TaxTMI 
TaxTMI 
2021 (9) TMI 859
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....s.) Confirmed demand (in Rs.) Udaipur 16.08.13 2009-10 7,01,662/- 5,44,846/- 2010-11 20,63,896/- Nil 2011-12 77,45,600/- Nil Total 1,05,11,158/- 5,44,846/- Chittorgarh 20.06.13 2009-10 2,66,493/- 2,60,623/- 2010-11 13,64,685/- 7,90,065/- 2011-12. 77,45,600/- Nil Total 93,76,778/- 10,50,688/- 3. The two units of the Appellant are engaged in manufacture of lead, zinc and other concentrates. Two show cause notices were issued to the Appellant proposing demand of service tax on foreign currency expenditure alleging that it was towards receipt of taxable services on which the Appellant was liable to pay service tax under the reverse charge mechanism. 4. The issues involved, the demand confirmed, the findings in the impugned order and the submissions of the Appellant in respect of the two Service Tax Appeals can briefly be summarized as follows:- SERVICE TAX APPEAL NO. ST/53101/2015 - UDAIPUR UNIT Sl. No. Issues/ Dispute Demand confirmed in Order Finding in the Order Submissions of the Appellant 2009-10 1 Demand of Service T....
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....t the Total Rs. 544,841/- SERVICE TAX APPEAL NO. ST/53125/2015- CHITTORGARH UNIT S.No. Issues/ Dispute Demand confirmed in Order Findings in the Impugned Order Submissions in Brief 2009-10 5. Service Tax in respect of foreign remittances, which has been duly discharged by the Appellant, but the same has not been accepted by the Adjudicating Authority Rs. 1,88,096/- Difference in amount of challan/(s) submitted i.e. Challans submitted towards payment of service tax of Rs. 2,48,736/- does not correlate with service tax liability of Rs. 1,88,096/- a) The Appellant has already paid service tax of Rs. 1,88,096/- towards the impugned services b) The difference in challan amount is due to exchange rate differences and TDS payments. 6. Certain entries could not be traced at the Appellant's end. Rs. 72,527/- Non-production of documentary evidence (challans etc.) indicating payment of service tax on impugned services. The impugned proceedings are vague as the department has failed in discharging its burden of proving taxability. There is no allegation in show cause notice, or findings in Impugned O....
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....e pertains to services falling under one of the sub-clauses of section 65(105) of the Finance Act, 1994 [the Finance Act ] and thereafter, prove how it would be taxable in terms of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 [Import Rules] ; ii. The impugned demand is based merely on the difference between the figures in balance sheet and in ST-3 returns, while it is a known fact that both are prepared on different basis. The vagueness of the impugned proceedings is also evident from the fact that for the period 2011-12, the same demand of Rs. 77,45,600/- on alleged difference between figures in the Balance Sheet and ST-3 returns was proposed against both the units; iii. The confirmation of demand is also not sustainable in as much as there is no liability on the Appellant to pay service tax on such expenses under the reverse charge mechanism. In support of the submissions reliance has been placed on the following decisions; a. Shubham Electricals v/s Commissioner of Central Excise & Service Tax, Rohtak [2015 (40) STR 1034 (Tri.-Del.) ]; b. M/s Deltax Enterprises v/s Commissioner of Central Excise, Del....
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....partment to first establish that the alleged foreign currency expenditure pertained to services falling under one of the sub-clauses of section 65(105) of the Finance Act and then establish how it would be taxable in terms of the Import Rules. Learned Counsel submitted that a charging provision has to be construed strictly and a heavy burden is cast upon the Department to prove that the demand is sustainable under the charging provisions. In this connection, learned Counsel placed reliance upon the decision of the Supreme Court in Commissioner v/s Dilip Kumar Company [2018 (361) ELT 575 (SC)]. 10. To appreciate the aforesaid contention, it would be necessary to examine the relevant provisions of section 66 and 66A of the Finance Act. Section 66 is the charging section and it provides that there shall be levied service tax at the rate of 12 per cent of the value of taxable services referred to in various clauses of section 65(105). Section 66A of the Finance Act relates to charge of service tax on services received from outside India. 11. Neither is there any allegation in the two show cause notices nor any finding has been recorded in the impugned order to demonstrate how the....
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....rned Counsel for the Appellant has also placed facts stated in the memo of appeal and has contended that the transactions are not taxable. Issues at Serial Nos. 1, 5 and 7 18. These issues relate to demand of service tax on remittance towards services on which service tax was payable as per the Import Rules and has been paid by the Appellant, but it has not been accepted by the Department. This covers service tax demand on Rs. 2,74,905/-. The Appellant has provided entry-wise summary of the demand on remittances to various foreign service providers vis-a-vis the payment of service tax on the taxable value on which service tax has actually been paid by the Appellant. It is reproduced as under:- S.No. of HZL letter dated 27.02.2013 Party's name Demand as confirmed Details of service tax payment by appellants Taxable value ST demand Actual taxable value ST paid by the appellants *Challan particulars 64 Stephens on Harwood Office No. 2 1137450 117157 1711920 176328 Challan no. 50119 dated 05.03.2011 66 Emperor Design Consultants Ltd. 1531530 157748 The entry....
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....e to demand of service tax on which service tax of Rs. 86,208/- could not be traced by the Appellant. 24. The contention of the Appellant is that the entries relating to the said demand do not pertain to the Appellant. The confirmed demand has been summarized by the Appellant in the following manner:- Serial No. in annexure to HZL letter dated 27.02.2013 Party's name Taxable value on which demand is confirmed Demand confirmed 12 Jhu Xuejun 2,05,876 21,205 22 Noranda Income Limited 4,98,270 51,322 Sub-total 7,04,146 72,527 51 Aspermount UK Ltd. 1,32,822 13,681 Grand total 8,36,968 86,208 25. It has been pointed out that the Appellant repeatedly requested the Department to provide details of the bank reference number and details of foreign currency against each of the entry, but the Department did not provide the information and it is for this reason that while submitting the reply to the show cause notice, the Appellant made a specific request for providing the date of debit of amount towards such remittances in the bank account of the appellant ....
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.... 13 Mr. Johan Carlier 232023 23898 14 .......do........ 239300 24648 17 .......do........ 332068 34203 18 .......do........ 348278 35873 20 .......do........ 487795 50243 54 .......do........ 144346 14868 Total 1783810 183733 31. The contention of the Appellant is that even though the activity of 'market research services' is not explicitly mentioned in the contract dated 13.02.2008 entered with the service provider but still the scope of the work, which is the crux of the contract, would clearly suggest that the contract is basically for the work of 'market research and exploration' which is taxable under the category of 'market research services' falling under section 65(105)(y) of the Finance Act. 32. Learned Counsel for the Appellant further contended that the other activities mentioned in the contract are only of supporting nature and since service tax is based on the actual nature of service and not because of what is described in the documents, the substance of the transaction would prevail over the form. The submission, therefore, is that the services are taxable under section 6....