TaxTMI 
TaxTMI 
2021 (12) TMI 242
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....struction Company Ltd.., Mumbai under section 73(2) of the Finance Act, !994, ii. I drop the demand of Rs. 5,19,31,738/- (Rupees Five Crores Nineteen Lakh Thirty One Thousand Seven Hundred Thirty Eight only). iii. I order recovery of interest at the appropriate rates, on the amount confirmed at para i, above from the due date(s) under the provisions of Section 75 of Finance Act, 1994 from l's Hindustan Construction Company Ltd.., Mumbai iv. I imposed penalty of Rs. 8,65,45,559/- under Section 78 of the Finance Act 1994, for suppressing the facts from the Department as detailed in Paras above, with malafide intention to evade payment of due Service tax. However, the penalty payable shall be 25% of the service tax so determined, provided service tax, interest applicable and reduced penalty is paid within a period of thirty days of the date of the receipt of this order issued determining the amount the service tax under Sub- Section (2) of the Section 73 of the Finance At 1994; v. I also imposed a penalty of Rs. 10,000/- (Rupees Ten Thousand only) under the provisions of Section 77 of the Finance Act, 1994 for failure to declare true / correct t....
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....nd Ninety Nine only) under Section 76 of the Finance Act, 1994 for failure o pay service tax in accordance with the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994. However, the penalty payable shall be 25% of the service tax so determined, provided service tax, interest applicable and reduced penalty is paid within a period of thirty lays of the date of the receipt of this order issued determining the amount the service tax under Sub- Section (2) of the Section 73 of the Finance Act, 1994; iv) I also imposed a penalty of Rs. 10,000/- (Rupees Ten Thousand only) under the provisions of Section 77 of the Finance Act, 1994 for non-filing of correct service tax returns. 50. This Order is issued without prejudice to any other action that may be initiated against M/s. Hindustan Construction Corporation Ltd under the provisions of Finance Act, 1994 or the rules made there under or under the provisions on any other law for the time being in force in India. 2.1 Appellant is engaged in Engineering and Construction of infrastructure development projects such as roads, dams, bridges, civil / industrial structures, nuclear/ ....
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....our Lakhs Seventy Seven Thousand Two Hundred and Ninety Seven only) inclusive of education cess and secondary higher education cess as detailed above for the period from Oct 08 to Mar 13, not paid by the assessee should not be demanded and recovered from them in terms of proviso to section 73 (1) of the Finance Act, 1994. ii. The interest should not be demanded and recovered from them under Section 75 of the Finance Act, 1994, iii. Penalty should not be imposed on them under section 77 of the Finance Act, 1994 on each of the following contraventions: i. Failure to furnish information and documents as called for in accordance with the provisions, ii. Failure to file the prescribe ST-3 returns by declaring the correct taxable value as required under Section 70 the Finance Act, 1994 read with Rule 7 of the Service tax Rules, 1994. iv. Penalty should not be imposed on them under section 78 of the Finance Act, 1994, for suppressing the facts from the Department as detailed in paras above, with malafide intention to evade payment of due service tax v. Penalty should not be imposed on them under section 76 of the Finance Act, 1994 for ....
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....ss to enhance their profitability as well as of group of companies. Thus, it is evident and undisputed that in the impugned transactions, services were provided by the noticee to their other 23 group of companies, having distinct and independent legal entities and consideration of better management and cost effectiveness has flown in. In terms of Section 66/66B read with Section 68 of the Finance Act, when there is provision of service and element of consideration, the service tax is leviable on any amount received for provisions of taxable services. 31. It can only be argued that in the instant case that consideration is not ascertainable in the context. I find that provisions of sub- Section (1) (iii) of Section 67 of the Finance Act 1994 are explicit i.e. in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. In a situation manner has been prescribed under Rule 3 of Service tax (determination of value) Rules 2006. The Rule 3 of the Service tax determination of value) Rules 2006 reads as under: 3. Manner of termination of value.- Subject to the provisions of section....
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.... of the CESTAT, relied upon by the noticee in the case of M/s Reliance ADA group P.Ltd., vs CST Mumbai, reported in 2016-TIOL-603-CESTAT-MUM also does not help to the cause of the noticee, as department has preferred an appeal with the Hon'ble High Court, Mumbai against the said order and therefore cannot be said to have achieved finality. 33. Further, the noticee has also submitted that they being a holding company, having more that 23 subsidiary companies and they share/ allocate cost like Pure Agent under Rule 5(2) of the valuation Rules merely because the services procured by them were not attributable to any particular group company and the aforesaid valuation rule did not stipulate any condition as to one on one identification of service recipient and service provider in order to fall within the ambit of 'Pure Agent'. Further, the cost allocations/ sharing of expenses with group companies were without any mark up or allocation of cost was revenue neutral and in absence of any value addition as consideration, such cost allocation was mere accounting transaction per se could not be taxed. Further, they stated in their submission that the Debit Notes were di....
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....es. Explanation2.- For the removal of doubts it is clarified that the value of the taxable service is the total amount of consideration consisting of all components of the taxable service and it is immaterial that the details of individual components of the total consideration is indicated separately in the invoice. 35. As per the provisions of Rule 5(2) of the valuation Rules, 2006 and the defined under the explanation 3 to the Rule, "pure agent 'means a person who- (a) enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure 'on costs in the course of providing taxable service: (b) neither intends to hold nor holds any title to the goods or services so procured or provided as pure agent of the recipient of service; (c) does not use such goods or services sc procured; arid (d) receives only the actual amount incurred to procure such goods or services and the person who satisfy all the conditions stipulated under the provisions. It is abundantly clear in the facts of the circumstances that the noticee does not fulfill any of the conditions specified from (i) to (VI) of the conditions specified under Ru....
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....67 of the Act. 22. Section 66 of the Act is the charging Section which reads as under: "there shall be levy of tax (hereinafter referred to as the service tax) @ 12% of the value of taxable services referred to in subclauses of Section 65 and collected in such manner as may be prescribed." 23. Obviously, this Section refers to service tax, i.e., in respect of those services which are taxable and specifically referred to in various sub-clauses of Section 65. Further, it also specifically mentions that the service tax will be @ 12% of the 'value of taxable services'. Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon. 24. In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such tax....
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....down its effect." 29. In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with 'consideration' is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the Learned Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income ....