TaxTMI 
TaxTMI 
2019 (6) TMI 270
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.... read with Section 73 and Section 75 of Chapter V of the Finance Act, 1994. (ii) I also impose a penalty of Rs. 6,80,01,435/- (Rupees six crore eighty lakh one thousand four hundred and thirty five only) for being recovered from M/s HDFC Bank Limited, Kamala Mills, Trade World, C-Wing, 10th Floor Senapati Bapat Marg, Lower Parel Mumbai 400 013 under Rule 15(3) of the CENVAT Credit Rules, 2014 in read with Section 78 of Chapter V of the Finance Act, 1994." 2.1 During course of audit scrutiny of the records of the appellant, it was found that they had availed certain inadmissible credits as detailed in table 1, in their CENVAT Account Table 1 Inadmissible Credit as Per the Show Cause Notice Description 2008-09 2009-10 2010-11 2011-12 Total Furniture/ Fixtures 15648830 10970703 7375179 3084354 37079066 Rent a cab, Club and association, travel agent and transportation services. 0 3011321 5060058 2716211 10787590 Exempted Services 2936767 3699267 12185868 1312877 20134779 Total 18585597 17681291 24621105 7113442 68001435 2.2 A show cause notice dated 5th March 2013 has been issued....
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....1199-CESTAT-BANG]. Royal Hatcheries [1994 (53) ECR 200 (SC)], R M Foods [2009 (243) ELT 632 9T-Ahd)], Dell International Services India Pvt Limited [2009 TIOL 1957 CESTAST BANG], Ultratech Cement Ltd [2010 (260) ELT 369 (BOM)] vi. Forex Broker Services are not used exclusively for providing exempted interbank forex trading and hence the credit has been rightly availed by them. vii. Demand is barred by limitation as there is no case for invoking extended period as they have not suppressed or misdeclared anything from the department. They rely on decisions in case of Pahwa Chemicals Private Limited [2005 (189) ELT 257 (SC)], Anand Nishi Kawa Co Ltd [2005 (188) ELT 149 (SC)], Apex Electricals {1992 (61) ELT (Guj)]. Tamil Nadu Housing Board {1994 (74) ELT 9 (SC)] viii. Interest is not justified in the present case. ix. Penalty under Section 78 is not imposable in view of decisions in case of HMM Ltd [1995 (76) ELT 497 (SC), Coolade Beverages Ltd. [2004 (172) EL 451 (ALL)], Guru Instrument [1998 (104) ELT (ALL)], Smitha Shetty {2004 (174) ELT 313 (T)], Tamil Nadu Housing Board {1994 (74) ELT 9 (SC)], Port Officer [2010 (257) ELT 37 (Guj)], {2001 (138)....
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....H)] • Mangalam Cement [2017 11 TMI 483 (Raj HC)] • Circular No 943/04/2011-CX dated 29.04.2011 C. Tour Operator Service and Travel Agent Service • Wills Processing Services (India) Pvt Ltd [2016 (1) TMI 1130 CESTAT Mum] • Barclays Wealth Trustees India Pvt Ltd. [2018 6 TMI 383 CESTAT MUM} • Pidilite Industries [2018 TIOL 1007 CESTAT MUM] • Reliance Industries Ltd [2016 TIOL 2392 CESTAT MUM] • Savita Oil Technologies Ltd [2018 4 TMI 1385 CESTAT MUM] • Semco Electrical Pvt Ltd [2009 12 TMI 143 CESTAT MUM] • Vidyut Metallics (P) Ltd [2012 11 TMI 376 CESTT MUM] • Indoswift Laboratories Ltd [2015 1 TMI 1147 CESTAT New Del] D. GTA Service • Federal Mogul Goeteze (India) Ltd [2011 (9) TMI 120 (P & H)] • Drolia Electrosteels (P) Ltd [2011 (10) TMI 33 CESTAT DEL] vii. Forex Broker services have not been used for Interbank forex trading. These services are used for- • Foreign exchange broking services to customers on which bank is paying service tax • Purchase and sale of foreign exchan....
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....er surfaced if not detected during the course of audit. Hence extended period of limitation is applicable in present case and demand not barred by limitation. v. Since appellants have evaded payment of tax by suppressing the relevant facts from the department penalty under Section 78 is justified. vi. Interest is statutory liability associated with delay in payment of sums due to Government; hence demand of interest to needs to be sustained. 5.1 We have considered the impugned order along with the submissions made in appeal and during course of arguments. 5.2 The issues that need to be addressed in the present appeal are as follows: I. Admissibility of CENVAT Credit on various items of Furniture and Fixture to the provider of Banking and Financial Services. II. Admissibility of CENVAT Credit on various services such as club and association services, rent cab service, travel agent service, tour operator service and GTA Services as input service to the provider of Banking and Financial Services. III. Admissibility of CENVAT Credit against Forex Broker Services IV. Whether extended period of limitation as provided for by prov....
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....in respect of Furniture and Fixtures used in factor of manufacture in case Agarwal Foundries [2015 (6) TMI 910 CESTAT Bangalore] and M/s Hyderabad Menzies Air Cargo Pvt Ltd [2017 (5) TMI 563 CESTAT Hyderabad)]. Alo in case of ICICI Lombard [2016 (2) TMI 316 CESTAT Mumbai] Credit has been extended in respect of Furniture items, stating- "6.2 As regards the Cenvat credit availed on the Furniture and Fittings, we find that the said furniture and fittings are nothing but tables and chairs which were procured by appellant during the relevant period. It is a common knowledge that any insurance company is required to have chairs and tables to render services to their clients. In our considered view, the said tables and chairs are used for rendering services of general insurance, accordingly, the appeal filed by the appellant on this issue needs to be allowed and we do so. 6.3 The reliance placed by the learned Departmental Representative on the judgment of Bharti Airtel (supra) will not carry their case any further, as we find in that case the Tribunal has recorded a clear findings that the appellant therein had not established that products were used for purpose of prov....
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....cified in sub-clause (i) of Rule 2(a)(A), it will not fall within the ambit of the definition of 'capital goods' as there is no direct nexus between this item and the output service provided by the appellant. The appellant has not established sufficient nexus between printers and their output service. There is substance in this submission. The appellant has not proved that the printers were used for the purpose of providing mobile telephone service. 44.In the absence of evidence that the chairs or printers were used for providing mobile telephone service, both these items would stay outside the ambit of the definition of "input" also. 45.We have also considered the decisions cited by the appellant in the above context. In the case of Hotel Leela Venture Ltd., window cleaning equipment was held to be capital goods for the purpose of Notification No. 28/97 which provided a definition for 'capital goods'. Needless to say that, in the present case, one has to consider the definition of capital goods given under Rule 2(a) of the CENVAT Credit Rules, 2004 and not one given in any Exemption Notification. In the case of Aditi Technologies (P) Ltd., the question considered....
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....Further the definition of 'input' as defined Rule 2(k) includes all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production, and as provided in sub-clause (ii) all goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Explanation 2 of sub-rule (k) is also relevant which provides that input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Similarly a plain reading of the definition of input indicates that in the present context clause (i) of Rule 2(k) may not be of relevance as same pertains to manufact....
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....envat credit as they are neither components, spares and accessories of goods falling under any of the chapters or headings of the Central Excise Tariff Schedule as specified in sub-clause (i) of the definition of capital goods. Hence a combined reading of sub-clauses (a)(A) (i) and (iii) and sub-rule (2) indicates that only the category of goods in Rule 2(a)(A) falling under clause (i) and (iii) used for providing output services can only qualify as capital goods and none other. Admittedly the goods in question namely the tower and part thereof, the PFB and the printers do not fall within the definition of capital goods and hence the appellants cannot claim the credit of duty paid on these items. Even applying the ratio of the judgments as relied upon by the appellants as observed above the said goods in the present context cannot be classified as capital goods. 32. As regards second contention of the appellants that the tower and part thereof, the PFB and the printers would also falls under the definition of 'input' as defined under Rule 2(k) also cannot be sustained. The definition of inputs as defined under Rule 2(k) includes all goods, except light diesel oil, high spe....
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....t tower is a part of antenna. An accessory or a part of any goods would necessarily mean such accessory or part which would be utilized to make the goods a finished product or such articles which would go into the composition of another article. The towers are structures fastened to the earth on which the antennas are installed and hence cannot be considered to be an accessory or part of the antenna. The position in this regard stands fortified from the decision of the Supreme Court in the case of "Saraswati Sugar Mills v. CCE, Delhi [2011 (270) E.L.T. 465]". From the definition of the term 'input' as defined in 2(k) of the Credit Rules it is clear that the appellant is a service provider and not a manufacturer of capital goods. A close scrutiny of the definition of the term capital goods and input indicates that only those goods as used by a manufacturer would qualify for credit of the duty paid. As observed hereinabove a service provider like the appellant can avail of the credit of the duty paid only if the goods fall within the ambit of the definition of capital goods as defined under Rule 2(a)(A) of the Credit Rules. The contention of the appellant that they are entitled for t....
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.... declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law." 5.4 Admissibility of CENVAT Credit on various services such as club and association services, rent cab service, travel agent service, tour operator service and GTA Services as input service to the provider of Banking and Financial Services. 5.4.1 Appellants have claimed CENVAT Credit in respect of various input services as detailed below: • Club or association services - They are required to organize various meetings, conferences, seminars etc., in relation to its banking and financial service....
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....s personal to the employee and is a part of his or her service facility. This service is used to shift the house hold goods of the employees from one location to another upon such transfer. These would be ineligible for cenvat credit. 21. The next is rent a cab and travel agent services. The notice seeks to disentitle the noticee from its claim from being admissible. The noticee says that these services have been availed from ferrying employees from one place to another and from one station to another. They state that "Employees of the HDFC often work in office till late. It is the duty of the noticee to provide transportation" from office to home. Such ferrying of employees from office to home would have no direct or indirect to rendering of the output services by the noticee. In view thereof, the availed cenvat credit on these counts would also be not admissible. 22. The noticee herein has claimed cenvat credit in respect of services, which are personal in nature to staff. The law was silent on the eligibility of these benefits upto 01.03.2011. It clarified its intent with effect from 01.03.2011. We find that this benefit now has been specifically denied. This m....
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....otion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; With Effect from 1st April 2011 (l) "input service" means any service, - (iii) used by a provider of taxable service for providing an output service; or (iv) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, busines....
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....against which they have taken the credit. They have relied upon the decision of Bombay High Court in case of Coca Cola Private Limited [2009 (242) ELT 168 (Bom)]. In the said decision Hon'ble Bombay High Court has held as follows: "23. We now propose to consider some of the expressions used in the definition of input service. Firstly what does the expression means and includes mean. The definition of input service uses the term means and includes. These expression must be understood as now judicially recognized. In Regional Director v. High Land Coffee Works - 1991 (3) SCC 617, the Hon'ble Supreme Court has held as under : The word include in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word include is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they sh....
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....and no meaning other than that which is put in the definition can be assigned to the same. (Also see : P. Kasilingam and Ors. v. P.S.G. College of Technology and Ors. MANU/SC/0265/1995). On the other hand, when the word "includes" is used in the definition, the legislature does not intend to restrict the definition; makes the definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which in its ordinary meaning may or may not comprise. Therefore, the use of the word "means" followed by the word "includes" in Section 2(bb) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover only those banking companies which fall within the purview of the definition and no other. Considering these judicial pronouncements, it is clear that the expression means and includes is exhaustive. By the word includes services which may otherwise have not come within the ambit of the definition clause are included and by the words means these are made exhaustive. 24. The next expression to be considered from the definition ....
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....iness" is, as has often been said, one of the wide import and in fiscal statutes, it must be construed in a broad rather than a restricted sense. 15. "The word 'business connotes", it was observed by this court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, 1955 1 SCR 952 "some real, substantial and systematic or organised course of activity or conduct with a set purpose." The term "business" therefore, particularly in fiscal statutes, is of wide import. 26. The definition of input service employs the phrase activity relating to business. The words relating to further widens the scope of the expression activities relating to business. This is in view of following observations of Supreme Court in Doypack Systems (P) Limited v. Union of India - 1988 (36) E.L.T. 201 (S.C.), interpreting the expression in relation to : 48. The expression in relation to (so also pertaining to), is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.....
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....ted, nor indeed whether this was a prudent transaction which resulted in ultimate gain to the appellant, but whether it was properly entered into as a part of the appellants legitimate commercial undertakings in order to indirectly facilitate the carrying on of its business. Further, in Commissioner of Income Tax v. Royal Calcutta Turf - 1961 (41) ITR 414 it was held that deduction may be allowed in cases where the payment or expenditure is incurred for the purpose of the trade of the subject making the return and it does not matter that this payment may inure to the benefit of a third party." 5.4.8 The issue needs to be examined as per the test laid down by the Hon'ble Bombay High Court after analyzing the entire definition and highlighted by us in bold. As per the test laid down by Hon'ble Bombay High Court even the facilities/ perks provided to employees as per the employment contract is a part of appellants legitimate commercial undertaking in order to facilitate the carrying on of its business. Further appellants have relied upon various specific decisions to support their case for individual input services. Also they have relied upon the CBEC Circular No 943/4/201....
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....ation to inter-bank transactions of purchase and sale of foreign currency, has been exempted from payment of service tax by Notification No 19/2009-ST dated 07.07.2009. Appellants do not dispute the position but have claimed that these services have been used not only for providing the services exempted by the under the said notification, but have also been used for providing (i) forex broking services and (ii) purchase or sale of foreign exchange with its customer other than bank. Accordingly appellants have claimed that CENVAT Credit in respect of these services have been rightly claimed by them. 5.5.2 The position in law is very clear if the Forex Broking Services have been utilized exclusively for providing the exempted output service, then no credit in respect of said input service will be admissible to the appellants. However in case said input service of Forex Broking has been used by the appellant as common input for providing both exempted and non exempt services, then the credit will have to be dealt with as per the provisions of Rule 6 of the CENVAT Credit Rules, 2004. However apart from making a bald assertion in their reply to show cause notice and in appeal, appell....
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.... that month." The said rule only provides a manner for determining the amount to be reversed by the banking company and a financial institution including a non-banking financial company every month. This rule do not provide that credit in respect of input services used exclusively for providing the exempted services is admissible subject to reversal of 50% of that. We do not find any merits ion the contention of appellants that order of Commissioner has been passed contrary to intent of Rule 6(3B). 5.5.5 In our view the matter needs to go back to the original adjudicating authority for allowing appellants one more opportunity to substantiate their claim that during the relevant period i.e. from 07.07.2009 to 31.03.2012, they were providing both exempted and taxable output services using this common input service. In case they are able to substantiate their claim to the satisfaction of Commissioner, the issue will have to be dealt by the Commissioner as per the provisions of Rule 6 of CENVAT Credit Rules, 2004 as they existed at the relevant time. In case appellants are not in position to substantiate their claim with relevant documents/ records, they should accept this demand....
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.... with the returns. But the trust imposed does not imply that assessee could go on a fishing expedition and evade the tax due or take inadmissible credits waiting for the revenue to catch them. It is also not a race against time whereby he gets the license that if the revenue cannot catch them within the normal period of limitation their inadmissible claims made without substantiation with the relevant information will become valid claims as action is barred by limitation. It is now settled law that non disclosure of any information that was relevant for determining the claim made and available with the assessee, at the relevant time, shall amount to suppression with intent to evade payment of duty. We find that in similar circumstances in following decisions invocation of extended period has been upheld: i. Tamilnadu Coop Textiles Processing Mills Ltd [2007 (207) ELT 593 (T)] "9.We have considered the decisions cited before us. In the case of Padmini Products (supra), it was held that, where there was scope for doubt as to whether the goods were dutiable or not, the extended period of limitation under the proviso to Section 11A(1) would not get attracted. In the present....
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....cts were known to the Department and hence the allegation of suppression against them is not sustainable. However, they have not established that the relevant facts were known to the Department prior to the investigating officers' visit to their premises. Even if it be assumed that the Department had knowledge of the relevant facts, the Mills can still be found to have suppressed such facts as held by the Tribunal in the case of Bajaj Tempo Ltd. (supra). 10.For the reasons already recorded by us, it is held that the extended period of limitation was rightly invoked in this case for demanding duty from the Mills in respect of the processed powerloom fabrics supplied to Co-optex during the period of dispute." ii. Rail Tel Corporation of India [2015 (40) S.T.R. 1131 (Tri. - Del.)] 6. We find that the appellant had registered itself under leased circuit service and as has been analysed above the impugned service rendered clearly and unambiguously fell under the scope of leased circuit service. Thus for the appellant who operates in this field and was even registered for leased circuit service, and therefore was not unaware thereof. Bona fide belief is not some sort....
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....n by the appellants do not help the cause of the appellants. This decision has been passed relying on the decision of Apex Court in case of Continental Foundation Joint Venture [2007 (216) ELT 177 (SC)]. While discussing the issue on suppression the Apex Court stated "Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." Since the facts in that case were known to both the parties Hon'ble Apex Court held charge of suppression cannot be invoked. That is not the case here. In this case certain information which was available with the appellants was never disclosed to revenue, with the intention to evade payment of tax. This decision of Apex Court is clearly distinguishable and so is the decision of Hon'ble C....
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....i materia with those provided in Section 78 thereof. The noticee has claimed inadmissible benefits, which remained privy to them, until unearthed by the audit officers of the service tax Commissionerate. The penalty proposed and mandated under Section 78 of Chapter V of the Finance Act, 1994 in reading of Rule 15(3) and Rule 15(4) of the CENVAT Credit Rules would, thus become imposable on the noticee. In view thereof, no penalty would be imposable under Section 76 of Chapter V of the Finance Act, 1994." 5.8 In view of our discussions and findings as above we respond to the questions framed in para 5.3 as follows: I. CENVAT Credit claimed by the Appellants on Furniture and Fixtures is inadmissible as they do not qualify either as Capital Goods or Inputs. The demand in respect of these is upheld. II. CENVAT Credit claimed by the Appellants on various services meant for consumption of their employees under the employment contract, is admissible upto 01.04.2011, provided no part of service has been received by the employee after that date. However CENVAT Credit in respect of these services meant for personal consumption of the employees is inadmissible post 01.04.2....