 4 or Section 4A of the Central Excise Act. Though the assessee has admitted the short levy on dough and paid the duty thereof, since he is raking up the plea that he is eligible to claim benefits under Section 4A instead of Section 4, that point goes out of the jurisdiction of the Settlement Commission, since it has not been vested with the power to decide such a question of direct assessment. By such an act, the Settlement Commission has usurped the jurisdiction of the adjudicating authorities and as had been rightly commented on the part of the Revenue, by the impugned order, the Settlement Comm....