2019 (3) TMI 1737

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....ZU/ KOL/Gr.A/16/Part-VIII/9704, dated 27-11-2017 (hereinafter referred to as 'SCN') by Additional Director General, Directorate General of Goods & Services Tax Intelligence, Kolkata Zonal Unit and to decide the penalty proposed in the SCN on the co-applicant. 1.1 The applicant company obtained Service Tax registration from erstwhile Service Tax-II Comm'te, Kolkata vide STC No. AACE7357HST001 for the service of "Erection, Commissioning & Installation Service", "Management, Maintenance or Repair Service" and "Consulting Engineer Service" as a provider of taxable services and also for "Transportation of Goods by Road" service as a recipient of such services. The applicant primarily engaged in providing taxable services to their clients in relation to construction/erection of infrastructure projects, including projects involving railway tracks which are not meant for public transportation of goods or passengers, as well as (i) management, maintenance or repair and (ii) consultancy related to such infrastructure projects and which appears to be classifiable under the erstwhile service categories of 'works contract services'; 'erection, commissioning & installation services', 'ma....

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....nance Act, 1994. (ii) Interest at appropriate rate under Section 75 read with Section 73B of the Finance Act, 1994 should not be demanded; (iii) Penalty under Section 78(1) of the Act should not be imposed on them for their aforesaid acts of omission/commission leading to evasion of Service Tax by way of wilful suppression of material facts; (iv) Penalty under Section 77(1)(a) of the Act should not be imposed on them for their failure to obtain Service Tax Registration against (i) 'Works Contract Service' as a provider and (ii) Director's remuneration as a receiver of taxable services, within stipulated time; (v) Penalty under Section 77(2) of the Act should not be imposed on them for their failure to submit their periodic ST-3 returns for the period October, 2015 onwards, within stipulated time; and (vi) The amount of Rs. 44,84,825/- (Rupees forty four lakh eighty four thousand eight hundred twenty five only) deposited by the applicant in cash after intervention by the DGCEI against their Service Tax liability pertaining to the material period, should not be appropriated towards the proposed demands. 1.3&emsp....

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....tlement Applications, they have agreed and accepted certain aspects of the demand and denied the rest. In this connection, the following submissions are made: - (a)      In relation to 'Annual Maintenance Service (AMC)', in their application, they have divided the underlying services, against which demand of Rs. 1,52,55,495/- was made in three (3) parts viz. (i) Service provided to Indian Railways, (ii) Service provided to Private Parties & (iii) Service provided to West Bengal Renewable Energy Development Service (WBREDA). The applicant admitted their Service Tax liability for services (AMC) rendered to Indian railways, private parties and WBREDA for the period subsequent to 31-3-2015 and did not agree to the demand for the services to Indian Railways prior to 1-4-2015 due to the assumption that such services are exempted vide Notification No. 25/2012-S.T., dated 20-6-2012. In this regard, it is submitted that such services (AMC of digital axles etc.) are taxable u/s. 65(105)(zzg) read with Sec. 65(64) of the Finance Act, 1994 (The 'Act'). Only 'Works Contract Services' provided to the Railways have been exempted vide Sl. No. 14 of the ab....

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....ce applicability of Sl. No. 29(h) of the above notification does not arise. Only such services which were exempt originally, would qualify for exemption to a sub-contractor providing services to the original contractor of exempted services. (d)     In respect of tax liability on Directors remuneration, it is submitted that the relevant statutory provision makes no distinction between whole-time and other directors, which has been addressed in the SCN itself. As per Rule 2(l)(d)(i)(EE) of the Service Tax Rules, 1994 (the 'Rules') read with Notification No. 30/2012-S.T., dated 20-6-2012 (amended vide Notification No. 45/2012-S.T., dated 7-8-2012), the recipient of such services was made liable for payment of Service Tax on 100% of the value from 7-8-2012. Also, no documentary evidence substantiating employer-employee relationship between the applicant and its directors could be furnished by the applicant. Also, there was wide variance in the amounts incurred by the applicant as Directors remuneration during the relevant period supports the fact. Amounts incurred for training of one of the directors was a circuitous way of remuneration. Hence, tax....

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.... Reverse Charge Mechanism (RCM). 4.3 The applicant was asked, vide this office letters dated 29-8-2018 and 4-10-2018, to submit the evidences in support of their payment particulars of Rs. 1,24,58,107/- as mentioned in their letter dated 16-8-2018, as only payment of Rs. 93,85,257/- could be verified by DGCEI. The applicant did not reply to any of these letters. On 28-1-2019, both the applicant and co-applicant have applied to this Bench to withdraw both applications under SA Nos. 1154/2018 & 1162/2018. 5.1 The matter was fixed for personal hearing on 28-2-2019. However, the applicant and co-applicant vide their letter dated 26-2-2019 expressed their inability to attend the hearing as they intimated to withdraw the application of settlement. Proceedings of the hearing 5.2 The matter was heard on 28-2-2019. 5.3 Nobody has attended hearing on behalf of the applicant and co-applicant. 5.4 The Department was represented by Smt. Susmita Bhattacharya, Joint Commissioner, Kolkata South CGST & CX., along with Shri Shivaji Chakraborty, SIO, and Shri Ajay Keshri, IO, from the DGGI, KZU. Shri Shivaji Chakraborty, SIO, submitted that out of the Servic....