TaxTMI 
TaxTMI 
2019 (7) TMI 723
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....ons of Section 73(2) of the Act. I further order appropriation of Service Tax and Education Cess totally amounting to Rs. 10,81,74,382/-, since paid by the assessee, as detailed in Annexure-I of the SCN., against the aforesaid confirmed demand. 41.2 I confirm the demand of Service Tax and Education Cess totally amounting to Rs. 39,33,395/- (Rupees Thirty Nine Lakhs Thirty Three Thousand Three Hundred and Ninety Five Only) short paid/ not paid by the assessee i.e. M/s Adiraj Manpower Service Pvt ltd., Pune in respect of MRSA services provided by them to M/s Sigma, during the period from April 2012 and September 2012 to March 2014, as detailed in Anne4xure -II of the Show Cause Notice, under the provisions of Section 73(2) of the Act. I further order appropriation of Service Tax and Education Cess totally amounting to Rs. 71,534/-, since paid by the assessee, against the aforesaid confirmed demand. 41.3 I also order recovery of interest, at the appropriate rate(s) as applicable during the relevant period, on the demand of Service Tax as confirmed at paras 41.1 and 41.2 above under the provisions of Section 75 ibid. I further order appropriation of the amount of inte....
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.... September 2012 to March 2014, as details of all these transactions are available on the specified records of the assessee, as stipulated under the first proviso to Section 78(1) of the Finance Act,1994. 41.7 Further I also give an option to the assessees, under the second and third proviso to Section 78(1) of the Finance Act, 1994 to pay penalty equivalent to 25% of the demand of Service Tax as determined/ confirmed in para 41.2 above (i.e. 25% of Rs. 39,33,395/- which is equal to Rs. 9,83,349/-) provided the assessee pays the entire amount of demand of service tax, as determined/ confirmed in para 41.2 relevant to the period from April 2012 and September 2012 to March 2014 i.e. Rs. 39,33,395/- along with interest payable thereon as ordered in para 41.3 above on the said amount as well as the 25% penalty, within 30 days of the communication of this order. 42 This order is issued without prejudice to any other action that may be taken against the noticee under the provisions of Chapter-V of the Finance Act, 1994 and/ or the rules made thereunder and/ or any other law for the time being in force." 2.1 Appellants are providing the services under the category of "....
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....Rupees Thirty Nine Lakhs Thirty Three Thousand Three Hundred and Ninety Five Only) arising out of reconciliation for the period from April 2012 to March 2014 (including service value provided to M/s Sigma Electric Manufacturing Corporation Pvt Ltd., Chakan, Pune from September 2012 to March 2014) from the assesssee, as detailed in Annexure -should not be demanded and recovered from them in terms of proviso to sub section (1) of Section 73 of the Finance Act, 1994. The amount of Service Tax of Rs. 69,450/- Education Cess Rs. 1,389/- and SHE Cess Rs. 695/- toatally amounting to Rs. 71,534/-, paid by the assessee vide challan no 86709 dated 24.03.2014 during the course of enquiry/ investigations , out of the demand mentioned above, should not be appropriated against the afore said demand of Service Tax. (iii) Interest of, on the demand of Service Tax as demanded at (i) and (ii) should not be demanded and recovered from the assessee, under the provisions of Section 75 of the Finance Act, 1994. Further the interest of Rs. 17,06,959/- already paid by them against their interest due, for the demand at (i) above, and the interest of Rs. 12,876/- already paid by the them vide chall....
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....-Del)], Mahavir Aluminium Ltd [2007 (212) ET 3 (SC)]}. In period post 1st July 2012, the activities undertaken by them will be covered by the definition of Service as defined under Section 65B(44) and is also not specified as service under Section 66D (negative list). Hence these services are leviable to service tax but are exempted by the Notification No 25/2012-ST {Seven Hillds Construction {2013 (31) STR 611 (T-Mum)], Ritesh Enterprises [2010 (18) STR 17 (T-Bang)], Nagar Taluka Shramik Seva Sangh [2010 (19) STR 119 (Commr Appl)], Karwar Dock & Port Labour [2010 (17) STR 423 (T-Bang)]. iii. Canteen charges recovered from employees and reimbursement of other expenses should not have formed the part of taxable value of services provided by the Appellant. They were providing the canteen facilities to their employees and recovering the charges towards providing such service to their employee form them. Such charges and other reimbursable expenses could not have formed the part of taxable value. iv. Late Fee could not have been demanded from them as they had filed their SR-3 return in time. For the period April 2013 to September 2013 they had filed the service tax re....
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....462 (T-Del)], Shri Ramadhar Singh [2018 (9) GSTL 303 (T-Del)], Dhanashree Enterprises [2017 (5) GSTL 212 (T- Del)], Nortel Network 9I) Pvt Ltd [2017 (52) STR 489 (T-Del)]} iv. In the case of Venus Albums Co Pvt Ltd [2019 (22) GSTL 386 (T-Chan)] and Sarkar & Sen Company {2016 (45) STR 479 (AAR)] benefit of Notification No 25/2012-ST has been extended to job work activities. v. The processed undertaken by them are nothing but intermediary process as explained in the table below: Manufacturing Process Process Performed By Base Metal bringing from storage and pouring in melting furnace Job Worker i.e. Appellant Melting in Furnace Principal Manufacturer Manufacture of Raw Casting Principal Manufacturer Fettling & Deburring of the raw casted goods Job Worker i.e. Appellant Material Handling and Handing over to next machining operation after acceptance of quality control Job Worker i.e. Appellant Machining Raw casted goods Principal Manufacturer Assembly Principal Manufacturer or Job Worker i.e. Appellant as applicable Packing of Finished Goods. Principal Manufacturer or Job Worker i.e. Appellant as applicable ....
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....Sigma, they had been paying the service tax under the category of Manpower Recruitment and Supply Services upto August 2008. They changed the practice with effect from September 2008 and stopped paying service tax in respect of the supply made to M/s Sigma claiming the same to be job work exempted in terms of Notification No 25/2012-ST (Sl No 30). iii. From the terms and condition of the contract entered between the appellants and M/s Sigma (Contracts dated 1st January 2012, 1st January 2013 & 1st January 2014) it is quite evident that the services provided by them were those of manpower supply and not of job work. (Specifically conditions at Sl No 10 to 17 of Terms and Conditions). iv. If the agreement was for the job work then why should contract have conditions like minimum wages to labour, submission of muster etc by the Appellant to M/s Sigma and issues like payment under ESI Act, Provident Fund to the employees of the appellant be part of the contract. v. All these conditions which are the part of the contract clearly show that the appellants were providing man power supply services and were not engaged in any job work. vi. He further refer....
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....avancore Agency Cochin [1989 (42) ELT 350 (SC)] laid down the law stating- "4. ............ It is sufficient for us to refer to Section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income, and to Section 276C which provides that if a person wilfully fails to furnish in due time the return of income required under Section 139(1), he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine. It is clear that in the former case what it intended is a civil obligation while in the latter what is imposed is a criminal sentence. There can be no dispute that having regard to the provisions of Section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assump....
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....ion process as job work in relation to any good on which appropriate duty is payable by the principle manufacturer"" 5.4 From the above submissions made in appeal it is clear that appellant do not dispute taxability of the services provided by them to M/s Sigma but are claiming the benefit of exemption in terms of Notification No 25/2012- ST. 5.5 The Terms and Conditions specified in the Contract between the Appellant and M/s Sigma are reproduced below: "The Contractor has undertaken the responsibility of Fetling, Material Handling, Assembly, Pouring, Supply of Cast & machine part, painting. 1. The Contractor has undertaken this job contract which is highly specialized in its nature where trained and expert team with coordination is required. 2. The contractor shall receive the consideration as per the services rendered and as per rates mentioned in Schedule "II" attached herewith. The Contractor shall be responsible for cleaning premises in highly hygienic condition. The Contractor while undertaking Fetling, Material Handling, Assembly, Pouring, Supply of Cast & machine part, painting or so shall avoid any wastage, theft, pilferage etc and....
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....oyees engaged by the Contractor, but ensure that he will pay them the wages not less than the rates of minimum wages as applicable for his scheduled industry. The mode of payment will be as described by the Government Authorities. 11. It is agreed that the Contractor shall take necessary license whenever required under the provisions of Contract Labour (Regulation & Abolition) Act, 1970 and shall submit a copy of the same to the Company. 12. The Contractor shall maintain various records, registers and shall submit timely returns required under legislation, rules and regulations applicable to him and hi personnel. The contractor shall submit Xerox copies of musters, vouchers to the company in respect of his personnel. 13. The Contractor indemnifies the Company that he shall bear any burden of whatsoever nature like fees, fines, penalty, damages, rise in wages, HRA,, Back-Wages, etc in respect of his personnel under the provisions of any law. 14. ..... 15. The Contractor shall ensure that the persons engaged by him shall not obstruct the working of the Company and in the event of any such obstruction the Contractor is liable for damages an....
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....upply of Cast & machine part, Painting, at our establishment situated at Gate No 154/1 & 155/1, Mahalunge, Chakan, Pune, 410501, which consists of plant area, offices, stores, canteen, utilities, open land, scrap yard etc.. SCHEDULE "II" The rate per Kg is given below: Particulars Copper/ kg Zinc/ Kg Aluminium/ kg Steel/ kg Fetling 0.83 Material Handling 0.58 Packing Pouring Supply Cast/ Machined Parts 2.49 Painting Total 2.49 1.41 0.00 0.00" 5.6 The above contract needs to be examined in light of the provisions of Contract Labour (Regulation & Abolition) Act, 1970. This Act permits companies and establishments in the manufacturing and services sectors to engage contract labour through contractors. Features of the said Act, relevant for the controversy in hand are reproduced below: Section 2 (c) "contractor", in relation to an establishment, means a person who undertakes to produce a giv....
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....escribed. (2) All expenses incurred by the principal employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. Section 21. Responsibility for payment of wages.- (1) A contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed. (2) Every principal employer shall nominate a representative duly authorized by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed. (3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorized representative of the principal employer. (4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or th....
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.... and is not a job work contract. Hence the services provided by the appellant cannot be said to be those in respect of which Sl No 30 of exemption Notification No 25/2012-ST shall apply. 5.8 Appellant shave referred to decision in case of Venus Album Co Pvt Ltd [2019 (22) GSTL 386 (T-Chand)] & Sarkar and Sen Company {2016 (45) STR 479 (AAR)]. In the said decisions it was held that if the activities undertaken were held to be of that job work in respect of the finished goods cleared on payment of duty then will be exempted in terms of this notification. None of these decisions have held that even the "Contract Labour" agreement shall be treated as the job work agreement. Hence we do not find these decisions applicable in present set of facts. 5.9 The decisions in case of Shailu Traders [2018 (10) GSTL 462 9T-Del)], Shri Ramadhar Singh [2018 (90 GSTL 303 (T-Del)], Dhanshree Enterprises [2017 (5) GSTL 212 (T-Del)], Nortel Network (I) Pvt Ltd [2017 (52) STR 489 (T-Del)] all are in respect of the law as it existed prior to 1st July 2012 and hence not applicable in the amended regime. Appellants as pointed out do not dispute the taxability of the activities under taken by them post....
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....ommissioner of Sales Tax, 1985 Supp (SCC) 205, this Court pointed out three components of a taxing statute, namely subject of the tax; person liable to pay tax; and the rate at which the tax is to be levied. If there is any ambiguity in understanding any of the components, no tax can be levied till the ambiguity or defect is removed by the legislature [See Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667; Indian Banks' Association v. Devkala Consultancy Service, (2004) 4 JT 587 = AIR 2004 SC 2615; and Consumer Online Foundation v. Union of India, (2011) 5 SCC 360.]. 43. There is abundant jurisprudential justification for this. In the Governance of rule of law by a written Constitution, there is no implied power of taxation. The tax power must be specifically conferred and it should be strictly in accordance with the power so endowed by the Constitution itself. It is for this reason that the Courts insist upon strict compliance before a State demands and extracts money from its citizens towards various taxes. Any ambiguity in a taxation provision, therefore, is interpreted in favour of the subject/assessee. The statement of law that ambiguity in a taxation stat....
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....n. These observations are made in para 17 of the judgment, which read as follows : "How then should the Courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India, 1962 Supp 3 SCR 481 = AIR 1963 SC 98. See als....
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....applicability. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit." 46. The above decision, which is also a decision of two- Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case (supra) deduced as follows : "Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally". 47. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record....
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....struction of an exemption notification, as in such a case it is for the assessee to show that he comes within the purview of exemption (See Novopan India Ltd. v. CCE and Customs)." 51. In Hari Chand case (supra), as already discussed, the question was whether a person claiming exemption is required to comply with the procedure strictly to avail the benefit. The question posed and decided was indeed different. The said decision, which we have already discussed supra, however, indicates that while construing an exemption notification, the Court has to distinguish the conditions which require strict compliance, the noncompliance of which would render the assessee ineligible to claim exemption and those which require substantial compliance to be entitled for exemption. We are pointing out this aspect to dispel any doubt about the legal position as explored in this decision. As already concluded in para 50 above, we may reiterate that we are only concerned in this case with a situation where there is ambiguity in an exemption notification or exemption clause, in which event the benefit of such ambiguity cannot be extended to the subject/assessee by applying the principle that a....
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.... not for". In view of these meanings obtained from the Law Lexicon and the Oxford Dictionary attached to the word "but" and to the phrase "but for", the Advocate pleaded that it should be interpreted that had sub-section (2B) not been in existence or rather the facility to pay the short duty was not available, the party would have been required to pay interest u/s. 11AB and if the facility is available, on compliance of the same, the party would not be liable to pay interest. Taking into consideration that the tail piece relied upon by learned Counsel is included in the Explanation to particular sub-section (2B), we are unable to accept the interpretation as tried to be attributed by the learned Counsel for one simple reason that an explanation ought to be therefor the purpose of explaining the main provision, it cannot nullify the effect of main provision. If Explanation (2) interprets as attempted by learned Counsel due to the phrase with which it ends "but for this sub-section", the explanation will have to be ignored being in conflict with sub-section (2B), which it explains. However, the meaning of this clause "but for this sub-section" can be enlightened when we refe....
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....s came to light. Commissioner has in para 38.3 of his order have held as follows: "38.3 The assessee are working in self assessment regime and are expected to be vigilant about their tax liabilities. It is an undisputed fact that the assessee have been repeatedly paying service tax beyond the due dates to the government exchequer even after being pointed out by the department and therefore have not lived upto the high standards of tax compliance and information disclosure as is expected of an assessee in the self assessment regime. Further, although they had been paying service tax on the MRSA services provided by them, they failed to pay service tax in respect of manpower supply made by them on piece rate basis to M/s Sigma, and also failed to include the canteen charges recovered by them from their employees, while calculating their service tax liability and continued evade payment of service tax. I, therefore, hold that the extended period of under proviso to Section 73(1) of the Finance Act, 1994,a s amended has been correctly invoked in this case." Since the fact about non-payment of service tax in respect of services provided to M/s Sigma, by treating the agreemen....
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....e Hon'ble Apex Court in the case of Commissioner of Central Excise, Vishakhapatnam v. Mehta & Co. - 2011-TIOL-17- S.C.-CX = 2011 (264) E.L.T. 481 (S.C.) and the question of time-bar was also raised. The Hon'ble Apex Court held as follows : "The cause of action, i.e., date of knowledge could be attributed to the appellant in the year 1997 when in compliance of the memo issued by the appellant and also the summons issued; the hotel furnished its reply setting out the details of the work done by the appellant amounting to Rs. 991.66 lakhs and at that stage only the department came to know that the work order was to carry out the job for furniture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years." In our considered view, the ratio of the aforesaid decision squarely applies to the facts of the present case. Since the co....
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....(1) Petronet LNG Ltd. v. CST [2013-T1OL-1700-CESTATDEL}; (2) Reliance Industries Ltd. v. CCE&ST [2014 (36) S.T.R. 820 (Tri.-Mum.)]; (3) Greatship (India) Ltd. - [2015 (37) S.T.R. 533 (Tri.- Mum.)]; (4) CCE v. Vinay Bele & [ 2008 (9) S.T.R. 350 (Bom)]; (5) CCE v. D.R. Gade [2008 (9) S.T.R. 348 (Bom.)]; (6) Nizam Sugar Factory v. CCE [2006 (197) E.L.T. 465 (S.C.)] (7) CCE v. Lark Chemicals [ 2008 (9) S.T.R. 230 (Bom.)] (8) CCE v. Ashish Vasantrao Patil [ 2008 (10) S.T.R. 5 (Bom.)], and (9) CCE v. Quick Service reported in 2008 (10) S.T.R. 235 (Bom.). I have gone through the said judgments and do not consider it necessary to discuss these judgments as the question of penalty has to be examined in the facts and circumstances of each case. The learned senior counsel has laid a lot of emphasis on this Tribunal's decision dated 18-7-2014 in the case of Greatship (India) Ltd. (supra). In the said case, the issue was relating to penalty under Section 78. Here, as held by me, Section 78 penalty is only relevant for the first show cause notice, which, in my view, is also not chargeable in the facts and circumstan....