AI Drafter 
TaxTMI 
TaxTMI 
2020 (6) TMI 258
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....02 The amount of Rs. 8,59,63,482/- (Rupees Eight crores Fifty nine Lakhs sixty-three thousand four hundred and eighty two only) paid by M/s. NPCIL against the confirmed demand at Sr.No.5.01 above stands appropriated. 5.03 Interest at appropriate rate on the amount confirmed as above at 5.01 under the provisions of section 75 of the Chapter V of the Finance Act, 1994 from the date the amount of service tax was payable till the date it is paid is hereby ordered for recovery. 5.04 The amount of Rs. 1,15,19,550/- (Rupees One crore Fifteen Lakhs nineteen thousand five hundred and fifty only) paid by M/s. NPCIL on account of interest against the interest due on the confirmed amount of demand stands appropriated. 5.05 A penalty of Rs. 18,11,23,250/- (Rupees Eighteen crores Eleven Lakhs Twenty-three thousand two hundred and fifty only) i.e. equal to the amount of service tax short paid by NPCIL, under section 78 ibid is hereby imposed. Having imposed penalty under section 78/FA, 1994, imposition of penalty under section 76 ibid is refrained. 5.06 I impose a penalty for Rs. 10,000/- (Rupees Ten thousand only) under Section 77 of the Chapter V of the....
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....) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 read with explanation (a) to Section 67 of the Act iii. an amount of Rs. 18,11,23,250/- (Service Tax Rs. 17,58,47,814/- + Educational cess Rs. 35,16,957/- + sec. & Higher Edu cess Rs. 17,58,479/-)(Rupees Eighteen Crore Eleven lakh twenty three thousand two hundred and fifty only) towards the Service Tax, Education Cess and Sec. & Higher Ddu. Cess not paid on the above Said services received by them and payable for the period from 01.04.2008 to 31.05.2013 discussed in para 5 supra, should not be demanded from them in terms of the proviso to the Section 73(1) of the Act; iv. the amount of Rs. 8,59,63,482/- (Service Tax Rs. 8,34,59,692/- + Educational Cess Rs. 16,94,194/- + Sec. & Higher Edu Cess Rs. 8,34,596/- (Rupees Eight Crore Fifty nine lakh sixty three thousand and four hundred and eighty two only) paid by them as detailed in para 5 above should not be appropriated against the above demand of Rs. 18,11,23,250/- payable by them; v. interest at the appropriate rate should not be demanded from them in terms of Section 75 of the Act. vi. the amount of Rs. 1,1....
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....Customs Act, 1962. Following the said decision they have at the time of clearance of the same at time of importation paid the Custom Duty due on them. ➢ Since they have discharged the Customs Duty on these drawings and designs, in view of the Hon'ble Apex Court decision, by treating them as goods, revenue cannot ask them to pay Service Tax by treating these as services irrespective of the nature of contract between them and their overseas supplier. ➢ In case the service tax is paid by them on a reverse charge basis the same will be admissible to them as CENVAT Credit and hence the situation is totally revenue neutral. ➢ All the facts were in the knowledge of the department as they had declared the same at time of payment of Customs Duty, and the fact that the matter is revenue neutral extended period of limitation as per proviso to subsection (1) of Section 73 cannot be invoked for demanding the Service Tax. ➢ There is no case for imposition of penalty. 3.3 Arguing contra, learned Authorized Representative while reiterating the findings recorded in the impugned order submitted that- ➢ It is quite evi....
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....ce provider. The terms of Contracts are univocal and clear to this effect. The defence put forth by the Appellants for not paying the service tax on the service received by them in terms of Section 68 of Finance Act, 1994, is that they have discharged the customs duty, on the documents, drawing and designs received by them by adding the value of these as per the decision of Apex Court in case of ACC, and hence demand of service tax on the same is contrary to the view expressed by the Apex Court, treating drawing and designs as goods. 4.3 We are not in position to agree with the submissions made by the Appellant by relying on the decision in case of the Associated Cement Company [2001 (128) E.L.T. 21 (S.C.)]. In the said decision Apex Court has held as follows: "As is evident from the perusal of the aforesaid provisions, namely, Sections 12 and 14 of the Customs Act and Rules 3,4 and 9 the value of the goods which are imported is deemed to be the price at which they are ordinarily sold. Sub-section (1A) provides that the price referred to in sub- section (1) of Section 14 shall be determined in accordance with the rules made in this behalf. As per Rules 3 and 4 the trans....
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....rtain services in the value of the goods imported for the purpose of determination of Customs Duty. In case of C K Jidheesh [2006 (1) STR 3 (SC)] Hon'ble Supreme Court held as follows: "Thus, a mere challenge to such a clarificatory letter is not enough. The challenge has to be to the provisions of the Finance Act. The provisions of the Finance Act had been challenged by the Kerala Colour Labs Association. That challenge had been repelled by the Kerala High Court and an SLP against that Judgment has already been dismissed by this Court. We have read the Judgment of the Kerala High Court. In our view, the Judgment correctly considers all aspects including the aspect of double taxation. We find no infirmity in that Judgment. The principles set out therein fully apply here also. There is one further difficulty in the way of the Petitioner. This Court has, in the case of Rainbow Colour Lab & Anr. vs. State of M. P. & Ors., reported in (2000) 2 SCC 385, held that contracts of the type entered into by persons like the Petitioner are nothing else but service contracts pure and simple. It is held that in such contracts there is no element of sale of goods. This Judgment is binding....
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....accept this submission. In Associated Cement Companies' case, the question was whether or not custom duty could be levied on drawings, designs, diskettes, manuals etc. The argument there was that these were intangible properties and not goods as defined in Section 2(22) of the Customs Act. The question of levy of service tax did not arise in that case. The observations relied upon are mere passing observations and do not overrule Rainbow Colour Lab's case. Even otherwise, the questions raised in this Petition are fully covered and answered by the decision of the Kerala High Court, which we confirm as laying down the correct law." 4.5 In case of Imagic Creative Pvt Ltd [2008 (9) STR 337 (SC)], Hon'ble Supreme Court expressed the same view in respect of its decision in case of Associated Cement Company and held as follows: 21. Evidently, therefore, the decision of Associated Cement Company Supra) whereupon strong reliance has been placed by the Tribunal as also by the High Court seeks to make a distinction between cases arising out of works contract wherefor sales tax is liable to be paid and the cases under the Customs Act. 22. Our attention has furtherm....
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....l known, should be applied only to the extent for which it was enacted. It, although must be given its full effect but the same would not mean that it should be applied beyond a point which was not contemplated by the legislature or which would lead to an anomaly or absurdity. 27. The Court, while interpreting a statute, must bear in mind that the legislature was supposed to know law and the legislation enacted is a reasonable one. The Court must also bear in mind that where the application of a Parliamentary and a Legislative Act comes up for consideration; endeavours shall be made to see that provisions of both the acts are made applicable. 28. Payments of service tax as also the VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of....
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.... 4.8 We do not find any merits in either of the submissions made by the appellant to challenge the demand on ground of limitation for the reasons as stated below: ➢ Revenue cannot deny that the appellants had made the disclosure of the contract with the overseas service provider to the Customs Authority at the port of clearance of the imported goods. However it is also a fact that no disclosure of the same was made to jurisdictional Service Tax authorities, nor was any declaration in respect of these services received was made on the ST-3 returns filed by the party. Customs Authority at the port of clearance of the goods is distinct from the jurisdictional Service Tax authorities. Just because there is loose coupling of the two tax administering authorities at the level of the Board (CBEC as it existed then), it cannot be said that both the authorities are one. As per the scheme, itself, Customs Duty is levied as per the provision of the Customs Act, 1962 and the rules made there under and Service Tax is levied in terms of provisions of Finance Act, 1994. Even the authorities administering the respective statue have been separately defined in the statute itself. Th....
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....e was no need even to file the appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit." ➢ In case of Dharampal Satyapal [2005 (183) ELT 241 (SC)] Supreme Court has dismissed the argument of revenue neutrality on the basis of availability of MODVAT Credit stating as follows: "25.Modvat is basically a duty collecting procedure which provides relief to the manufacturer on the duty element borne by him in respect of the inputs used by him. The relief is given under the modvat scheme on the actual payment of duty on the input. On such payment, the assessee gets a right to claim adjustment/set-off against the duty on the final product. The question of duty adjustment/set-off against duty on the final product was not in issue. In any event, no record on credit entitlement was produced. A right to claim proforma/modvat credit against duty on final product was different from the defence of bonafides in a case where circumstances mentioned in the proviso to section 11A(1) stands proved by the department for invoking larger period of limitation. The burden to prove the defence of bonafides was on the assessee and the assesse....