AI Drafter 
TaxTMI 
TaxTMI 
2023 (8) TMI 50
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.... made the following submissions: (i) They provide a comprehensive range of services such as data collection and analysis, manpower mobilization, liaison, training supervision, management consulting, software development etc. Apart from above, they provide services under a consortium arrangement in the capacity of sub-contractor. (ii) The Notice in this case was issued solely based on the audit objection raised by the AG (Orissa) during verification of Income Tax Returns, filed by them for the aforesaid period. The Notice neither states the date of scrutiny of such Income tax returns by the AG (Orissa) nor provides a copy the audit report to them. Purely on the basis of the said audit objection and without causing any independent enquiry to ascertain the correctness of the alleged short payment, the Notice was issued. (iii) The entire demand was barred by limitation. For the Financial Years 2001-02 to 2004-05, the demand is clearly barred by limitation in as much as no allegation of willful suppression, mis-statement, fraud or collusion has been made in the SCN. It is a settled position of law that in the absence of any such allegation in the SCN, extended....
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....llful misstatement or suppression of facts with an intent to evade payment of tax for the FY 2001-05. Accordingly, the demands confirmed in the impugned order is liable to be set aside. (ix) The demand is unsustainable on merits. The services rendered in the field of deployment of staff, software development, repair & maintenance and public relation etc., cannot be taxed under the category of management consultancy services. Deployment of mobile team, software development, repair and maintenance, and providing public relation service etc. does not come within the ambit and scope of management consultancy service during the material period. (x) Section 65(65) of the Act as applicable during the period in dispute provides that: "'Management or business Consultant' means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or upgradation of any working system of any organisation" Furth....
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....liable to be taxed in the hands of the Appellant. The services rendered by the Appellant in the capacity of sub-contractor to principal contractors i.e., Adam Smith Institute, Bhubaneswar, Administrative Reforms & Public Grievances, Price Water House Cooper (P) Ltd., European Union, BASIX & OERC etc., during the period under dispute, cannot be subjected to levy of Service tax in the hands of the Appellant in terms of the legal provisions existed at the material time. The aforesaid services cannot be considered to have been provided to "a client" in as much as the same have been provided to the main contractor engaging the Appellant as a sub-contractor. Thus, the said service provided by the Appellant is outside the ambit of Section 65(105)(r) of the Act. In support of this contention they relied on the decision of the Tribunal in the case of Indfos Industries Ltd. v. Commissioner 2012 (26) STR 129 (Tri.-Del)as affirmed in 2015 (40) S.T.R. 220 (All.). (xvi) The expenditures incurred during execution of job and reimbursed by the customers, is not to be treated as fees and made excisable to levy of Service tax. The reimbursements received by them from its customers are outsid....
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....travention with intention to evade the payment of Excise duty. Not only does it not give any such particulars, it does not even make a bare allegation. 3. This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. [See Collector of Central Excise v. H.M.M. Limited, 1995 (76) E.L.T. 497 and Raj Bahadur Narayan Singh Sugar Mills Limited v. Union of India, 1996 (88) E.L.T. 24]. 4. The appeal is allowed and the order of the Tribunal under appeal is set aside. 8. In the case of Collector v. HMM Ltd. 1995 (76) ELT 497 (SC), the Hon'ble Supreme Court has held as under: 2. The assessee contended before the Additional Collector of Central Excise that the show cause notice was....
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....ection. The mere non-declaration of the waste/byproduct in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or byproduct did not attract excise duty and hence it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, mis-conduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the excise department places reliance on the proviso ....
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....Rs. 2,37,88,832/-. For ease of reference, the same is reproduced hereinbelow: Sl. No. Description 2000-01 2001-02 2002-03 2003-04 2004-05 1. Consulting fee (other than Management consulting) 12,13,560 44,40,000 13,75,991 24,000 5,67,322 2. Reimbursable expense 1,87,500 24,24,717 1,35,000 9,14,311 3,17,242 3. Sub-contract 2,10,000 2,52,000 10,49,478 66,29,939 20,94,636 4. Repair and maintenance 2,83,136 - - - - 5. Payment not received from client - - 5,20,000 - - 6. Software development - - - - 11,50,000 Total 18,94,196 71,16,717 30,80,469 75,68,250 41,29,200 11. For the period 2004-05, the Appellant has received income under four different heads as mentioned above. The liability of service tax on the categories mentioned above are discussed as below: (i) Consulting fee (other than Management consulting) - Rs5,67,322/- The Appellant stated that they provide a comprehensive range of services such as data collection and analysis, manpower mobilization, liaison, trainin....
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....nder dispute, cannot be subjected to levy of Service tax in the hands of the Appellant in terms of the legal provisions existed at the material time. They also submitted that the aforesaid services cannot be considered to have been provided to "a client" in as much as the same have been provided to the main contractor engaging the Appellant as a sub-contractor. Thus, the said service provided by the Appellant is outside the ambit of Section 65(105)(r) of the Act. In this regard they placed their reliance on the decision of the Hon'ble CESTAT in the case of Indfos Industries Ltd. v. Commissioner 2012 (26) STR 129 (Tri.-Del)as affirmed in 2015 (40) S.T.R. 220 (All.), the relevant para of the decision is reproduced below: 14. Now the argument that they were not the main contractors but were only sub-contractors needs to be examined. This issue whether sub-contractor needs to pay service tax has arisen because of certain clarifications issued by the Board in the early stage of evolution of service tax levy and connected laws. These instructions were issued in view of different factors like, (i) Even prior to the introduction of Cenvat Scheme for service tax, the....
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....ded to a client by a consulting engineer. The sub-contractor who was carrying out part of the activity may not have fitted into the definition of "consulting engineer" and the consulting engineer subcontracting the work might not have fitted into the definition of "a client". It is in such situations that the impugned clarifications were issued by the Board. The clarifications issued by Board do not expose a legal position that no sub-contractor is liable to pay service tax on any taxable activity. 15. The liability to tax has to be decided with reference to the definition the concerned taxable service at the relevant period of time and the activities carried out and the contract governing such activity. Some of the case laws quoted do not discuss any provision of any statute to come to the conclusion that there shall be no levy of service tax on sub-contractors. In fact the decision in Semac Pvt. Ltd v. CST - 2006 (4) S.T.R. 475 (Tri.-Bang.) is given considering that the main contractor had paid tax for the full value. However the policy that if the main contractor has paid service tax, the sub-contractor need not pay tax again on the same service, for periods prior to in....