TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 897
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....t was the sole and exclusive service provider for the US Embassy and operated from a desk set up within the premises of the US Embassy. On such services, the appellant was availing exemption from payment of service tax in terms of Notification dated 23.05.2007 till 30.06.2012 and, thereafter, under Notification dated 20.06.2012. These Notifications exempted services rendered to diplomatic mission or consular posts in India from payment of service tax. 3. In 2014, an investigation was initiated and audit of the records of the appellant was conducted in terms of rule 5A of the Service Tax Rules, 1994 [1994 Rules]. During the audit, it was observed that the appellant was incorrectly availing exemption on services rendered to the US Embassy. 4. The audit resulted into issuance of a show cause notice dated 16.04.2014 proposing to deny the exemption as a result of which a demand of service tax amounting to Rs. 81,11,575 was made. The allegations in the show cause notice are as follows: "12. Whereas, the party does not appear to be eligible for exemption under Notification No. 33/2007-ST dated 23.05.2007 and Notification No. 27/2012- ST dated 20.06.2012 as they did not fulfill the con....
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.... whether penalty is leviable? (c) Whether the extended time period can be invoked? (d) If yes, whether the appellant is liable for payment of interest & penalty under the provisions of Act/Rules, as alleged in the show cause notice?" 8. In regard to the issue at (a), the Principal Commissioner found that the appellant had not mentioned the running serial no's and the date of undertakings on invoices issued by it. He also found that the appellant had not struck off the inapplicable portion on the face of the undertakings and on the undertakings issued by the US Embassy there was no endorsement of the name of the party. Thus, some of the mandatory conditions laid down in the Notification were not strictly followed by the appellant. 9. In regard to the issue at (b), the Principal Commissioner found that the appellant had not provided documentary proof regarding the fulfillment of the Service Tax Rules 1994 [1994 Rules ] as the appellant had not got the addresses amended and kept on doing business from the Noida address without having any valid registration certificate. 10. In regard to the issue at (c), the Principal Commissioner found that the appellant had violated the provis....
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....tax on services rendered to diplomatic mission or consular posts in India on the basis of the Exemption Notification dated 23.05.2007 for the period up to 30.06.2012 and for the subsequent period from 01.07.2012 on the basis of the Exemption Notification dated 20.06.2012. 16. The Notification dated 23.05.2007 is reproduced below: "In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all taxable services specified in section 65 of the said Act provided by any person, for the official use of a foreign diplomatic mission or consular post in India, from whole of the service tax leviable under section 66 of the said Act, namely:- 1. Procedure:- To claim the exemption the following procedure shall be fulfilled, namely:- (i) the foreign diplomatic mission or consular post in India, is issued with a certificate by the Protocol Division of the Ministry of External Affairs that it is entitled to exemption from service tax, as stipulated in the certificate, based on the principle of reciprocity; (ii) the head of such foreign diplomatic missi....
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....sary in the public interest so to do, hereby exempts taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein from whole of the service tax leviable under section 66B of the said Act, subject to the following conditions, namely :- (i) that the foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein, are entitled to exemption from service tax, as stipulated in the certificate issued by the Protocol Division of the Ministry of External Affairs, based on the principle of reciprocity; (ii) that in case of diplomatic agents or career consular officers posted in the foreign diplomatic mission or consular post in India, the Protocol Division of the Ministry of External Affairs or the Protocol Department of the State concerned issues to each of such diplomatic agent or career consular officer an identification card bearing unique identification number and containing a photograph and name of such diplomatic agent or career consular officer an....
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....iii) alongwith a duplicate copy of the invoice issued, for the purposes of verification. 2. In case the Protocol Division of the Ministry of External Affairs, after having issued a certificate to any foreign diplomatic mission or consular post in India or as the case may be, the identification card issued to a diplomatic agent or career consular officer, decides to withdraw any one or both of them subsequently, it shall communicate the withdrawal of such certificate or identification card, as the case may be, to the foreign diplomatic mission or consular post. 3. The exemption from the whole of the service tax granted to the foreign diplomatic mission or consular post in India for official purpose or for the personal use or use of their family members shall not be available from the date of withdrawal of such certificate or identification card, as the case may be. 4. This notification shall come into force on the 1st day of July, 2012." 18. A bare perusal of the Notification dated 23.05.2007 indicates that the following conditions have to be satisfied: i. Services must have been rendered to a diplomatic mission or consular post in India; ii. The Protocol Division of the ....
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....so given at paragraph 27 of the impugned order. 22. It would, therefore, be seen that though a submission was advanced by the appellant in regard to the allegation in the show cause notice that the US Embassy did not provide authenticated certificate to the appellant, no finding has been recorded in the impugned order. It has been pointed out by the appellant that the certificates received from the US Embassy were duly authenticated as they carried the stamp of the US Embassy. These certificates have also been enclosed in the appeal memo. It would also be seen that the impugned order recorded a finding that the format of the undertaking was not proper. The appellant had furnished copies of the original undertakings received from the US Embassy. So long as the undertakings were furnished, it would be immaterial if they were not in the proper format unless some relevant requirement was not contained in the undertaking so as to make the undertaking of no consequence. 23. The fourth condition to the Exemption Notification mentions that the invoices issued by the service provider must carry the serial number and date of the undertaking. The purpose of this condition is to....
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....onditions to the Exemption Notifications stand fulfilled and the exemption cannot be denied. 28. In this connection reliance can be made to the decision of the Supreme Court in Lakshmiratan Engineering Works Ltd. vs. Assistant Commissioner (Judicial) l Sales Tax, Kanpur Range, Kanpur and Another [1967 (9) TMI 116-Supreme Court ]. The proviso to section 9 of the UP Sales Tax Act provided that no appeal against an assessment shall be entertained unless accompanied by satisfactory proof of payment of the amount of tax admitted by the appellant to be due. The corresponding rule 66(2) of the UP Sales Tax Rules provided that the memorandum of appeal shall be accompanied by a challan showing deposit in the treasury of the admitted tax. It was contented before the Supreme Court that rule 66(2) provided the 'challan' to be the mode of proving that the admitted tax was deposited. However, section 9 of the UP Sales Tax Act was more general and the proviso thereunder required only satisfactory proof. Hence, it was not open to a rule to make the section narrower by prescribing a particular mode. In this connection, the Supreme Court observed: "The rule lays down one uncontestable mode ....
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.... Learned counsel for the appellant also contented that the extended period of limitation could not have been invoked in the facts and circumstances of the present case as there is no mala fide on the part of the appellant. The learned counsel for the appellant submitted that the appellant was the only service provider to the US Embassy for air travel services and the services rendered by it were supported by certificate and undertakings. Learned counsel also submitted that details about availing the benefit under the Exemption Notification was duly declared in the ST-3 returns and this fact has been admitted by the Department at paragraph 16 of the show cause notice. The submission, therefore, is that since the ST-3 returns were filed with the Department, it was aware of the fact that the appellant was claiming benefit under the Exemption Notifications and so no element of suppression or mala fide can be attributed to the appellant in such circumstances. In this connection reliance has been placed on the following decisions: a) Delhi International Airport Limited vs. Commissioner of CGST, Delhi 2019 (24) GSTL 403 (Tri.- Del.); b) Onward E-Services Ltd. vs. Commissio....
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....ayment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." 39. The Delhi High Court in Bharat Hotels Limited vs.Commissioner of Central Excise (Adjudication) [2018 (12) GSTL 368 (Del.) ] also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Act and held as follows; "27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word 'suppression' in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there ....