TaxTMI 
TaxTMI 
2023 (4) TMI 216
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....e Act, 1994 (hereafter 'the Act'). In addition, MTNL also assails the Notification dated 10.02.2015 conferring jurisdiction on the Principal Director General, Directorate General of Central Excise Intelligence to assign show cause notices to Principal Commissioners Service Tax, Commissioners Service Tax, Principal Commissioners, and Commissioners of Central Excise to adjudicate the show cause notices issued by the Directorate General of Central Excise Intelligence. 3. MTNL is, essentially, aggrieved by the impugned show cause notice issued by respondent no.3 (Additional Director General, Director General of GST Intelligence) calling upon MTNL to show cause why service tax amounting to Rs.56,61,37,440/- (Rupees Fifty-six Crores Sixty-one Lacs Thirty-seven Thousand Four Hundred Forty Only) inclusive of cess, should not be recovered from it along with interest under Section 73(1) of the Act. Further, MTNL was also called upon to show cause why penalty not be imposed under Sections 76 to 78 of the Act. 4. The principal controversy involved in the present case is whether MTNL is liable to pay service tax on the compensation of Rs.458.04 crores received by it from the Government of....
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....the Telecom Regulatory Authority of India (hereafter 'TRAI') had recommended that the DoT withdraw MTNL's entire spectrum holding in the 800 MHz band, and requested it to provide its comments, if any, regarding this recommendation. In response to the aforesaid communication, MTNL furnished its comments to the DoT on 21.04.2014, inter alia, stating that the spectrum was allotted to it up to 09.10.2017 and the said period had not expired. The spectrum was used for carrying CDMA services and it had made significant capital investment for providing such services. MTNL claimed that if the allocated spectrum is prematurely surrendered, it must be reimbursed/compensated with an amount equal to the value of the spectrum for the remaining period of the license at a value determined at the auction rate of 800 MHz. 12. On 18.08.2015, the DoT issued a letter stating that the Union Cabinet, in a meeting held on 05.08.2015, had approved financial support to Bharat Sanchar Nigam Limited (BSNL) and MTNL in lieu of surrender of the 800 MHz CDMA carriers. An amount of Rs.458.04 crores was approved to be given to MTNL in this regard. 13. On 28.03.2016, the DoT issued an order informing the sanc....
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.... computed on the amount received by MTNL as financial support for surrendering the CDMA spectrum, as the value of service. Reasons & Conclusion 20. The first and foremost question to be addressed is whether the impugned show cause notice was issued beyond the period stipulated under Section 73(1) of the Act. The impugned show cause notice refers to a note prepared by MTNL on 16.04.2014 in the context of the DoT taking back the entire spectrum holding in 800 MHz by way of surrender of carriers allotted to MTNL. The said note indicates that in the year 1998-99, MTNL was allowed to deploy CDMA services under basic service license issued by the Government of India in the service areas of Delhi and Mumbai. MTNL was allotted CDMA carriers/spectrum (800 MHz, two carriers in each service area) for rolling out its services. 21. The DoT, by its letter dated 18.06.2013, indicated that CDMA spectrum was not part of the basic service license as it was included in Cellular Mobile Telephone Service (CMTS) License under dual technology. 22. Thereafter, on the recommendation of TRAI, MTNL constituted a committee to suggest further course of action to protect its interest in the evolving....
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....allegation that MTNL had suppressed material facts from the Service Tax Department regarding surrender of spectrum as a taxable service, and the receipt of consideration. 27. At this stage, it would be relevant to refer to Section 73(1) of the Act as was applicable at the material time: "Section 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded.- (1) Where any Service Tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the Service Tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any Service Tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful misstatement; or (d) suppression of facts; or (e) contravention of any of t....
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....the basis of the said reasoning, the respondents formed an opinion that MTNL had suppressed facts and had consciously contravened the provisions of the Act with an intent to evade service tax. 30. The conclusion that MTNL had suppressed material facts or had contravened the provisions of the Act with an intent to evade service tax is not supported by any material on record. The statements of the officials of MTNL - which are relied upon by the respondents - clearly indicate that it was their understanding that service tax was not chargeable on compensation or financial support received for surrendering the spectrum. 31. Indisputably, the contention that service tax is not chargeable on the compensation received is not without substance. Since it was MTNL's understanding that the compensation received was not a consideration for any taxable service but for the surrender of spectrum, MTNL could not be expected to disclose the compensation as consideration for service in its Service Tax Returns. Plainly, there was no requirement for MTNL to do so. 32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service....
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....on 11A of the Central Excise Act, 1944, which is similarly worded as the proviso to Section 73(1) of the Act, and observed as under: "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or willful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of....
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....hat for proviso to Section 11-A to be invoked, the intention to evade payment of duty must be shown. This has been clearly brought out in Cosmic Dye Chemical case where the Tribunal had held that so far as fraud, suppression or misstatement of facts was concerned the question of intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows: (SCC para 6) '6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "misstatement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11- A. Misstatement or suppression of fact m....
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....x 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, willful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid paying excise duty. The terms "mis-statement" and "suppression of facts" are preceded by the expression "willful". The meaning which has to be ascribed is, deliberate action (or omission) and the presence of an intention. Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention." 41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was awa....
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....2012, Service Tax is levied on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another. As per Section 65B(51) of the Act, ''taxable service' means any service on which Service Tax is leviable under Section 66B. Further, in terms of Section 65B(44) of the Act, 'service' means any activity carried out by a person for another for consideration and includes a declared service. From this, it appears that 'service' has the following ingredients:- (a) It means any activity carried out by any person (b) The activity shall be carried out by one person for another person (c) The activity shall be carried out for a consideration. In terms of common understanding, activity would include an act done, a work done, a deed done, an operation carried out, execution of an act, provision of a facility etc. It is a term with wide connotations. Activity could be active or passive and would include forbearance to an act. Under the sub-section (e) of Section 66E of the Finance Act, the "agreeing to the obligation to refrain from an act, or to tolerate an act or ....
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....erm is defined under Section 65B(44) of the Act as under: "Section 65B. In this Chapter, unless the context otherwise requires, - *** *** *** (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1.-For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities an....
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....de the same as a declared service, which by virtue of the definition of 'service' under Section 65B(44) of the Act is included as a 'service. 48. The expression 'declared service' is defined under Section 65B (22) of the Act as under: "declared service" means any activity carried out by a person for another person for consideration and declared as such under Section 66E." 49. According to the respondents, the receipt of compensation is covered under clause (e) Section 66E of the Act. It is relevant to refer to said clause and the same is set out below: "66-E. Declared services. - The following shall constitute declared services, namely- *** *** *** (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;" 50. The first limb of Clause (e) of Section 66E of the Act relates to an obligation to refrain from an act or tolerate an act or a situation or to do any act. It is difficult to accept that MTNL had agreed to forbade doing any act as is contended on behalf of the respondents; it had merely agreed to surrender allocation of an asset. It did not agree to tolerate an act. The spectrum is a pub....