TaxTMI 
TaxTMI 
2019 (7) TMI 1072
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....sand Seven Hundred Twenty Eight Only) paid by the noticee as interest on the service Tax paid by them during investigation is hereby appropriated. 5.03 Other than the above actions proceedings initiated vide impugned show cause notice No 12/Commr/OFG(6)/SIMPL/STD/Non-CERA/2014-15 dated 17th October 2014 are hereby dropped." 2.1 Respondents herein are registered with LTU. They had been incurring expenditure in foreign currency as remittance to various service providers who do not have any permanent establishment in India and were providing taxable service to them. They were not paying service tax on the gross amount remitted. Suspecting tax evasion investigations were undertaken. 2.2 Findings that came forth as result of the investigations undertaken are recorded in table below: Description Amount 'Rs Period 2009-10 to 2012-13 Foreign Currency Remitted to Service Providers 2106,34,63,677 Amount Remitted towards Taxable Services 1263,39,04,599 Amount Remitted towards Non Taxable Services 842,99,59,078 Service Tax paid by the Respondent in regular course 137,19,62,543 Service Tax Paid during the course of investigation 4,13,42,0....
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....- i. Whether the noticee is liable to penalty in respect of the tax short paid in the normal course, but paid before the issuance of Show Cause Notice. ii. Whether the noticee is liable to pay Service Tax on the services of (i) "Sponsorship services without benefit" received from outside India & (ii) Membership fees paid outside India. iii. Whether the noticee is eligible to exemption under notification 17/2004-ST dated 01.09.2004. iv. If the noticee is held to be liable pay tax on services of sponsorship and membership and if the benefit of notification 17/2004-ST is denied to them, then whether they are liable to be penalized in terms of section 76, 77 and 78 of the Finance Act, 1994. 3.3 Challenging the order of the Commissioner not imposing penalty on the respondents, relying on the decisions in case of Jay Yushin Ltd [2000 (119) ELT 718 (T-LB)], Coca Cola Industries Pvt Ltd {2007-TIOL-245-SCCX], Crystal Quinone Pvt Ltd [2009 (233) ELT 499 (TAhd)], SLP against Indeos ABS Ltd [2010 (254) ELT 628 (Guj)] revenue has relied on the following decisions: i. Neminath Fabrics [2010 (256) ELT 369 (Guj)] ii. Machino Montell (I) Ltd ....
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....cate submits that i. The benefit of R & D Cess abatement is available against the liability to pay service tax under Section 66A of the Act. [Cummins Technologies India Ltd [2017 (9) TMI 224 (Del)], Rochem Separation Systems Pvt Ltd [2015 (39) STR 112 (T-Mum)]. United News of India [2017 (3) TMI 17 (Del)]. The ground for challenging the order of Commissioner in this respect is that Appeal of department against the order of Tribunal in case of Rochem is pending in High Court. The appeal filed by the revenue against the decision of Tribunal has been dismissed by the High Court vide its order dated 17th September 2018 in CEA No 57/2017 ii. They had paid certain donations to British Council Trading registered in UK for UK-India Education and Research India (UKIERI0 which is nothing but a grant for educational purposes and did not represent any consideration for service. This amount is not paid towards any sponsorship service. It is settled that burden is on the revenue to show that the service provided by them is sponsorship service. {Hindustan Coca Cola Beverages Pvt Ltd [2016 (42) STR 696 (T)]. GSP Infratech Development Ltd [2015 (39) STR 327 (T)]. iii. The....
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.... iv. Whether penalty under Section 78 can be imposed on the Appellants. 5.3 Whether the amounts paid to UKEIRI can be considered as fees for "sponsorship service" leviable to service tax: Appellants have claimed that the amounts paid by them to UKEIRI were towards donations made by them to UKEIRI. Revenue has contended relying on the invoice stating Invoice Type as "Services" for Description : "Payment of the 4th Year Sponsorship fee". In their appeal revenue has stated that the invoice itself is the sufficient to prove that appellants have not paid this amount as donation but have made payments towards certain services which they would have got in return of such payment and hence would not be covered by the exclusion clause to Section 65 (99a) of the Finance Act, 1994, which reads as follows: ""sponsorship" includes naming an event after the sponsor, displaying the sponsor's company logo or trading name, giving the sponsor exclusive or priority booking rights, sponsoring prizes or trophies for competition, but does not include any financial or other support in the form of donations or gifts, given by the donors subject to the condition that the service provide....
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....mes without any benefits to them and hence cannot be considered as "Club or Association Services" as defined under Finance Act, 1994. Commissioner has in his order discussed the issue in this respect in his order and has held that the membership of SPE is covered by the definition of "Club or Association Services". For coming to such finding he has relied upon the information available of web site of SPE. These findings of the Commissioner have not been challenged by the Appellant by way of an appeal or by filing the cross objections in the matter. Hence this finding of Commissioner against the appellants has become final. However during the course of argument counsel for appellant sought to raise the issue by stating that SPE do not organize any activities. Such argument even if allowed at this stage is without any merits because as per the Annual Report of SPE following information can be cull out which is enough to hold that submissions made are contrary to published information on SPE. Consolidated Statement of Financial Position as of 31st March 2009 2010 2012 2013 Assets USD Thousands Cash and Cash equivalents 8883 9100 20725 1848....
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....nd-level realities. The appellants have not been able to demonstrate with facts and figures before the lower authorities (nor before us) as to how the theory can be made applicable to them. By sculpting the air, no Eiffel Tower could be created. Yet, the wondrous human mind revels in such fantasies! Otherwise, Rumsfeld would not have made the following remarks: "There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. These are things we don't know we don't know." In case of Deccan Veneer [2008 (223) ELT 263 (T-Bang)] in similar circumstances as present case Tribunal has held as follows: "8.1 ...................... Even the observation as to revenue neutrality made in paragraph 168 of the impugned order, ignores the provisions of Rule 57-E(3) of the Rules, under which it was provided that, the provisions of subsection (2) of Section 57-E shall not apply in cases where the additional amount of duty became recoverable from the manufacturer on account of any short levy or non-levy by reason of fraud, collusion or any wilful misstatement or suppr....
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....cipient of service. (respondent) Commissioner has allowed the benefit of notification and dropped the demand in this respect. Revenue has challenged the order of Commissioner on the ground that the order of CESTAT relied upon by the Commissioner while extending the benefit is under challenge before the High Court of Bombay. Revenue has contended that the benefit of this notification is admissible only to the service provider and not the deemed service provider under Section 66A(1)(b). This argument of revenue was rejected by the tribunal in case of Rochem Separation Systems Pvt Ltd [2015 (39) STR 112 (T-Mum)] holding as follows: "10. The Commissioner has rejected the benefit of Notification No. 17/2004 for the reason that the notification applies only to Section 66 and not to Section 66A in which the appellant is required to pay service tax on the import of services or reverse charge basis. The Commissioner's further reasoning is that the appellant is only a deemed provider of service under Section 66A(1)(b) and cannot be treated as one who provided the service. This reasoning is flawed Section 66A was introduced by Finance Act, 2006 w.e.f. 18-4-2006 whereas the Noti....
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....rovider for the purpose of Section 66 ibid. Therefore, we are of the view that the benefit of exemption Notification No. 17/2004-S.T., dated 10-9-2004 should also be available to the respondent. We find that the Tribunal in the case of United News of India (supra) while interpreting the provisions of Section 66A ibid, has held that the benefit of the exemption should also be available to the recipient of service. The relevant paragraph in the said order is extracted herein below : "5. Heard both sides and perused the appeal records. The only dispute in the case is that the eligibility of the appellant for the exemption under Notification cited above as a recipient of service. A plain reading of Section 66A brings out the legal obligation of the recipient of service in certain situations. The said Section stipulates that taxable service shall be treated as if provided by the recipient of service in India and accordingly, all the provisions of Chapter V shall apply. We find that the tax liability is put on the appellant on such legal fiction. It is not legally tenable to hold that such legal fiction will have limited application only for payment of service tax and not with r....
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....non-levy of tax. While the total tax paid on all services in regular course was Rs. 137.2 crores, a short levy of Rs. 4.13 Crores was alleged by the department. This was accepted by the noticee and they paid the full amount of tax along with interest. The payments were made before issue of the SCN. The present show cause notice has been issued for confirmation of the demand and for imposition of penalty under Section 78. The principal submission of the noticee is that: - the situation was revenue neutral. The noticee itself was eligible to avail credit of the tax payable by it. There could be no intention to evade such tax, credit of which was available to them. In absence of 'intention to evade', it is contended that the provisions of section 78 would not apply. - Certain amount of tax was not paid due to inadvertence arising out of 'inaccuracy in the internal system'. - There were areas on which there was lack of clarity and the interpretation adopted by the noticee did not match with the interpretation adopted by the department. The noticee had adopted the interpretation to the best of his understanding but the Department did not appreciate the same. ....
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....e do not find any merits in the order of Commissioner holding that for the reason of admissibility of CENVAT Credit in respect of the tax sought to be recovered the issue is revenue neutral. However in para 4.02 (ii) Commissioner himself observes: "ii) So far as the claim of inaccuracy in the internal system is concerned, the noticee has not provided any detail of the actual inaccuracy. It is not known as to what was the inaccuracy and how did it result into short payment of tax. Similarly, except for non payment of tax on TDS, the noticee has not pointed out the actual cases of difference of opinion and the basis for their belief that the tax was not payable. ..." Thus in our view Commissioner has himself rejected the arguments advanced by the respondents in respect of system inaccuracies and bonafide belief. Once the Commissioner has rejected such arguments then in respect of the amount of tax paid by the appellants during the investigation he could not have dropped the penal proceedings. In para 9 (d) of the Show Cause Notice following is stated: "d) thus they have failed to disclose the facts to the Department as regards the foreign currency expenditures in....
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....eliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. 19. From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 20. .....