TaxTMI 
TaxTMI 
2022 (3) TMI 1320
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....ing 'Construction of Residential Complex and 'Construction of Commercial Complex' Service. Information was shared by Central Economic Intelligence Bureau, New Delhi with DGGI which inter-alia indicated that search and Seizure proceedings were conducted by DGIT, Ahmedabad against M/s J.P. Iscon Group. The Income tax Authorities provided the documents to DGGI containing Excel Work Sheet which was seized during the Income Tax search from the computer. In view of the information, inquiry was initiated against the Appellant by DGGI. A show cause notice was issued to them for recovery of Service tax of Rs. 13,79,41,328/- in respect of taxable services "Construction of Residential Complex Services / Construction of Commercial Complex Services and Service tax of Rs. 2,98,55,000/- in respect of Work Contract Service supplied during the period 01.04.2014 to 30.06.2017. On adjudication, part demand was dropped and demand of Service tax of Rs. 5,60,28,373/- confirmed in respect of "Construction of Residential Complex Services/ Construction of Commercial Complex Services" with penalty under Section 78 and 77 of the Finance Act, 1994 and Penalty of Rs. 1 Lakhs each also imposed on Shri Pra....
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....t before levelling allegation against the assessee: (i) CCE Vs. Ravishnkar Industries Ltd. 2002 (150)ELT 1317 (Tri. Chennai) (ii) Kashmit Vanspati (P) Ltd. Vs CCE 1989(39)ELT 655 (Tribunal) (iii) Shabroc Chemicals Vs CCE 2002 (149) ELT 1020 (Tri. Del.) (iv) T.G.L. Poshak Corporation vs. CCE 2002 (140) E.LT. 187 (Tri. Chennai) 6. He also submits that confirmation of demand under the category of 'Construction of Complex Service' is wholly incorrect. The said category would not be applicable on indivisible composite contracts, wherein materials, land and services are provided together. Since the demand of Service tax is raised under erroneous category, the same is not sustainable. Without prejudice he also submits that irrespective of classification under 'work contract service' or 'construction of residential complex service', the demand of service tax on the amount charged by the Appellants for sale of flats is not sustainable in view of the decision of the Hon'ble Delhi High Court in the case of Suresh Kumar Bansal Vs Union of India 2016(43) STR 3 (Del.). 7. He argued that the demand of Service tax cannot be confirmed merely on the basis of statements of the employee of t....
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....Section 132(4) of the Income Tax Act, 1961 is restricted and limited to the provisions of Income tax and same cannot be used or relied upon for other purpose. In the present matter adjudicating authority has relied upon the statement of Ms. Kalindi Shah recorded by the Income Tax Authorities which cannot be used in proceedings under Chapter V of the Finance Act, 1994 in the light of above provision of law. 11. He submits that no demand can be sustainable on the basis of Excel Sheet named 'Platinum -Final -Booking Chart -28-03-2015' allegedly recovered from the computer used by Ms. Kalindi Shah. However she has not been examined and her statement has not been recorded by the revenue. On contrary, the veracity of the data contained in the Excel Sheet has been got confirmed from Shri Venkataramana Ganesna, who was not is possession of the computer and was nowhere related to the data maintained in impugned Excel Sheets. Statement of Shri Venkatarman Ganesna cannot be admitted as evidence in the absence of examination-in-chief by the adjudication authority as held in the matter of M/s G-Tech Industries Ltd 2016 (339) ELT 209 (P&H). 12. As regard the other files recovered from the comp....
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....(Authorised Representative), reiterating the grounds of Appeal filed by the Revenue and finding of Ld. Principal Commissioner to the extent of confirmation of demand of Service tax. He submits that cash receipts under consideration have been found to be noted in diaries and other incriminating documents seized by the income tax authorities. The details contained therein are found to be matching with the .xls sheets recovered from the computer. The facts of unaccounted cash and authenticity of said excel files admitted by Shri Venkataramana Ganesna, President of the assessee in his statements were recorded before investigating officers. Therefore, service tax demand is sustainable in the present case. The order of the Principal Commissioner to the extent of dropping the demand of Service tax amounting to Rs. 8,19,12,955/- in respect of taxable services viz., 'Construction of Residential Complex Services/Construction of Commercial Complex Services' is not proper and legal and the same is required to be set aside. 17. As regard the Judgment of Hon'ble Supreme Court in the matter of M/s Canon India Vs. Commissioner of Customs, he submits that Review Petitions have been filed in Hon'bl....
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.... it had reduced the tax liability imposed by the assessing authority. The second and third questions as proposed, therefore, also do not merit acceptance. Without conducting the independent enquiry, the demand of Service tax only on the basis of document/ information/ data provided by the Income tax authorities by the revenue legally not sustainable. The documents relied upon loses its evidentiary value in absence of any independent enquiry. 19. We find that, in the whole matter revenue rely upon the statement of Ms. Kalindi Shah and Shri Venkataramana Ganesna both are the employees of the Assessee's company. No statement of Directors of the Appellant company recorded by the revenue to find out the truth of employee's statements. It was on records that Assessee company have raised the dispute on both the statements of employees recorded during the course of investigation by Income tax Authority and revenue. Therefore the said statement cannot be relied upon as admissible evidence in terms of the provisions of Section 9D of the Act. The provisions of Section 9D which are reproduced as under "9D. Relevancy of statements under certain circumstances. - (1) A statement made and sig....
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....s) re-examined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter." 9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does not choose to examine him in chief. However, the practice of tendering witness for cross-examination in session trials had been frequently resorted to since the enactment of the code of Criminal Procedure, 1898. 21. In adjudication, the adjudicating authority i....
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.... of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65B(2). Following are the specified conditions under Section 65B(2) of the Evidence Act : (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the....
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....ial output was recording properly at the material time. The presumption can be rebutted if evidence to the contrary is adduced. In the United States of America, under Federal Rule of Evidence, reliability of records normally go to the weight of evidence and not to admissibility." The above prescribed certain guidelines were not followed by the revenue during the investigation of impugned matter before accepting electronic documents as an admissible piece of evidence. Therefore in our view no service tax demand is sustainable on the basis of contents of said .xls sheets. 25. Further on the basis of details of investigations shared by the Income tax Authority, Revenue knew the name of author of said xls. sheet but revenue failed to record the statement of author of said xls. sheets. Therefore, the said .xls sheet is not corroborated with any other evidence, hence, cannot be used as evidence against the assessee. 26. In the impugned matter Revenue and Adjudicating authority has relied upon the statement of Ms. Kalindi Shah recorded by the Income tax Authorities. In this regard we find that the Section 132 (4) of the Income Tax Act , 1961 provides as under: "The authorized officer....
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....the period from April 2014 to June 2017. The Ld. Adjudicating Authority in present case also dropped the demand on the ground that in all cases where the assessee have entered into a sales deed or an Agreement to sale prior to 01.04.2014, the amount have been received prior to the said date. However we find that he did not apply the same principle to letters of reservation on the ground that the same is not a contract and confirmed the demand of service tax. The Appellant produced the copies of said letters of reservation before us and we noted that letter of reservation demonstrate that the assessee has bound themselves to sell a particular flat at a particular consideration. Hence, the effect of such letters is not different than executing an Agreement to sale. We agree with the argument of Ld. Counsel that the effect of the letter is nothing else, but an agreement to sale which even if entered into orally. Oral agreement to sell a particular flat at particular rate itself lead to binding contract. Even if there is no documents, a flat owner who books a flat and pays one cheque as booking amount the appellant would be legally bound to hold an apartment in question for the concern....
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....r the ambit of the term 'Work Contract' as defined under Sec. 65B (44) of the Finance Act, 1994. 26. The Show cause notice has relied upon the ratio of the case law of M/s K Raheja reported at 2006 (3) STR 337 (SC) which was affirmed in the case of M/s Larsen & Toubro Ltd. reported at 2014 (303) ELT 3 (SC) to drive home the point that an agreement to sell an immovable property could also be treated as 'Work Contract'. The assessee have contended that the analogy of the case of M/s K Raheja is not applicable to the facts of the case since the factual matrix of the same is entirely on a different footing than the case at hand in as much as the activity undertaken by M/s K Raheja was construction of residential apartments and commercial complexes. The Following text of the said ruling also supports the contention of the assessee to the effect that the issue under construction in the said case was construction of residential and commercial complexes: 2. Briefly stated the facts are as follows: The Appellants carry on the business of real estate development and allied contracts. They are having their office at Bangalore. They enter into development Agreements with owners of lands.....
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....m the customers which was not so in the present case. In support of their argument, the assessee relied upon para 9 of Writ Petition 429 of 2010 of High Court of Andhra Pradesh which read as under : " Although as per the allotment, Rs. 90/- per square yard alone was to be paid towards development charges, the opposite party unilaterally enhanced in to Rs. 75000/- i.e at Rs. 150 per square yard which the complainant paid. The opposite party again enhanced the said charges to Rs. 1,25,000/- at Rs. 250/- per square yard" In the instant case, there is nothing on record to indicate that the assessee had collected a separate charges towards development of the common amenities and other infrastructure. Further, the copies of sale deed in respect of the plotting scheme viz. Iscon Greens which have been relied upon the in SCN and marked at Sr. No. 13 to Annexure - G1 of the SCN does not in any manner indicate that the assessee have collected separate charges for development of the plot. Thus the fact of the present case are not identical to the facts in the Case of M/s Narne Constructions. Moreover, in the case of M/s Narne Construction, the matter was being examined in the light of th....
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....se Structurals & Engg. Pvt. Ltd. as reported at 2002 (48) ELT 503 (T) which is affirmed by the Hon'ble Apex Court as reported at 2003 (154) ELT A241(SC), the Tribunal had made the following observations: "However, the notice proceeded on the footing that what was to be added was the profit of the job worker. Therefore, any finding that what was to be included any element other than these would be beyond the scope of the notice, and therefore impermissible". b.) In the case of M/s Reliance Ports and Terminals Ltd. reported at 2016 (334) ELT 630 (Guj), the Hon'ble High Court of Gujrat has held as under : "Under the circumstances, in the light of the settled legal position as emerging from the above referred decisions of the Supreme Court, that the show cause notice is the foundation of the demand under the Central Excise Act and that the order-in-original and the subsequent orders passed by the appellate authorities under the statute would be confined to the show cause notice, the question of examining the validity of the impugned order on grounds which were not subject matter of the show cause notice would not arise." c.) In the case of M/s Kandeep Dilipbhai Dholakai report....
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....as been found to be out of the purview of " Work Contract", the said activity cannot be said to be a 'declared service' in terms of the provisions of Section 66E(h) of the Finance Act, 1994 in as much as the said declared service is restricted to the service portion in execution of work contract Resultantly the said activity is not covered within the ambit of work contract service as defined under Section 66 E(h) of the Finance Act, 1994. Once a service has been classified under a particular head and the same is not found to be covered under the head under which the show cause notice proposes to classify the same, the demand becomes unsustainable. This principle has been laid down in the following case laws which have been relied upon by the assessee in their defence reply a) M/s J.S.E.L. Securities Ltd. reported at 2017(4) GSTL 8(T) where in has been held as under : "Ld. Counsel for the appellant contested the proceedings before the lower authorities mainly on the ground that the same are beyond the scope of the show cause notice. The show cause notice proposed Service Tax from the appellant under a specific category of "lease circuit service" referring to the statutory provis....
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....der the category of Commercial and Industrial Construction Service as well as Repair and Maintenance Service. Hence we are of the view that the confirmation of demand under the category of WCS will not be proper particularly in view of the decision of the Tribunal in case of Ashish Ramesh Dasarwar (supra) wherein Tribunal has taken the view that demand for Service Tax is to be set aside if the Show Cause Notice proposed a classification different from WCS for construction activity; "6. As regards the period after 1-6-2007, since the demand was raised under 'commercial or industrial construction service, whereas admittedly the service is correctly classifiable under works contract service, demand raised under wrong head of service cannot sustain." 9. Consequently, we set aside the demand for service tax made under the (CICS) category for Construction of foundation/roads as well as repair of roads." 14. Likewise, a demand of service tax under a particular category could not have been confirmed under a different category. Thus, in Service Tax Appeal No. 53251 of 2015, the demand of service tax could not have been confirmed under "works contract" when the show cause notice was is....
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....ax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "thirty months", the words "five years" had been substituted. Accordingly, I find that the cash amount to the tune of Rs. 80,82,79,171/- (Rs. 76,12,95,585/- pertaining to the scheme Iscon Platinum as summarized at Annx. A-1 to SCN +Rs. 4,69,83,586/- pertaining to the scheme Iscon Harmony as summarized at Annx. B-1 to SCN), at tabulated at para 29.3.9 hereinabove, is required to be deducted from the computation under Annexure-A-1 and B-1 to the show cause notice. Annex. A-1 to SCN reveals that abetment to the tune of 70% has been granted in case of Towers H to K in terms of the provisions of Notn. No. 26/2012 ST. Likewise, Annx. B-1 to the SCN reveals that abatement to the tune of 70% has been granted in case of Towers A & D and abatement to the tune of 75% has been granted in case of Towers B, C,E,F & G. Accordingly, the Service tax involved on the above cash amount of Rs. 80,82,79,171 comes to Rs. 3,50,58,715/. which is computed in OIO. While making the above calculation the outstanding amount in cash as shown at column '1' to Annx. A-1 & B....
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....o be received, and shown as 'Outstanding' service already provided shall be taxable and the point of taxation shall be determined in terms of Rule 3 of Point of Taxation Rules, 2011. As against the said allegation, the assessee have contended that Service tax cannot be demanded on the amount which had not been received and was shown as Outstanding on the following grounds: a) The principle of receipt of 'consideration' for the purpose of taxation was not done away with and stood as it was before the change to the invoice based system of taxation since corresponding amendment was made to Rule 6(3) of the Service Tax Rules, 1994 to the effect that excess service tax paid in cases where the price was re-negotiated was admissible as credit to the assessee. b) The definition of the term 'service' as per Sec. 65B(44) of the Finance Act, 1944 made 'consideration' as an integral part of the service c) The department themselves had not computed the service tax on the outstanding amount which is shown to be due on the cheque payment. 29.4.2 It is an undisputed fact that such amount has not been received by the assessee till the time of issuance of show Cause Notice. The SCN in the ....
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....ipulating merely proper usage of funds and furnishing of account also will not result in making it a provision of service. * Donations to a charitable organization are not consideration unless charity is obligated to provide something in return e.g. display or advertise the name of the donor in a specified manner or such that it gives a desired advantage to the donor. When the activity without consideration is not construed as 'service', the natural corollary that follows is that the amount of 'consideration' which has not been received is not liable to service tax. Thus, the argument of the assessee to the effect that service tax cannot be levied on that portion of consideration which has not been received find support in the definition of the term 'service'. 29.4.4 The assessee have contended prior to 01.04.2011, the service tax was payable at the time of receipts of the payment of the service in terms of the provisions of Rule 6(1) of the Service Tax Rules , 1994 which at the material time, read as under: (1) The service tax shall be paid to the credit of the Central Government, - (i) by the 6th day of the month, if the duty is deposited electronically through internet....
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....reason, or where the amount of invoice is renegotiable due to deficient provisions of service, or any terms contained in a contract the assessee may take the credit of such excess service tax paid by him, if the assessee- (a) has refunded the payment of part thereof, so received for the service provided to the person from whom it was received or (b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued. Prior to 01.04.2011, the adjustment of excess service tax was applicable only in cases where the payment had been received against a service which was not provided either wholly or partially. After the amendment the adjustment of excess service tax paid was extended to cases where the amount was renegotiated due any terms of the contract. This purpose for such amendment can be derived that there may be occurrences where the service tax has been discharged on the invoice value at the material time but later on a part or whole of such invoice value is not received by the service provider owing to deficient service or re-negotiation of price. In such cases, the service tax proportionate to such value not receiv....
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....ect that service tax is not chargeable on the amount which has not been received by them. This is specially so in light of the fact that the SCN itself admits that such amount has not been received by the assessee which makes it an undisputed fact that such amount has not been received by the assessee which makes it an undisputed fact that such consideration has not been received by the assessee. Accordingly the demand of service tax as per Annexure A1 and B1 to the SCN is required to be recomputed by deducting the value that has been shown as Outstanding and not received by the assessee. Annx. A-1 to the SCN reveals that abatement to the tune of 70% has been granted in case of Towers A to G & L and abatement to the tune of 75% has been granted in case of Towers H to K in terms of the provisions of Notn. No. 26/2012 ST. Likewise, Annx. B-1 to the SCN reveals that abatement to the tune of 70% has been granted in case of Towers A & D and abatement to the tune of 75% has been granted in case of Towers B, C, E, F & G. Accordingly, the Service tax involved on the above cash amount of Rs. 88,22,62,572/- comes to Rs. 3,75,35,481/-. which is computed in OIO. In view of the above, I find....
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....old as per the ledgers of the assessee are not one who have been mentioned in the documents on which reliance has been placed. Thus the documents itself loses credibility since the details therein cannot be said to be true when the documents of the assessee indicate that the said flats are sold to some other entities and payment have also been shown in the ledgers of such other entities. In this credibility of the documents has been destroyed by the cogent evidence in the form of ledgers of the assessee which were existing even at the time of investigation and the facts that payment have been received from such customers. Further, the copies of sales deeds produced by the assessee also indicate that the flats have not been sold to the person whose name are appearing in the chit except for one entry. It defies all logic as to why the person who have not bought the flats under consideration should give some cash amount to the assessee. 29.5.4 It is further found that the details contained in the said document have also not been admitted by any of the company's official. The said document was shown to Shri Venkataramana Ganesna, Presient of the assessee during the course of recordin....
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....n has not deemed to fit to conduct any investigation in respect of the said piece of document especially when the same was denied by Shri Venkataramana Ganesna in his statement and the fact that the buyer of the flat mentioned therein were different a compared to the ledger of the assessee at the time of investigation. Despite these facts, the show cause notice has proposed to demand service tax on the basis of such uncorroborated document. 29.5.5 In the instant case, the document is claimed to have been authored by some broker and the investigation has failed to bring any substantial material on record to prove the authenticity of the said document. Coupled to this fact, the financial records maintained by the assessee in form of ledger and the copies of sale deeds produced by them is depicting the fact that the buyers of the flat are totally different from the one's whose name are mentioned in the loose document. Accordingly, the documents relied upon loses its evidentiary value and no demand can be raised on the basis of such uncorroborated document. My conclusion is aptly supported by the Judgement in the case of M/s Emmtex Synthetics Ltd. reported at 2003 (151) ELT 170 (T) w....