TaxTMI 
TaxTMI 
2022 (7) TMI 768
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....ment were seized and statement of Shri Jagdish Chandra Somani Director of M/s Forward Resources Pvt. Ltd. was recorded wherein he stated that Shri Suneet Kabra was the Director of the Appellant and he along with Shri Suneet Kabra operated different firms including that of the appellant. Statement of Suneet Kabra was also recorded wherein he interalia stated that Appellant had received commission charges from different customers. On the basis of the investigation conducted and scrutiny of the records of the Appellant, it appeared that Appellant were engaged in providing services as "Commission agents" to M/s Windsor Machines Ltd., and 'Management or Business Consultancy" to various customers in India. Appellant neither filed ST-3 returns nor paid any amount of service tax. Accordingly, show cause notice on 20.10.2016 was issued proposing the Service tax demand along with interest, penalty. The Additional Commissioner, Surat vide Order-In- Original No.20/ADJ/ADC-KSM/OA/2017-18 dated 30.01.2018confirmed the demand of service tax of Rs. 1,05,34,774/- under proviso to Section 73(1) of the Finance Act, 1994 and ordered for appropriation of Rs. 20,00,000/- paid by Appellant during t....
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....rder wrongly upholds the same. For the period post July 2012, the service provided by a mutual fund agent to mutual fund or asset management company or by distributor to a mutual fund or asset management company were exempted vide Notification No. 25/2012- ST dtd. 20.06.2012. The same is also clarified in CBEC Education Guide. He placed reliance on the case of Vijay Sharma & Co. Vs. CCE Chandigarh, 2010(20)STR 309 (Tri. -LB). 3.2 He further submits that service provided to M/s Windsor Machines Pvt. Ltd. of transporting machinery from premises of Windsor to M/s Manike Moulds Pvt. Ltd. and appellant performed commissioning and installation Jobs at the site of M/s Manike Moulds Pvt. Ltd. are not taxable as it amounted to intermediate process in manufacture of excisable goods. Appellant had provided services to M/s Welspon Corp Ltd., Welspon Syntex, Welspon Global Brands Ltd. and M/s Alkem Laboratories Ltd. towards providing advice and negotiation in respect of packing credit in foreign currency. Packing credit is a credit facility provided by the Bank to an exporter. Thus, the services provided by the Appellant were ancillary to export in nature and hence, was not liable to Service....
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....ice provided by a sub-broker to a stock broker were exempted vide Notification No. 25/2012-ST dtd. 20.06.2012. The CBEC Education Guide also stating that the services provided by the intermediaries to entities which are liable to pay tax on their final output service shall be exempt. He placed reliance on the case on M/s Vijay Sharma & Co. Vs. CCE, Chandigarh, 2010 (20) STR 309 (Tri- LB) 3.5 He also submits that the impugned order failed to consider that the show cause notice invoked wrong provision of the Finance Act, 1994 to demand Service tax. The demand of Service tax should have been proposed under Section 73A of the Finance Act, 1994 and not under Section 73. Therefore, there can be no demand of Service tax as the impugned order is passed without jurisdiction and hence liable to be quashed and set aside. He placed reliance on the following decisions: • Checkmate Industries Services Vs. CCE, Pune -III, 2016(44)S.T.R. 290 (Tri. -Mumbai) • M/s Fusion India Inc V. CCE & ST., Lucknow- 2018(11)TMI 358 -CESTAT Allahabad. 3.6 He also submits that the show cause notice proposes to recover service tax under Section 73 of the Finance Act, 1994 which is th....
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....he Appellant. 3.9 He further submits that demand of service tax is based on the definition of Services existed prior to 01.07.2012. However, the entire period of dispute in the present case is falling on or after 01.07.2012. The demand of service tax on the definition based in erstwhile regime cannot be confirmed. The show cause notice has failed to analyse the transactions properly and mechanically raised the demand of Service tax. He placed reliance on the following decisions: • Maharashtra Industrial Development Corporation 2014 (36) STR 1291 (Tri.- Mum) • Frisco Foods Pvt. Ltd. Vs. CCE, Dehradun 2022-VIOL-49-CESTAT-Del-ST 3.10 He also submits that the show cause notice relies on the statements of the directors of the Appellant to allege the rendition of services. The statements of the directors of the Appellant were recorded under duress and pressure. The show cause notice alleges rendition of services and collection of service tax without any documentary evidence. It is well established principle of law that demand of service tax cannot be confirmed merely on the basis of statements. The Appellant have produced enough documents to support their ....
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....earned Superintendent (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order and submits that Appellant have filed fresh and new evidences before the Bench by submitting for the first time which is not permissible. 4.1 New grounds and documents may only be admitted according to the procedure prescribed under Rule 23 of CESTAT (Procedure) Rules, which has not been complied with. So, all arguments tendered by the Appellant now have not been first observed by the Adjudicating Authority. The fresh evidences/documents are not allowed in Tribunal. He placed reliance on the following decisions: • Kneader House Vs. CCE, Delhi -I 2013 (290) ELT 249 (Tri- Delhi) • Sterlite Industries (I) Ltd. Vs. CCE Tirunelvelli 2017(357)ELT 161 (Tri-Chennai) 4.2 He submits that as regard their contention of rendering of electric transmission service, sub-broker of Stock Exchange, agent of mutual fund, life insurance agent, etc. no supporting documents are submitted. 4.3 He further submits that Section 73 covers the tax not paid or short paid, which covers the demand made of service tax in present case, while section 73A....
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....tional Thermal Power Co. Ltd. v. Commissioner of Income Tax, reported in 1998 (99) E.L.T. 200 (S.C.), which is to the effect that the Tribunal has jurisdiction to examine the question of law which arises on facts, as found by the authorities below, and having bearing on tax liability of assessee, even though said question was neither raised before the lower authorities nor in appeal memorandum before the Tribunal, but sought to be added later as an additional ground by a separate letter. 5.1 In the matter of Devangere Cotton Mills Ltd. v. Commissioner - 2006 (198) E.L.T. 482 (S.C.) the question arose whether the third member of the Customs, Excise and Gold (Control) Appellate Tribunal to whom the case was referred on difference of opinion between the Bench of two members could permit an additional ground to be raised under Rule 10 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982. The Supreme Court held that the Tribunal has got wide power to hear and consider a new ground and decide the appeal. The relevant observations are as follows : "Rule 10 of the 1982 Rules allows the parties to urge grounds not taken in the appeal provided the ....
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....horities are hereby quashed and set aside. Parties are requested to be relegated to the Commissioner (Appeals) for consideration of these issues afresh. Accordingly, the Commissioner (Appeals) is directed to examine all the grounds raised before it by both the sides in accordance with law and both the parties are directed to cooperate in proceeding with the matter with requisite promptness. Appeal is, accordingly, allowed. Rule is confirmed. No order as to costs." In view of the above precedent law, we are of the considered opinion that the Law/Rules has not precluded CESTAT for considering new grounds/ evidence. We do not find merit in the pleas of the Ld. Departmental representative in this regard. 5.2 We find that in the present matter it is on record that during the search at the premises of the Appellants, no invoices/ debit notes etc., raised to their customers were found. The department in the present matter computed the service tax demand on the basis of TDS statement / 26AS Statement / 3CD Statement and financial statements seized from the premises of M/s Forward Resources Pvt. Ltd.However, presumption of documents in certain cases under Section 36A of the Central Ex....
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....cise Act 1944, as stipulated and in force from time to time shall apply so far as may be in relation to Service Tax as they apply in relation to duty of excise. Section83 of the Finance Act reads as under : - "83. Application of certainprovisions of Act 1 of 1944. - The provisions of the following sections of the Central Excise Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to ServiceTax as they apply in relation to a duty of excise :- sub-section (2A) of section 5A, sub-section (2) of Sections 9A, 9AA, 9B, 9C, 9D, 9E, 11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 15, 15A, 15B, 31, 32, 32A to 32P (both inclusive), 33A, 34A, 35EE, 35F, 35FF, to 35-O (both inclusive), 35Q, 35R, 36, 36A, 36B, 37A, 37B, 37C, 37D, 38A and 40." From the above Section 83 of the Finance Act, 1944 it is seen that Section 9D of the Central Excise Act, 1944 is applicable in the case of Service tax matters. 5.4 The department for confirmation of service tax demand also rely on the statement of Shri Suneet Kabra director of Appellant company and statement of Shri Jagdish Chandra Somani, Director of M/s Forward Resources Pvt. Ltd. However,....
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....equirement of Section9D of the Act regarding examination in chief of witness, therefore demand of service tax on the basis of statement of persons not sustainable. 5.6 When the Service tax is demanded on alleged services, it is the responsibility of the department to show that the appellant had rendered these services to customers with positive evidences. In the present case department failed to do so. Further we also do not agree with argument of Ld. Departmental representative that classification of service is not important after 01.07.2012. In the present matter demand was raised under the category of "Business Auxiliary Service", and Management or Business Consultant Services, without analyzing the activities carried out by the Appellant. Whereas as per the details submitted by the Ld. Counsel, we find that appellant was engaged in providing GTA Service, sub-distributer services of Mutual Funds, maintenance service related to principle supply of transmission and distribution of electricity, insurance agent service, sub-broker services related to stock and commodity stock, Intermediatory Manufacturing Service and services towards providing advice and negotiation in respect of....
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....d under sub-clause (vii) could be on activities relatable to either one of the preceding six sub-clauses. Therefore, if a notice issued proposing demand under BAS, the noticee will not be aware as to the precise ground on which tax is proposed to be demanded from him unless the sub-clause is specified. In the instant case, Service Tax was proposed to be demanded for an activity under BAS and BSS. Under BSS also several activities are listed as exigible under that head. In the absence of proposal in the show-cause notice as to the liability of the assessee under the precise provision in the Act, we find the demand to be not sustainable." 5.8 We may also refer to the observations of the Supreme Court in the decision of Kaur & Singh v. C.C.E., New Delhi - 1997 (94) E.L.T. 289 (S.C.).It is axiomatic that a show cause notice must communicate to the addressee the specific allegation/charge and the basis for the demand of tax. The Supreme Court stated that the party to whom a show cause notice is issued must be made aware of the allegation against it and that this is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case agai....
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....the requirement of the Income-tax Act, on the recipient who made payment to the foreign supplier. Such a statutory requirement, as exists under the Income-tax law on the person making the payment to deduct tax at source, as a tax collecting agency of the Revenue, does not exist under the provisions of the ServiceTax law, and no obligation was cast upon the recipient of the service to make any deduction from the amounts payable by way of consideration, under the statutory provisions. Authorization to pay Servicetax under a contractual arrangement which obliged the recipient to pay the tax and file return, was a matter distinct and different from a statutory obligation to make tax deduction as a collecting agency, as envisaged under the Income-tax law. The Commissioner (Appeals) has, therefore, rightly set aside the orders-in-original insofar as respondent of Service Tax Appeals Nos. 170, 171 and 173 of 2005 was concerned. In the matter of Commissioner of C.Ex. Jaipur-I Vs. Tahal Consulting Engineers Ltd. - 2016(44) S.T.R. 671 (Tri. Del) the Tribunal also observed as under: 2. The brief facts of the case are that respondents are engaged in providing taxable service.....
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....D Statements are not sustainable. 5.12 Without prejudice, we find that in the impugned matter without examine the nature of activity of appellant, observation of department that appellant were engaged in providing 'financial consultancy services' , 'business auxiliary service' and 'management or business consultancy services' not tenable. From the submission of appellant it is clear that appellant provided the various types of services to various entities and department has classified all as commission agent services under the category of 'business auxiliary service' and 'management consultancy service' legally not correct. 5.13 During the impugned period appellant provided the mutual fund distribution service to M/s ECL. In this regard, as per Rule 2(l)(d)(vi) of the Service Tax Rules which was in force upto 30-6-2012 reads as follows : "2(1) In these rules unless the context otherwise requires, - (d) "Person liable for paying the Service Tax" means, - (vi) in relation to business auxiliary service of distribution of mutual fund by a mutual fund distributor or an agent, as the case may be, the mutual fund or asset management com....
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...., we find that appellant provided the services of commission agent to M/s Chaz Insurance Brokers Pvt. Ltd. The said brokerage company deal in the business of life insurance and general insurance products. In terms of circular No. 59/8/2003 -ST dtd. 20.06.2003, the services provided by insurance agent were covered under the 'insurance agent or 'insurance auxiliary service'. The relevant portion of above circular is reproduced below: 2.1.3 Certain doubts have been raised in case of business auxiliary services. In this regard the following is clarified,- • While it is not possible to give an exhaustive list of business auxiliary services, the following are illustrations of services that are covered under this category viz. evaluation of prospective customers, processing of purchase orders, customer management, information and tracking of delivery schedules, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, managing distribution & logistics. The services provided in relation to getting a customer, verification of prospective customer, processing of purchase order etc would als....