TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1072
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....oticee 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 4,13,42,028 Total Service Tax paid 141,33,04,571 Interest paid by the respondent 1,....
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....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 [2006 (202) ELT 398 (P & H)] iii. Tata Steel Ltd [2013-TIOL-707-CESTAT-MUM] iv. Automotive Stampings & Assemblies Ltd. [2015- TIOL-836-CESTAT-Mum] v. Dharamendra Textile Processors [2008....
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....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 membership fees paid to Society of Petroleum Engineers (SPE) is not liable to service tax under the category of "Club or Association Service", as SPE is a charitable not for profit organization. The person seeking any employment in the company like theirs is r....
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....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 provider is under no obligation to provide anything in return to such donors." From the perusal of the invoice itself following is evident that the invoice has been indicating "British Council Trading" and is issued against the contract number: UKIERI for an amount of GBP 100,000/- towards "payment of the fourth year re sponsorship fee for UKIERI." In our view the invoice itself justifies the correctness of the stand taken by revenue. If t....
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....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 18485 Other Assets 7376 11100 14690 13514 Reserve Fund Investments 32124 42700 38561 39999 Property and Equipment 4946 3700 12582 19959 Interest in SPE Foundation 7463 7800 10471 10811 Total Assets 60792 74400 97029 102768 Liabilities Account Payable 5420 6600 11038 11870 Deferred Revenue 9875 11500 17057 18459 Total Liabilities 15295 18100 28095 30329 Net Assets 45497 56300 6....
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....r [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 suppression of facts. The issue of revenue neutrality was, therefore, required to be considered by the Commissioner in view of the findings reached in the order, that there was massive under-valuation of goods by suppression of material facts with intent to evade payment of duty, and in light of the provisions of Section 57-E(3) of the Rules of 1944 or any other corresponding new Rules." Hon'ble Supreme Court has in case of Mahindra & Mahindra [2005 (179) ELT 21 (SC)] held as follows: "4.There can be number of eventualities where extended period of limitation in terms of proviso to section 11A may be available to the Depart....
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.... "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 Notification No 17/2004 was issued on 10-9-2004. It appears that the law makers slipped on bringing an amendment to the notification because the intention of the notification is very clear, that is, not to levy service tax on cess paid towards the import of technology. Careful reading of the notification indicates that what is exempted is "taxable service provided by the holder of the Intellectual Property Right to any person............" Service Tax Rule 2(r) defines "Provider of Taxable Service" to include a person liable for paying service tax. Therefore, this rule read with Notification No. 17/2004 can be interpreted only to mean that the ap....
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....bove 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 reference to any concession available to such service tax. No such implication can be read from the provisions of Section 66A. Further, we also note that the conditions mentioned in the Notification 13/2010 have been fulfilled and there is no dispute on that score. When the provider of service is put to liability to discharge service tax as per provisions of Section 66A all the provisions of Chapter V shall have full force for charge and collection of service tax. The exemption now claimed is part and parcel of the provisions of service tax as the Notification 4 ST/58841/2013-ST [DB] has been issued under the powers vested under Section 93 of the said Act....
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....bsence 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. - They believed bona fide that tax was not payable." After recording so Commissioner proceeds to drop the penal proceedings initiated against the appellant, relying on the decision in case of Jay Yushin Ltd [2000 (119) ELT 0718 (T-LB)], Coca Cola Industries Pvt Ltd [2007-TIOL- 245-SC-CX], Crystal Quinone Pvt Ltd [2009 (233) ELT 499 (T-Ahd)] and Daman Ganga Board Mills P Ltd [2012 (276) ELT 4532 (T-Ahd)] The issue that is under Consideration is vis a vis the imposition of penalty under Section 78 of Finance Act, 1994. Hon'ble Bombay High Court has in case of Padma Shri V V Patil SSK [2007 (215) ELT 23 (Bom)] held as follows: "Emphasis by Advocate Shri Kolte was on the tail piece ....
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....jected 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 incurred by them which are liable to Service Tax under reverse charge mechanism under section 66A of Finance Act, 1994. In light of the fact that they were receiving services from foreign entities and were liable to pay Service Tax under the Reverse Charge Mechanism, it appears that the assessee has deliberately suppressed material facts from the department which has facilitated the evasion of Service Tax payable on the said services received by them from Foreign Service providers. These facts could not have been notice if a case had not been booked by the department and it was revealed only through investigations that the expenditure in foreign currency was not on account of expenditure incurred by their foreign offices but tow....
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....ter 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. .................... 21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows : "5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC wher....