TaxTMI 
TaxTMI 
2021 (7) TMI 402
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.... appealed against: Section 35F of the Act is applicable to service tax case by virtue of Section 83 of FA, 1994. 3. Every appeal under sub-section(1) [or sub-section(2) or sub-section(2A)] of Section 86 of FA,1994 shall be filed within three/four months of the date on which the order sought to be appealed against was received by the assessee/ the [Committee of the Commissioners], as the case may be. 4. The appeal, as referred to in Para 2 above, should be filed in S.T.5/S.T.-7 proforma in quadruplicate; within three/four months from the date on which the order sought to be appealed against was communicated to the party /Deptt., preferring the appeal and should be accompanied by four copies each (of which one should be a certified copy), of the order appealed against and the Order-in-Original which gave rise to the appeal. 5. The appeal should also be accompanied by a crossed bank draft drawn in favour of the Assistant Registrar of the Tribunal, drawn on a branch of any nominated public sector bank at the place where the Tribunal is situated, evidencing payment of fee prescribed in Section 86 of the Act. The fees payable are as under: (a) where the amount of service tax ....
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.... GST Commissionerate, Hyderabad (hereinafter referred to as 'original authority). 2. The appellant company is engaged in providing taxable services viz., TV broadcasting, advertising, operation and maintenance of studios etc., under the brand / TV channel name 'STUDIO ONE'. They are registered for the purpose of payment of service tax on taxable services rendered by them under the category of "Broadcasting Service" and "Copyright Service Transfer Temporarily/Permit Use or Enjoyment". 2.1 Intelligence developed by the officers of the Directorate General of Goods & Services Tax Intelligence, Hyderabad Zonal Unit, Hyderabad (for short 'DGGI') Indicated that the appellant company resorted to evasion of service tax by not paying service tax charged I collected from their clients / customers in respect of taxable services viz,. TV programming, Advertising, Broadcasting etc., and also by not filing statutory returns from October 2014 to June 2017. Therefore, investigation was initiated by conducting a search on 20.12.2019 and certain documents such as Balance Sheets for the Financial Years from 2014-15 to 2018-19, Advertisement Sales Ledger Account (Revenue from Operations) for the ....
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.... in the list of exempted services. As such it appeared to be a taxable service in terms of clause (51) read with clause (44) of Section 65B of the Finance Act, 1994 and the appellant company is liable to pay service tax along with interest and penalty. 2.3 From scrutiny of books of accounts, Annual Reports / Balance Sheets, Other Income & Party Ledgers and the appellant company's letter dated 23.03.2020, it also appeared that they provided videos / contents i.e., Cooking, Devotional and Entertainment programs to M/s Manam Digital Network, Hyderabad who received, controlled, supervised, managed and uploaded the said contents on YouTube channel for public viewing. The appellant company received consideration from M/s Manam Digital Network, Hyderabad for provision of above services and declared the same in their books of accounts under the head 'Other Income'. The appellant company vide their letter dated 23.03.2020 informed that they did not have any agreements with M/s Manam Digital Network, Hyderabad and they did not raise any invoice for the said transactions. Scrutiny of books of accounts of the appellant company revealed that they received net service consideration of Rs. 4,5....
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....ation. Accordingly, it appeared that the said voluntary declaration I application was made with mala fide intention in contravention of the provisions of Section 125(1)(f)(i) of the Finance (No 2) Act, 2019. Further, it appeared that they falsely declared the service tax liability of Rs. 73,54,987/- only for the period from October 2014 to June 2017 in the above said SVLDRS application while their actual service tax liability is Rs. 1,82,07,288/-. In terms of section 129(2)(c) of the Act ibid, where any material particulars furnished in the SVLDRS declaration are subsequently found to be false, it shall be presumed as if the said declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted. Therefore, the above said application appeared to be liable for rejection, disqualification and shall be presumed as if the same was never made. Since the appellant company filed the SVLDRS application on online under the category of 'Voluntary Disclosure', Form SVLDRS-3 was issued by the Designated Committee concerned on 09.01.2020. However, it appeared that Discharge Certificate in Form SVLDRS-4 was not issued by the Designated Committee sinc....
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....ector of the appellant company, by virtue of being in charge and responsible for the affairs of the company during the impugned period, appeared to be liable to penalty under section 78A of the Finance Act, 1994. 2.9 Smt. Gadde Viiaya Sree, Managing Director of the appellant company is in office during period when service tax was apparently evaded, provisions of Finance Act, 1994 and the rules made thereunder were contravened and offences were seemingly committed. In her voluntary statement, she deposed that she takes care of day-to-day financial and banking transactions of the company and she is also authorized signatory for Service Tax and GST matters. Thus, it appeared that she was in charge of the company during the impugned period and appeared to be responsible for conduct of business of the appellant company. Therefore, it appeared that she was knowingly concerned with non-filing of statutory returns with intent to evade service tax. Therefore, Smt. Gadde Vijaya Sree, Managing Director of the appellant company, by virtue of being in charge and responsible for the affairs of the company during the impugned period, is liable to penalty under Section 78A of the Finance Act, 1....
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....g the service tax collected but not deposited to the Government account on the taxable services mentioned at (I) above during the period from October 2014 to June 2017 should not be demanded and recovered from them under proviso to section 73(1) of the Finance Act, 1994; (iv) an amount of 50,00,000/- paid towards part of their Service Tax liability during investigation should not be appropriated/adjusted against the amount demanded at SI. No (iii) above; (v) interest at applicable rates on the demand as mentioned at (iii) above should not be demanded and recovered from them under Section 75 of the Finance Act, 1994; (vi) penalty equivalent to the amount of service tax demanded at (iii) above, should not be imposed on them under Section 78 of the Finance Act, 1994 for suppression of the relevant facts and for contravention of various provisions of Chapter V of the Finance Act, 1994 and Rules made thereunder with intend to evade payment of service tax. (vii) penalty should not be imposed on them under Section 76 of the Finance Act, 1994 for failure to pay Service tax as explained in this notice; (viii) penalty should not be imposed on them....
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....under option 'Voluntary Disclosure', the designated committee proceeded to directly issue the Form SVLDRS-3 on 9th January 2020 for the same amount. • In the meanwhile, Investigation team issued the SCN dated 21.04.2020 under proviso to section 73(1) of the Act read with section 174(2) of the GST Act and alleged that the appellant is not eligible to file a declaration under the SVLDRS scheme. • Appellant is eligible to make declaration under the scheme. Section 125(I)(f)(i) is not applicable in the present case as appellant did not make any disclosure beyond the accounted and audited service tax liability in books of account even after visit is made by the Investigation team. In the facts and circumstances of the present case, the visit made by investigating team is merely ironical. • The enquiry/investigation/audit must be pending as on 30.06.2019 as well as the amounts must have been quantified in order for the respondents to justify their stand. In other cases, the designated committee is empowered to verify the eligibility in light of the facts and circumstances of the case. This position has been clarified by CBIC vide its circular number....
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....ct to the view of designated committee to be taken on merit, taking into account the facts and circumstances of each case and that in light of facts of the present case, benefit of the scheme shall be allowed to the appellant because of following reasons: • As per SVLDRS Rules, appellant had time till 31st December 2019 to file the application in Form SVLDRS-1. This time limit was further extended to 15^th January 2020 by way of NN 07/2019-CE(NT) dated 31.12.2019. • In the meanwhile, the Investigating team conducted inspection and visited the premises of the appellant on 20th December 2019 wherein they took a note of accounted liabilities. • Appellant disclosed that they wish to avail the SVLDRS and are in the process of preparing documentation and arranging funds to opt for the scheme. • As undertaken to pay, appellant paid Rs. 50,00,000/- on 21st December 2019 to ensure smooth conduct of investigation proceedings and under a belief that this amount would be adjusted at the time of making application under SVLDRS scheme. • Appellant accounted for entire service tax liability in his books of account and nothing ....
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....ed. Since the adjudication officer himself agreed to make the allegation regarding rejection of SVLDRS subject to the issuance of Discharge Certificate, the adjudicating proceedings should not have been concluded prior to issuance of said certificate. • The designated committee issued the Form SVLDRS-3 on 9^th January 2020 for the amount of Rs. 73,54,987/-. At time when appellant tried to generate challan for payment of service tax dues, after appropriating the amount of Rs. 50,00,000/- paid during investigation, it was observed that said challan could be generated with full amount of Rs. 73,54,987/- and the amount paid by appellant before filing of declaration in Form SVLDRS-1 is not being appropriated. Therefore, appellant made several visits to the office of designated committee to allow them to pay net liability for Rs. 23,54,987/- but to no avail. The grievance of the appellant left unanswered despite the fact that this position has also been made clear by CBIC vide its circular number 1074/07/2019-CX dated 12^th December 2019 which reads as under: "Section 124(2) provides for adjustment of any amount paid as pre deposit at any stage of appellate proceedi....
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....art of personal hearing and this fact was also stated before the adjudication officer at the time of conduct of personal hearing on 27^th October 2020. • Since the appellant is not getting heard from the competent authorities regarding issuance of Form SVLDRS-4, they are in the process of filing a writ petition before jurisdictional High court to get a suitable direction in this regard along with certain other relief(s). Since the writ petition is not final as on date of submission of this appeal, they have not enclosed any proof of filing thereof. • CENVAT credit claimed in the books of account is considered as valid compliance with the provisions related to availment of credit. Reporting of these figures in ST-3 form is merely a reporting requirement. Therefore, CENVAT credit of the appellant shall not be disallowed. • Appellant is engaged in provisioning of output services in the nature of sale of time for advertisement in TV and 'supply of content' for which it utilizes various input services on which he is entitled to avail the CENVAT Credit. • The eligibility of credit is based on receipt of input services. In the present ca....
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.... made by the Managing Director and Chairman-cum-Director of the appellant, the fact of availment of CENVAT Credit to the tune of Rs. 1,08,12,978/- and pending service tax liability of Rs. 73,54,987/- which is arrived after appropriating I utilizing the balance of CENVAT Credit was disclosed to the Investigating team as well as to the Adjudicating officer. However, despite taking this statement on record, they did not ask the appellant to submit the information related to month-wise CENVAT Credit balances. • Rule 9 further provides that provider of output service availing CENVAT credit shall submit a half yearly return in Form ST-3. Therefore, Form ST-3 is merely a furnishing of information related to CENVAT Credit availed by the provider of output service and it is not a Form wherein the CENVAT Credit is availed by the assessee. • Attention is invited to the decision of CESTAT Bangalore in case of Target Corporation India Private Limited versus commissioner of Central Tax, Bangalore East reported as 2019 (10) TMI 1148 wherein Id. Bench observed it has not been categorically provided that non-disclosure of cenvat credit in the ST-3 return will disentitle th....
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....ove decision reject the entire Credit has been of the impugned order, the Adjudication officer distinguished the of Hon'ble Madhya Pradesh HC which cannot be a ground to CENVAT Credit admissibility in a situation where entire CENVAT audited by the statutory auditor. • The Adjudication officer has further taken the ground of non-utilization of the Cenvat Credit due to non-filing of ST-3 return as well as not carrying forward the same to GST regime by way of filing Form GST TRAN- 1. As per GST law, only the closing balance lying in CENVAT Credit account as on 30^th June 2017 can be transitioned to the GST regime subject to various conditions specified in section 140(1) of the Central Goods and Services Tax Act, 2017 and in the present case, there was nil closing balance in the CENVAT Credit account as on 30^th June 2017. • On the basis submissions made above, appellant submits that demand for the period October 2014 to June 2017 which is covered by CENVAT Credit is liable to be set aside and hence, full demand of interest liable to set aside. As SVLDRS Scheme specifically provides for waiver of interest or penalty on the amount paid under the scheme, d....
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....l tax dues were duly accounted in the books of account and there was a reasonable cause for not paying the taxes on time. • On the basis of the supra mentioned submissions, appellant submits that penalty u/s 77 is also not leviable. 4. Shri Narne Apparao, Chairman-cum-Director Smt. Gadde Vijaya Sree, Managing Director and Shri Kuchi Nageswararao, Chief Accounts Officer of the appellant company mostly reiterated the contentions raised by the appellant company and accordingly contested the penalty imposed on them under Section 78A of the Finance Act, 1994. Personal hearing: 5. In view of the Board's instructions dated 21.8.2020 issued from File No.390/Misc/3/2019-JC, personal hearing was held in virtual mode. Sri Kashish Gupta, Chartered Accountant appeared for personal hearing on 09.06.2021 on behalf of the appellants. 5.1 Referring to their appeal memorandum, the learned consultant has explained the issue in detail. 5.2 Referring to the show cause notice, copy of the Order-In-Original and SVLDRS declaration filed by the appellant in this case, the learned Consultant has informed that subsequent to the impugned order, they have filed a writ petition....
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.... original authority as part of their reply to the show cause notice, that they are eligible for the Cenvat credit on the input / input services in the event of tax liability on their output service is confirmed, the original authority has not dealt with these arguments properly and dismissed their contention on the ground that allowing Cenvat credit was not part of the allegations made in the show cause notice 5.8 It was contended that it is the duty of the original authority to consider this aspect and get their claim verified and arrive at the correct tax liability while passing the impugned order. It was contended that this was not done so by the original authority in the impugned order. In this regard, he has drawn my attention to various case laws covered in their appeal memorandum on this aspect. 5.9 It was also contended that while the show cause notice has proposed as to why their SVLDRS declaration should not be rejected and why the service tax should not be demanded from them, the original authority in the impugned order has not given categorical finding on this and simply side stepped the issue. 5.10 It was also contended by them that though they have not filed ....
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.... that out of the demand of Rs. 1.82 crores, Rs. 1.08 crores stood paid through the balance in Cenvat Credit Account which was claimed by them in their books of accounts. The appellant company further contended that they are entitled to Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (for short "SVLDRS') and rejection of their application is not proper. 8. As per the record, the appellant company filed an application on 31.12.2019 under SVLDRS under voluntary disclosure category by declaring their total service tax liability for the impugned period. The appellant company field the said application after their premises was searched on 20.12.2019 by DGGI, Hyderabad Zonal Unit for alleged evasion of service tax. Therefore, the application filed by the appellant company under SVLDRS was alleged to be in contravention of the provisions of Section 125(1)(f)(i) of the Finance (No 2) Act, 2019, which bars a person from making voluntary disclosure under the Scheme after being subjected to any enquiry or investigation or audit. The appellant company, however, contended that in all cases where enquiry / investigation / audit is not pending as on 30.06.2019 and where tax liability is ....
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....authority has taken up the show cause notice for adjudication, as an adjudicating authority he should have considered all their arguments while arriving at the correct tax liability including their eligibility for Cenvat Credit, to be legally tenable. The appellant company contended that CENVAT credit claimed in the books of accounts should be considered as valid compliance with the provisions related to availment of credit; that reporting of these figures in ST-3 form is merely a reporting requirement and, therefore, CENVAT credit shall not be disallowed. It is the case of the appellant that eligibility of credit is based on receipt of input services and since they received the input services at material point of time, the eligibility of CENVAT Credit cannot be disputed. In this connection, the appellant company relied on the case of Target Corporation India Private Limited versus commissioner of central Tax, Bangalore East [2019 (10) TMI 1148] wherein the Hon'ble CESTAT observed that it has not been categorically provided in law that non-disclosure of cenvat credit in the ST-3 return will disentitle the assessee from claiming the cenvat credit which he is otherwise entitled to. I....
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....'s reported in the ST-3 returns, the department has no way of knowing the amount of credit availed and the extent of tax liability discharged by utilising the credit, whether there is excess credit utilIsation or whether any irregularity or offence is committed by the assessee with regard to the same. But, I find that in terms of Rule 4 of Cenvat Credit Rules, 2004, CENVAT credit in respect of inputs can be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Further, in terms of sub-rule (4) of Rule 4 of Cenvat Credit Rules, 2004, the CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 is received. Thus, as per the rules, the right to CENVAT on inputs is accrued immediately on receipt of inputs in the factory / premises of the provider of output service and the right to CENVAT on input services is accrued on receipt of the invoice, bill or challan. Therefore, as long as the appellant company is in a position to prove their entitlement to CENVAT with necessary documentary evidence, such benefit ca....
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....ng the remand proceedings. 10. The appellant company raised many contentions against invoking extended period of limitation and imposing penalty on them. But, it is to be noted that the appellant company during the impugned period provided taxable services and also collected service tax. However, they failed to pay the service tax so collected to the Government Exchequer. The appellant company also failed to file ST-3 returns for the impugned period. As rightly held by the original authority, the appellant company's claim that they did not pay the tax on account of financial crisis is not acceptable in the light of the fact that they had collected the service tax from their customers over and above the service consideration. Therefore, I do not find any justifiable reason to differ with the findings of the original authority to the extent of invoking proviso to Section 73(1) of the Finance Act, 1994 for recovery of service tax payable by the appellant company and imposing consequential penalty on them. The case laws relied on by the appellant company against invoking proviso to Section 73(1) do not help them in support of their contention as this aspect needs to be examined base....