TaxTMI 
TaxTMI 
2024 (2) TMI 306
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.... them to SIFCL during the period 01.07.03 to 31.07.06. I appropriate the amount of Rs 10 Crores deposited by them. I direct them to pay the balance forthwith. 2. I also direct M/s Sahara India, Sahara Bhawan-1, Kapoorthala Complex, Aliganj, Lucknow to pay interest at applicable rates, in terms of Section 75 of the Finance Act, 1994. 3. I impose a penalty of Rs 80,99,58,723.00 (Rupees Eighty Crore Ninety Nine Lacs Fifty Eight Thousand Seven Hundred and Twenty Three only) under Section 76 Finance Act, 1994. I direct them to pay the penalty forthwith. 4. I impose a penalty of Rs 1000.00 (Rupees One Thousand only) under Section 77 Finance Act, 1994. I direct them to pay the penalty forthwith. 5. I also impose a penalty of Rs 80,99,58,723.00 (Rupees Eighty Crore Ninety Nine Lacs Fifty Eight Thousand Seven Hundred and Twenty Three only) under Section 78 Finance Act, 1994. I direct them to pay the penalty forthwith." 2.1 Appellant is a partnership firm engaged in mobilizing deposits from the public under various deposit schemes of M/s Sahara India Financial Corporation Limited (SIFCL). With effect from 01.011.2005 SIFCL also became a partner in the p....
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....e said amount of service tax and education cess should not be charged and recovered from them in terms of Section 75 of the Finance Act, 1994. iii) Penalty should not be imposed upon them in terms of Section 76 and 77 of the Finance Act, 1994. iv) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994. 2.4 The show cause notice was adjudicated as per the impugned order referred in para 1 above. Aggrieved appellants have filed this appeal. 3.1 We have heard Shri B. L. Narasimhan and Shri Prakhar Shukla, Advocates for the appellant and Shri Deepak Kumar Special Counsel for the revenue. 3.2 Arguing for the appellant learned counsel submits that: • Show cause notice and impugned order has classified the activities undertaken by them as business auxiliary service under sub-clause (ii) and (iv) of Section 65 (19) for the period prior to 10.09.2004 and under sub clause (ii), (vi) and (vii) of Section 65 (19) for the period post to 10.09.2004. Same activity could not have been classified under multiple categories during the same period and during the different periods as has been held in following decisions o ESS G....
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....stration under this category, and hence no tax can be demanded under any other category for the previous period. Reliance is placed on the following decisions: o Indian national Shipowners‟ Association [2009 (14) STR 289 (Bom)] o CBRE South Asia Pvt Ltd [2020-TIOL-197-CESTAT- Del] affirmed by Hon'ble Supreme Court as reported at [2021-TIOL-06-SC-ST-LB] o Malviya national Institute of Technology [2019 (6) TMI 127-CESTAT NEW DELHI] o Sourav Ganguly [2020-TIOL-1687-CESTAT-KOL] o Global Coal & Mining Pvt Ltd. [2020 (36) GSTL 77 (T- Delhi)] o Capital transport Convoy Contractors [2016 (2) TMI 546 CESTAT NEW DELHI] • Extended period of limitation is not invokable since the appellant was under bonafide belief that the activities performed by them are not taxable under the category of business auxiliary services. • For the same reason the penalty is also not imposable. • They are entitled to claim deduction of the reimbursable expenses from the gross amount charged in view of the decisions as follows: o Intercontinental Consultants and Technocrats Pvt Ltd. [2012-TIOL-966-HC-DEL-S....
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....try is introduced for defining the same service rendered then the classification has to be done as per the specific entry. Section 65 A of the Finance Act, 1994 provided for the application of this principle for classifying the services which are classifiable under more than one entries. The decisions referred to by the learned counsel are distinguishable. Thus it is possible that the same activity of the appellant is classifiable with reference to (ii) of Section 65 (19) up to 9.10.2004 and with reference to (iv) thereafter. • The contention of the appellant that (vi) is applicable only if SIFCL is rendering any taxable service to its clients namely depositors as it is not the case that accepting of deposit is in the nature of taxable service. It has been stated earlier also that the phrase used in section 65 (19) (vi) is service and not taxable service. Thus this contention is not tenable. • Further the contention that SIFCL is not their client and hence (vi) will not be applicable is also not tenable. Existence of client (service receiver), service provider and payment of service charge are 3 parameters for levy of service tax. The contention of the app....
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....the appellant that services provided by them are correctly classifiable under BSS is not correct, particularly when the said services are taxable under the category of BAS. • Appellants have not indicated any basis of claiming the classification under the category of BSS. At Sr No 11 on page 363 of the paper book appellant has themselves declared the "Nature of Service: The firm is engaged in services to provide office space along with infrastructural facilities like telephone security etc., from its branches in India which is taxable under Business Support Service. Therefore, we are liable to pay Service Tax under the said category with effect from 1.05.2006." From this it is seen that appellant has taken registration under this category in respect of services which are not in dispute in the present proceedings. Just for the reason that the appellant had obtained registration under the category of BSS will not exclude the applicability of the BAS in respect of activities undertaken prior to it. • Appellants claim for reimbursable expenses has not been denied by the adjudicating authority, it has been disallowed for the reason that the appellants were not ....
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.... or (v) production of goods on behalf of the client; or (vi) provision of services on behalf of the client; or (vii) any service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as commission agent, but does not include any information technology service and any activity that amounts to "manufacture" within the meaning of clause (f) of section (2) of the Central Excise Act, 1944 (1 of 1944) 4.3 From the definition of Business Auxiliary Service as per Section 65 (19) reproduced as above it is quite evident that for the period up to 09.10.2004, the clause (ii) was with reference to promotion and marketing of services provided by the client and clause (iv) was with reference to the incidental or auxiliary support services provided to the client. The clause (i), (ii), (iii) & (iv) were mutually exclusive and referred to different categories of activity which need not ne....
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....t parts of country. The staff & officers of the noticee have sufficient professional expertise for running business of savings & finance, as they have been doing it since last many years & whereas the noticee is also able to provide field staff & field force like Agents, Field Officers etc., which are necessary & required for carrying on & conducting business as Residuary Non Banking Financial Institution. 16.4 As per the agreement with SIFCL, the noticee continued to act as an agent for receipt of fixed deposits and render the service mentioned in the agreement. With all service conditions and facilities readily available with the noticee, M/s SIFCL has contacted the Noticee to continue its cooperation with M/s SIFCL to enable them to continue its relationship to promote and manage its business of para banking and the Noticee has agreed to continue its business co-operation with M/s SIFCL and to continue to act as Agent to M/s SIFCL for its para banking related business activities which have been discussed amongst parties and have been mutually agreed among themselves. The Agreements covenant as under: 16.4.1 The noticee shall continue to work as Agent t....
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....lance of audited aggregate deposit liability under various scheme on account of fixed deposit of Sahara India Financial Corporation Limited as on 1^st April of each financial year. Provided that the total consideration as referred to above in sub-clause a) and b) shall not exceed 3.75% of the aggregate deposit liability as on 1^st April of each financial year as outstanding in the books of M/s SIFCL. The amount payable to M/s Sahara India shall be paid in four quarterly installments. 16.4.7 The noticee shall remit to M/s SIFCL the net amount of deposits collected by the noticee under the various schemes of deposits run by M/s SIFCL after meeting all commitments for payments to depositors under all categories as set out in the respective deposit schemes. 16.4.8 M/S SIFCL will allow the noticee to retain an amount equivalent to the sum required for meeting maturities/pre maturities/ secured loan for the succeeding fortnight, out of collection of deposits under various deposit schemes. The sum so retained with the noticee shall not bear any interest and will be used to meet the requirements of prompt payments of maturities, pre maturities, secured loan, deat....
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....of demand show cause notice. 18.4 Whether the CENVAT Credit on the input service was admissible to the Noticee during the period of demand. 18.5 Whether the Noticee is liable to penalty under Section 76, 77 & 78 of the FA'94 for violation of different provisions of the FA'94." .... 20.3 The Noticee's further main contention is that M/s SIFCL is not engaged in the providing any service or sale of goods. The deposit accepted by them is required to be invested as per the direction of RBI. The deposits are actionable claim and money which are an actionable claim and money which are not goods as per definition of goods given in sales of Goods Act, 1930. It is submitted that M/s SIFCL does not deal in goods and also do not provide any services. Yet, the fact remain that they have appointed the noticee for collection of deposit and other related works as mentioned in the agreement. The Noticee has submitted that they are providing services in relation to the actionable claim and money which are not goods as per the definition of goods given in the Sales of Good Act, 1930. Due to this fact i.e. goods are not covered under the purview of service tax, the ....
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....ulation Act, 1949. 2. To borrow and receive money as deposits, loan or otherwise at interest or otherwise subject to Section 58A, 292, 293 of the Companies Act, 1956, and directions issued by reserve Bank of India, Issue debentures or debenture stocks bonds or other instruments of similar nature, perpetual or otherwise convertible into any other class of security or otherwise, unsecured or by creating a charge upon all or any of company's assets (both present and future) including its uncalled capital, if any and issue bonds, hybrid debt, subordinate debt, bills of exchange, promissory notes or other obligation or securities or issue such other instrument of similar nature as it may deem fit for the purpose of company's business and to apply the same or any part thereof for all or any purposes of the Company and to purchase, redeem or pay of any such security/instrument 3. (a) To buy acquire, sell, dispose of, exchange, convert, underwrite, subscribe, participate, invest in and hold, whether in its own account or on behalf of any person, body corporate, company, society firm or association of persons, whether incorporated or not, shares, stock, debentures, debentu....
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....Interest Act, 2002 and guidelines issued by RBI in this regard from time to time, and to facilitate easy transferability of financial assets by issue of debentures, bonds or any other security in nature of debenture and to raise funds by issue of security receipts to qualified institutional buyers and to act as an enforcement agent and or manager for any Bank or Financial Institutions for the purpose of recovery of the dues from the borrower on fee basis and as receiver if appointed by the Court or tribunal and to issue "security receipts" to qualified institutional buyers pursuant to a scheme, evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in the securitization. (b) To carry out asset reconstruction as per the guidelines framed by RBI by change in takeover of the management of business of the borrower, the sale or lease of part of business, rescheduling the debts of the borrower, enforcement of the security as per Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, settlement of the dues of the borrower and taking possession of the asse....
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....rms of regulation issued by Insurance Regulatory & Development Authority or any other such authority constituted under the law for purpose from time to time and to carry on the business as Insurance Advisers, Pension Advisers, Consultants, Assessors, Values and Surveyors." 4.6 It is settled principle in law that the business of the appellant cannot be bifurcated into various limbs for computation of business income. From the above Memorandum of Association it is quite evident that "accepting deposit" is only one of the limbs of the entire gamut of business activities undertaken by the appellant. It may prima facie appear to be without any consideration as has been submitted by the appellant. It is the submission of the appellant that the act of accepting the deposits is without any "consideration" and hence cannot be termed as "service". M/s SIFCL accepts the deposits made by the depositors in various schemes launched by them. They use the deposits to fund their activities in business during the period amounts are held by them. The depositors in turn allow/ permit M/s SIFCL to utilize their deposits for the purpose of business activities of the M/s SIFCL. The permission for use ....
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....3 in this case it was held, that consideration is "some right, interest, profit or benefit accruing to one party or forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other". 4.7 Having recorded the meaning of "consideration" as above we also place on record the fact that in respect of business and commerce, every act is for gain and there is no place for free lunches in the scheme of Business and Commerce. There ain't no such thing as a free lunch (TANSTAAFL) is a phrase that describes the cost of decision-making and consumption. In economics, TANSTAAFL describes the concept of opportunity costs, which states that for every choice made, there is an alternative not chosen which would also have produced some utility. Decision-making requires trade-offs and assumes that there are no real free offerings. In the case of Curie Vs Misa referred above this principle has been applied. The consideration as such can be in form monetary transaction or otherwise. 4.8 Hon'ble Supreme Court has in case of Indian Bank Ltd. [1965 AIR 1473 SC] held as follows: Therefore, it seems to us that there is nothing in the language of S. 10 from which it ....
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....out of it with some (1) 21 T C 472 apportioned expenses appropriated to it as though it were a trade by itself." Mr. Sastri urges that the authority of the above decision has been shaken in Mitchell and Edon (H. M. Inspectors of Taxes) v. Ross (40 T.C. II), but we are unable to accept this contention. The, point ,urged in this case was that the authority of Fry v. Salisbury House Estate ([1930] A.C. 432) had been qualified by the decision in Hughes v. Bank of New Zealand (21 T.C. 472), but this was negatived. A number of Indian cases have been cited before us and we will now proceed to examine them. The Madras High Court's decision in Commissioner of Income 'Tax v. Somasundaran Chettiar (A.I.R. 1928 Mad. 487) does not assist Mr. Sastri. The carried on business at Madras, where his head office was, and Ipoh, a place in the Federated Malay. Money was borrowed ,at Madras and part of it sent to Ipoh where it was used as capital in the conduct of Ipoh business. The High Court held that interest ,on the part of the borrowed money used at lpoh was rightly disallowed as a deduction because the business which was being taxed was the business at Madras and ....
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....on in respect of his income up to a certain amount or certain kinds, similar to the exemptions conferred on certain classes of income by the provisos to Secs. 8 and 9 of the Burma Act." Then he noted the difference between the wording of s. 10 (2) (ix) of the Burma Act and the corresponding clause in the English Act. But we are unable to appreciate that these differences necessitate the rejection of the principle laid down in Hughes v. The Bank of New Zealand (21 T.C 472). It is true that under the Indian Income Tax Act it is income that is taxed but it is not taxed in vacuo. It is taxed in the hands of a person. In England, the interest of tax-free securities was exempted much in the same way as in India. It did not matter there who held them. Hughes v. The Bank of New Zealand (21 T.C 472) cannot be distinguished on the grounds mentioned by the Rangoon High Court. In our judgment Chellapa Chettiar v. C.I.T. Madras ((1937) 5 I.T.R. 97.) was correctly decided. The decision of this Court in indore Malwa United )Wills v. C.I.T. (Central) Bombay ([1962] Supp. 3 S.C.R. 310) is distinguishable. It appears to us that it was because s. 14 (2) (c) and s. 4(1)(a) and (c) existed at the relev....
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....31588992 3138424648 3304569564 Loan funds Liability Towards Depositors 3 88035557912 115372586226 155612020135 181076117145 Deferred Tax Liability 259730754 334541833 385731258 344270887 Total 95108977260 122569017051 163066476041 188705257596 APPLICATION OF FUNDS Fixed Assets Gross Block 4 4491944298 6277573468 6339358032 6205280536 Depreciation -984658566 -1220748980 -1481823472 -1596270028 Net Block 3507285732 5056824488 4857534560 4609010508 Capital Work In Progress 66043821 45762910 20863774 23742871 Investments 5 78764478548 106482448687 136837877678 149117032547 Current Assets Loans & Advances Inventories 36295834 Sundry debtors 6 2233193327 1308925760 1905277001 1003051703 Cash, Bank....
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.... Rental Income 815736235 882044915 1145979356 1062143231 Income from joint venture 7917701 8537807 671168 0 Income from sale of Securities 1010214949 1113803104 404405441 140106027 Profit on sale of Assets 0 0 19835399 1510541 Other Income 13 197685804 108968890 162897139 135363223 TOTAL 9851513803 9389535803 10981173470 12897431215 EXPENDITURE Operational & Other Expenses 14 3333310729 2899277022 3725676106 5301330585 Interest 15 5453170525 5728037917 6245763435 6548939672 Depreciation 198600873 229984844 273986802 258188283 Provisions, depreciation & Write off 16 213852490 99592118 215514577 575206838 TOTAL 9198934617 8956891901 10460940920 12683665378 Net Profit before Tax etc. 652579186 432643902 520232550 213765837 Current....
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....37313 Total 5453170525 5728037917 6245763435 6548939672 4.10 From the perusal of the balance sheet and profit and loss account of the appellant it is quite evident that main input for all the activities undertaken by M/s SIFCL is deposits received by them under various schemes. The profits made by M/s SIFCL are used to project the financial health of the company to the depositors and printed on the Forms for making deposit to gain the confidence of the depositors. One such form is reproduced below: 4.11 In case of deposits or investments made by the depositors with the appellant, the opportunity cost of investing in some other scheme of similar type is lost. The consideration for the depositor is the risk associated with the investment/ deposit made. Deposit made in one of the schemes floated by M/s SIFCL, is the foregone opportunity to invest in an alternative, riskier or less risky investment. As an investor moves higher on the risk spectrum, the phrase TANSTAAFL becomes even more relevant as investors provide capital with hopes of achieving larger gains than what less-riskier deposits/ investments may mean. From the balance sheet and profit and los....
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....eration for such service is exempted. 47.3 In para 32, Section 65B(44) definition of 'service' has been extracted. It clearly shows that for an activity to be considered as a service, the said activity should be performed for a consideration. The word 'consideration' as used in the said section refers to the consideration by the service recipient of the service provided. Thus consideration is paid by recipient to the service provider. In the present case the deposits are being made by various depositors with the financial institutions/banks. Banks need these deposits for the purpose of conducting their business and in turn for receiving deposits, paid certain amounts as interest to the depositors. Thus banks are not receiving any consideration for deposits taken by them from the depositors. Even otherwise the DICGC Act provides for protection of the interest of the depositors and not the bank in case the bank goes worst. In absence of any consideration from the depositors to the bank for the activity of accepting deposits, the same cannot be considered as a service in terms of Section 65 B (44)." However the above has not been agreed to by the larger bench of Tr....
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....stment by the banks. Thus, the main activity of a banking company is to mobilise the resources received by the banks in the form of deposits from the public for the purpose of lending or investment. These deposits, thus generate returns for the banks. A part of the returns is given by the banks to the depositors as a consideration, which consideration is normally in the form of interest. 45. What also needs to be noticed is that the lending and investment portfolio of banks are required to be funded by deposits and the funds of the shareholders. The Credit Deposit ratio is the percentage of how much the banks lend out of the deposits they have mobilised and also indicates how much of the core funds of the banks are being utilised for lending. A higher ratio indicates more reliance on deposits for lending. In such circumstances, the raising of deposits is an important function of the banks. In other words, the acceptance of deposits is not only a pre-requisite for lending but is also necessary for the banks since the entire activity undertaken by the bank begins with the acceptance of deposits, without which the subsequent activities of lending or investment cannot be under....
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....t "accepting" of deposits is covered under Section 66D(n) of the Finance Act. 64. This view has been taken by the Tribunal in State Bank of Bikaner. However, in ICICI Bank a contrary view was taken. For "all the reasons stated above, it is not possible to accept the view taken by the Division Bench of the Tribunal in ICICI Bank." Thus in view of the above decision of the larger bench we are not in position to agree with the submissions made by the appellant in this regard. 4.13 The circular of 2003 was not quashed by the Hon'ble Andhra Pradesh High Court in case of Karvy Securities Ltd. [2006 (2) STR 481 (AP)] as argued by the appellant, holding that circular clarified contrary to legal provisions but has been quashed for the reason that Board was not having jurisdiction to interfere in the matters which need to be decided by the authorities in adequate proceedings. Hon'ble High Court has held as follows: "6. From bare perusal of the circular it would be emphatically known that the respondents raised two specific questions. First question is, Whether the commission received by distributors on mutual fund distribution as liable to Service Tax un....
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.... the Government had issued Notification No. 13 of 2003-S.T. whereby it exempted the 'Business Auxiliary Services provided by a commission agent' from the Service Tax leviable thereon under sub- section (2) of Section 66 of the Finance Act, 1994. Thereafter, Circular dated 5-11-2003 was issued in which it is stated that having regard to some doubts that had arisen regarding application of Service Tax on the activity of mutual fund distribution, it was clarified that the commission received by distributors on mutual fund distribution would be liable to Service Tax as it would not fall within the expression 'Business Auxiliary Services'. This circular dated 5-11-2003 has been set aside by the High Court in the impugned judgment on the ground that it amounts to foreclosing discretion or judgment that may be exercised by the quasi-judicial authority while deciding a particular lies under particular circumstances. The High Court referred to the proviso to Section 37B of the Central Excise Act, 1944, which categorically states that such kind of circulars cannot be issued. We, thus, do not find any error in the impugned judgment. This appeal is accordingly dismissed." Thus by quashing t....
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....9;94 and after 10.9.04 does not allege the noticee of providing services in sub clause (iv) and (v) of the Clause 19 of Section 65 of the FA'94. Therefore noticee's contention in their defence reply needs no further discussion. Regarding noticee's contention that since they are not providing services under subclause (i), (ii) and (iii) of "Business Auxiliary Services", as it existed upto 9.9.04, the provisions of sub-clause (iv) and later sub-clause (vii) is not applicable in their case, it is seen from the definition of BAS during 01.07.03 to 09.09.04 that Sub clause-(iv) is independent of sub clause (i), (ii) and (iii). There is nothing in the Section to suggest that the definition of "BAS" is to be interpreted the way as made by the noticee. The use of the word "or" at the end of each sub-clause is more than sufficient to understand as to how the definition is to be interpreted. On perusal of the Sub clause (iv) of the definition it is clear that "Business Auxiliary Services" includes any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation ....
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....is not providing any taxable service, accordingly noticee would not be covered under "BAS" The noticee has also pleaded that their activities promote business of the clients but the services are not rendered to the client, therefore, they do not come under purview of "BAS". The provision of service by noticee on behalf of M/S SIFCL in the nature of deployment of manpower and paraphernalia in implementing the scheme devised by M/s SIFCL is evident. Therefore, noticee has provided services falling under Sub clause (vi) of the definition of BAS (Auxiliary and Support Service) incidental service. The plea advanced by the noticee in this regard that there is no provision of service is not correct and hence unacceptable. 22. On perusal of MOU effective from 01.04.01 and 20.09.2003 entered between the Noticee and M/S SIFCL, it is observed that the Noticee is having well equipped infrastructure facilities, having more than 1500 offices with the required manpower at various places and in different part of the country. The staff and officers of the Noticee have sufficient expertise for running business of savings and finance by deploying their field staff and field force li....
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....ors under various scheme of SIFCL, accountal of the money received and the payments on maturity for M/S SIFCL. In the facts of the case there is no doubt about the provision of service by the noticee to M/S SIFCL which are taxable under the provisions of Service Tax and they fall within the BAS. It can therefore be concluded that the noticee are service provider and M/S SIFCL are service receiver and the relationship between the two is that of service provider and client. 22.1 On careful examination of the memorandum of undertaking between the partners it is seen that the noticee is an agent of M/S SIFCL in every reasonable way including the provision of the services as agent rendered under agreement for which the commission is paid to them. It is not in dispute that M/S SIFCL shall pay the noticee towards expenses incurred in running of its office, branches and noticee is rendering all services as agent. The agreement which is a part of MOU, elaborate the system of working and covers different aspects of the functioning by the noticee. The nature of services provided by the noticee have also been mentioned in the said agreement which states collection of requisite amount ....
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....nt in the instant case. In the present case, SIFCL (entity) have employed noticee (professional) for supporting in their "para banking operations" service relating to collection of money from the investors, preparing bills, collecting them and accounting the same etc., which otherwise would have carried by the SIFCL and the noticee is paid commission on such services, thus establishing service provider - client relationship with the SIFCL. The said activity, carried out by the noticee, is that of "Service Provider" and the "Service Receiver is SIFCL. The Service Tax is, therefore leviable as per law. In the net analysis I find that w.e.f. 10.09.2004 the provision of service on behalf of the client is covered under "Business Auxiliary Services". I, therefore, hold that during 10.09.2004 to 31.07.2006 there was provision of "Business Auxiliary Services" by the noticee was liable to service tax as per the provision of Service Tax law." 4.15 From the perusal of the definition as per Section 65 (19), for the period prior to its amendment with effect from 10.09.2004, it is evident that (iv) is an independent entry and is not linked with any of the entries at (i), (ii....
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....entering in to franchise agreement with bottlers permitting use of brand name by bottlers promotion of brand name, etc. the expression will have to be seen in that context See (i) Pepsi Foods Ltd. v. Collector - 1996 (82) E.L.T. 33, (ii) Pepsi Foods Ltd. v. Collector - 2003 (158) E.L.T. 552 (S.C.). The Hon'ble Supreme Court in State of Karnataka v. Shreyas Paper Pvt. Ltd. 2006 SCC affirmed the view taken by the Hon'ble Karnataka High Court reported at 2001 (121) STC 738, which, inter alia, held as under : Business comprises of the regular and systematic activity with an object of earning of profits. The machinery, plant, building and the land over which they have erected or constructed are only the tools of such business. Assets and liabilities including goodwill are the necessary ingredients to constitute a business, besides the stocks and other movable and immovable items connected with the said business. In Mazgaon Dock Ltd. v. Commissioner of Income tax and Excess Profits Tax - AIR 1958 SC 861 the Hon'ble Supreme Court held as follows : 14. The word "business" is, as has often been said, one of the wide import and in fiscal statutes, it must ....
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.... Revenue that the expression "such as" in Rule 2(l) of 2004 Rules is restricted to the categories specified therein, runs counter to the C.B.E.C. Circular No. 97, dated 23^rd August, 2007. In that Circular the C.B.E.C. (vide para 8.3) has held that the credit of service tax paid in respect of mobile phone service is admissible provided the mobile phone is used for providing output service or used in or in relation to manufacture of finished goods. Mobile phone service is neither used in the manufacture of final product nor it is specifically included in the definition of input service. Even then, the C.B.E.C. has construed the definition of input service widely so as to cover not only the services specifically enumerated in the definition of 'input service' but also cover all services which are used in relation to the business of manufacturing the final products. Therefore, the argument of the revenue which runs counter to stand taken by the C.B.E.C. cannot be accepted. 37. In the case of Coca Cola India Pvt. Ltd. (supra) a Division Bench of this Court has considered scope of the expression "input service" as defined in Rule 2(l) of 2004 Rules. In that case, the question f....
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....and telecom facilities, pantry and security;'; As they are covered by the definition as introduced by the Finance Act, 2006 they took the registration under this category and started paying service tax under this category. It is the submission of the appellant thus that they are providing support services to the business of M/s SIFCL and hence they are not covered by the scope of any clause Section 65 (19). They rely on the following decisions of to buttress their arguments: • Indian national Ship-owners Association [2009 (14) STR 289 (Bom)] • CBRE South Asia Pvt Ltd [2020-TIOL-197-CESTAT- Del • CBRE South Asia Pvt Ltd [2021-TIOL-06-SC-ST-LB] • Malviya National Institute of Technology [2019 (6) TMI 127-CESTAT New Delhi] • Global Coal & Mining Pvt Ltd [2020 (36) GSTL 77 (T-Del)] • Capital Transport Convoy Contractor [2016 (2) TMI 546 CESTAT New Delhi] 4.17 These decisions do not support the case of appellant as in all the cases the court/ tribunal concluded that the services provided were not classifiable under the earlier entry and became taxable only after introduction of new entry. In the pres....
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....he term "Service". It merely describes the expression "Taxable Service". As far as the matter in hand is concerned the liability of the appellants is said to be in terms of Section 65(19)(ii) read with Section 65(105)(zzb) of the said Act. 62. Section 65(19) of the said Act defines the "Business Auxiliary Services" and under clause (ii) thereof it provides that Business Auxiliary Service means, any service in relation to promotion or marketing of service provided by the client. Section 65(105)(zzb) defines the "Taxable Service" means, any service provided or to be provided to a client by any person in relation to Business Auxiliary Service. In fact, the expression "any person" was substituted for the earlier expression "a commercial concern" since 18th April, 2006, consequent to the amendment to Finance Act. 63. Perusal of the above provisions of law, therefore, would disclose that a person can be said to have rendered Business Auxiliary Service in terms of the provisions of law in force, on being established that he has rendered service in relation to either promotion or marketing of some service provided by the client. The fact, that the service provider has ren....
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....167) E.L.T. 3, Fakir Chand Gulati v. Uppal Agencies Private Limited reported in 2008 (12) S.T.R. 401, Home Solutions Retail India Limited v. Union of India reported in 2009 (14) S.T.R. 433 = 2009 (237) E.L.T. 209 58 Service Tax Appeal No.979 of 2009 (Del.), Association of Leasing & Financial Service Companies (supra), All India Federation of Tax Practitioners v. Union of India reported in 2007-TIOL-149- SC-ST = 2007 (7) S.T.R. 625 (S.C.), Bharat Sanchar Nigam (supra) and Gannon Dunkerley's case. 78. In Tamilnadu Kalyana Mandapam Association case, the Apex Court while dealing with the issue as to whether the High Court was correct in coming to the conclusion that the provisions in the Finance Act, 1994 imposing Service tax on the services rendered by the Mandap Keeper were intra virus of the Constitution of India or not. After going through the scheme of the said Act and various judgements relevant for the decision in the matter, it was observed that the Mandap Keeper provide a wide variety of services apart from the service of allowing temporary occupation of mandap. Apart from proper maintenance of the mandap, they were providing the necessary paraphernalia for holding fu....
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....isions of the said Act as well as taking into consideration the various reported decisions including Kalyan Mandapam Association case held that the Supreme Court in Kalyan Mandapam case had held that the service of a Mandap Keeper does not involve transfer of movable property nor does it involve a transfer of any immovable property of any kind known to law either under the Transfer of Property Act or otherwise and therefore, the said activity could be only classified as a service. It was further held that the observation of the Supreme Court in Kalyan Mandapal case that the utilization of the premises as a mandap by itself would constitute a service was required to be distinguished from the kind of activity that is contemplated under Section 65(105)(zzzz) of the said Act. The case of a mandap and service provided by Mandap Keeper would not be applicable to a case of renting of immovable property simplicitor. It was further held that the Service tax is a value added tax. It is a tax on value addition provided by a service provider. It is, therefore, obvious that it must have connection with a service and there must be some value addition by that service. If there is no value additio....
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....ving not less than 60% of their total income from such activities can be classified as higher purchase/equipment leasing companies. The Apex Court further observed that the significance of the said circulars and guidelines is to show that the activities undertaken by non-banking financial companies of equipment leasing and hire-purchase finance are facilities extended by non- banking financial companies to their customers. They are financial services rendered by such non-banking financial companies to their customers and they fall within the meaning of the words banking and other financial services which were sought to be brought within the Service tax net under Section 66 of the said Act. Referring to the Sale of Goods Act and commentary of the said statute by Mulla, the Apex Court specifically observed that : "a common method of selling goods is by means of an agreement commonly known as a hire-purchase agreement which is more aptly described as a hiring agreement coupled with an option or purchase, i.e. To say that the owner lets out the chattel on higher and undertakes to sell it to the hirer on his making certain number of payments. If that is the real effect of the a....
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....very tax may be levied on an object or on the event of taxation. Service tax is, thus, a tax on activity whereas sales tax is a tax on sale of a thing or goods". Having held so, it was also ruled that : "A contract of sale is different from an agreement to sell and unlike other contracts, operates by itself and without delivery to transfer the property in the goods sold. The word "sale" connotes both a contract and a conveyance or transfer of property. The law relating to building contracts was well known when Gannon Dunkerlay's case was decided and under that law the supply of goods as part of the works contract was not a sale. Thus, the essential ingredients of the "sale" are agreement to sell movables for a price and property passing therein pursuant to an agreement". 83. Referring to the facts of the case of Association of Leasing & Financial Service Companies, the Apex Court held that: "the impugned levy relates to or is with respect to the particular topic of "banking and other financial services" which includes within it one of the several enumerated services, viz, financial leasing services. These include long time financing by banks and ....
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....elephone exchange was not goods but immovable property as contended by some of the petitioners". It was further held that "a telephone service is nothing but a service. There is no sale element apart from obvious one relating to the hand set if any. That and any other accessory supplied by the service provider in our opinion remain to be taxed under the State Sales Tax Laws". It was also held that the nature of the transaction involved in providing the telephone connection may be a composite contract of service and sale. It is possible for the State to tax the sale element provided there is a discernible sale and only to the extent relatable to such sale. 85. In Gannon Dunkerley case it was held that if there is an instrument of contract which may be composite in form in any case other than the exceptions in Article 366(29A), unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service and impose the tax on sale. However, the said finding was preceded by the reasoning that "we are concerned herewith a building contract....
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.... or the developed properties or the constructed project by Sahara Corporation. It does not relate to any service rendered by Sahara Corporation to others in relation to the sale of such properties or projects." 4.20 From the observations made in the said decision it is quite evident that the issue under consideration of the tribunal in this case was making distinction between sale and service. Tribunal has in the above decision nowhere concluded that the service rendered by the service recipient should have been taxable service. Similarly we do not find any such finding recorded by the tribunal in the case of Steria also. Therefore the submissions made by the appellant on the basis of these decisions cannot be accepted. We have referred to the memorandum of understanding, balance sheet and other documents in the earlier part of our order, and have concluded that the client of appellant was engaged in the business of providing services to his clients. 4.21 Appellant has relied upon the decision of Federal Bank Limited [2008 (10) STR 320 (T-Bang)] and the decision in case of Atlas Documentary Facilitators Company (P) Ltd [2017 (50) STR 22 (T-Mum)] to argue that for the purpose ....
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....s been held: 18. It is well accepted that a statute must be construed according to the intention of the Legislature and the Courts should act upon the true intention of the legislation while applying law and while interpreting law. If a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the Legislature. In this connection, the following observations made by this Court in District Mining Officer v. Tata Iron and Steel Co., (2001) 7 SCC 358, may be noticed : "... A statute is an edict of the Legislature and in construing a statute, it is necessary, to seek the intention of its maker. A statute has to be construed according to the intent of them that make it and the duty of the Court is to act upon the true intention of the Legislature. If a statutory provision is open to more than one interpretation the Court has to choose that interpretation which represents the true intention of the Legislature. This task very often raises the difficulties because of various reasons, inasmuch as the words used may not be scientific symbols having any precise or definite meaning and the language may be ....
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....is to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose [Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355]. Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. 21. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocent might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution [265. Taxes not to be....
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....e interpretation; interpretatio restrictive. See strict constructionism under constructionism. Cf. large interpretation; liberal interpretation (2). "Strict construction of a statute is that which refuses to expand the law by implications or equitable considerations, but confines its operation to cases which are clearly within the letter of the statute, as well as within its spirit or reason, not so as to defeat the manifest purpose of the legislature, but so as to resolve all reasonable doubts against the applicability of the statute to the particular case.' Wiliam M. Lile et al., Brief Making and the use of Law Books 343 (Roger W. Cooley & Charles Lesly Ames eds., 3d ed. 1914). "Strict interpretation is an equivocal expression, for it means either literal or narrow. When a provision is ambiguous, one of its meaning may be wider than the other, and the strict (i.e., narrow) sense is not necessarily the strict (i.e., literal) sense." John Salmond, Jurisprudence 171 n. (t) (Glanville L. Williams ed., 10th ed. 1947). 24. As contended by Ms. Pinky Anand, Learned Additional Solicitor General, the principle of literal interpretation and the principle ....
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....rd must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute. 26. Justice G.P. Singh, in his treatise 'Principles of Statutory Interpretation' (14th ed. 2016 p.-879) after referring to Re, Micklethwait, (1885) 11 Ex 452; Partington v. A.G., (1869) LR 4 HL 100; Rajasthan Rajya Sahakari Spinning & Ginning Mills Federation Ltd. v. Deputy CIT, Jaipur, (2014) 11 SCC 672, State Bank of Travancore v. Commissioner of Income Tax, (1986) 2 SCC 11 and Cape Brandy Syndicate v. IRC, (1921) 1 KB 64, summed up the law in the following manner - "A taxing statute is to be strictly construed. The well- established rule in the familiar words of LORD WENSLEYDALE, reaffirmed by LORD HALSBURY AND LORD SIMONDS, means : 'The subject is not to be taxed without clear words for that purpose : and also that every....
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....ting in clarity that no meaning is reasonably clear, the Courts will be unable to regard it as of any effect [IRC v. Ross and Coutler, (1948) 1 All ER 616]." Further elaborating on this aspect, the Learned author stated as follows : "Therefore, if the words used are ambiguous and reasonable open to two interpretations benefit of interpretation is given to the subject [Express Mill v. Municipal Committee, Wardha, AIR 1958 SC 341]. If the Legislature fails to express itself clearly and the taxpayer escapes by not being brought within the letter of the law, no question of unjustness as such arises [CIT v. Jalgaon Electric Supply Co., AIR 1960 SC 1182]. But equitable considerations are not relevant in construing a taxing statute, [CIT, W.B. v. Central India Industries, AIR 1972 SC 397], and similarly logic or reason cannot be of much avail in interpreting a taxing statute [Azam Jha v. Expenditure Tax Officer, Hyderabad, AIR 1972 SC 2319]. It is well-settled that in the field of taxation, hardship or equity has no role to play in determining eligibility to tax and it is for the Legislature to determine the same [Kapil Mohan v. Commr. of Income Tax, Delhi, AIR 1999 SC 5....
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.... the service provided by the appellant squarely falls within the ambit of Clause (iii) of Section 65(19) of Finance Act, 1994, which reads as under : (iii) any customer care service provided on behalf of the client. 11. For the period after 1-7-2012, the service provided by the appellant fall within the definition of 'service' as under Section 65(b)(44) of the Finance Act, 1994 w.e.f. 1- 7-2012, which reads as follows : ....... 12. The reliance placed on Section 99 of the Finance Act, 2013 by the appellant in this appeal, at this stage, is of no relevance as it applies only to taxable service provided by the Indian Railways. The service provided by the appellant to the Railways cannot be construed as the service provided by the Railways. What is provided by the appellant is the service of supply of bed rolls alone for the passengers travelling in AC compartments. Therefore, the appellant cannot claim any exemption in terms of the aforesaid provisions of the Finance Act, 2013. That apart, while claiming exemption, the Hon'ble Supreme Court in Union of India v. Wood Papers Ltd. 1991 taxmann.com 77 (SC) = 1990 (47) E.L.T. 500 (S.C.) has held as unde....
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....ecision of the Privy Council in Cape Brandy Syndicate v. Inland Revenue Commissioner [(1921) 1KB 64] wherein it is held as follows : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only took fairly at the language used." 15. This view has also been followed by the Hon'ble Supreme Court repeatedly in several cases dealing with taxing enactment. Therefore, we are not inclined to interfere with the order passed by the Central Excise Service Tax Appellate Tribunal. Accordingly, these Civil Miscellaneous Appeals are dismissed. We, however, give liberty to the appellant to work out their remedy in terms of Section 64A of the Sale of Goods Act, 1930." 4.24 Thus in view of the discussions as above we hold that the services provided by the Appellant to M/s SIFCL were correctly classifiable under the taxable category of Business Auxiliary Service as defined by Section 65 (19) and amended from time to time during the relevant period. 4.25 On the issue of reimbursable expenses, adjudicating a....
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....nts and evidence in respect of these expenses. We are inclined to accept the submissions made by the appellant relying on the decision of Hon'ble Delhi High Court in the case of Intercontinental Consultants and Technocrats P ltd [2012-TIOL-966-HC-ST-Del] and affirmed by the Hon‟ble Apex Court as reported at [2018 (10) GSTL 401 (SC)], subject to production of documents and evidences in this regard before the adjudicating authority for re-determination of the taxable value. Thus matter to this extent needs to be remanded to the adjudicating authority. 4.26 On the claim of CENVAT Credit, Commissioner has observed as follows: "22.4 Whether CENVAT Credit to the noticee was admissible during the period of demand: It has been pleaded by the noticee that in the case of confirmation of demand in respect of business Auxiliary Services they should be extended benefit of CENVAT service tax paid on input service used in relation to output service provided by them. In this connection, for consideration of the plea of the noticee, it is pertinent to examine the relevant provisions of the CENVAT Credit Rules, 2004. Sub Rule 7 of Rule 4 of the CXENVAT Credit Rule....
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.... they had been providing service to M/s SIFCL in promotion of their work as an agent. They have pleaded that because all the facts had been brought to in the notice of the department about their activities and therefore the extended period therefore the extended period invoked in the show cause notice was not proper. I have perused the referred letter dt 19.07.03 by the noticee. It is addressed to Superintendent, Central Range -II, Lal Imli, Kanpur and signed by Regional Manager of M/s Sahara India located at Kanpur. The question of relying of this letter does not arise even if was in fact sent to some officer in Kanpur in light of Hon'ble High Court's judgment in the case of Commissioner of Customs and Central Excise, Meerut Vs Kushal Fertilizers (P) Ltd [2008 (229) ELT 652 (Uttarakhand)] wherein it has been held that information given to Inspector of range with regard to which he had no jurisdiction in the matter, cannot be said to information to Office of Assistant Collector I.e. the concerned Central Excise Officer. It is seen that the head office of the Noticee was at Bombay and the Noticee itself is located at Lucknow. The Noticee was well in position to wri....
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....ervice tax return. The relevant extract of Section 70 is as under: "Section 70: - Furnishing of returns: a) Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees, for delayed furnishing of return, as may be prescribed. It is evident from the ace records that the noticee had not furnished any return to the Superintendent of Central Excise during the relevant period. 22.2.6 It is evident from the Para 20.2.3 and para 20.2.4 that the noticee did not obtain any registration from the department under the provisions of Section 69 of the Act, ibid, did not furnish any return to the department under the provisions for the provision of Section 70 of the Act, ibid; they did not pay any Service tax. It simply implies that the noticee did not discharge his statutory obligations and liability of payment of service tax under Service tax law. The contention of the noticee that the service Tax was not paid on bonafide belief that ....
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....iod from the Department and the investigating officers of DGCEI. The noticee has relied upon the following decisions of the Hon'ble Tribunal in their defence that penalty is not impossible: In the instant case, the noticee has never approached the department for taking registration and discharging its service tax liability. The noticee by action of omission or failure to make a return under Section 70 for the period 1.7.03 to 31.7.06 to disclose wholly or truly all material facts viz, nature of a service provided by them and the gross amount of pay out/ commission received by them, necessary for their assessment for the sad period, the value of taxable service had escaped assessment. The noticee did so with intent to evade payment of service tax. Thus Noticee has rendered themselves liable to penal action under Section 76, 77 and 78 of FA' 94". 4.28 The sole reliance for arguing against invocation of the extended period of limitation by the appellant in the present case is on the letter dated 19.07.2003 2hich the some regional office of the appellant has written to some unconcerned range officer. The Commissioner has rightly stated that nothing was communicated....
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....led product would amount to manufacture. This decision was rendered after considering the decision of Hon. Supreme Court in Steel Strips Ltd. - 1995 (77) E.L.T. 248 (S.C.), which was rendered prior to the enactment of the said Chapter Note 4 which had the effect of including the process of hardening or tempering in relation to flat-rolled products in the definition of 'manufacture'. The subsequent decision in Lalit Engineering Works v. CCE, Ahmedabad could not have taken a view contrary to the earlier binding decision in Indian Strips v. CCE, Aurangabad (supra) is required to be followed in a subsequent decision of the Division Bench. The assessee M/s. Gujarat Industries removed the goods without any cover of excise invoices and the other assessees received the cold-worked goods without cover of such excise invoices." 4.29 In the case of L.R. Brothers Indo Flora Ltd [2020 (373) E.L.T. 721 (S.C.)] Hon‟ble Supreme Court has held as follows: "34. In the fact situation of the present case, the appellant was issued a show cause notice mentioning that it had suppressed the DTA sales of cut flowers to evade payment of duty. Had the appellant in good faith believed that n....
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....ture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years." 4.31 In case of Bombay Dyeing & Mfg Co Pvt Ltd [1999 (113) ELT 331 (T)] following has been held: "9. Where this situation prevails, the assessee who is in the knowledge that the inputs so received are less than those shown in the covering documents, it is for him to voluntarily take the less credit. Where the assessee is in such knowledge and where the department have no knowledge of the situation, the department can allege suppression of facts. Weighment sheets are not the documents prescribed in the legislature. The assessee was working under the self removal procedure and therefore, there is no reason or cause for the jurisdictional officer to know about the existence of the weighment sheets and the shortages in the weighment of inputs that they indicated. In thi....
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....n squarely applies to the facts of the present case. Since the copy of the agreement and relevant information were provided to the department only in 2011 the show cause notice issued in April, 2011 is clearly within the period of limitation and therefore, the demands confirmed as above for the period on or after 18-4-2006 cannot be said to be time-barred at all." 4.34 In case of Usha Rectifier Corpn (I) Ltd [2011 (263) E.L.T. 655 (S.C.)] where appellant had failed to take registration and discharge the duty liablity, Hon‟ble Supreme Court has held as follows: "12. Submission was also made regarding use of the extended period limitation contending inter alia that such extended period of limitation could not have been used by the respondent. The aforesaid contention is also found to be without any merit as the appellant has not obtained L-4 licence nor they had disclosed the fact of manufacturing of the aforesaid goods to the department. The aforesaid knowledge of manufacture came to be acquired by the department only subsequently and in view of non- disclosure of such information by the appellant and suppression of relevant facts, the extended period of limitation....
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....g value of taxable service : [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 mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. the person, liable, to pay such service tax or erroneous refund, as determined under sub-section (2) of Section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon; if any, payable by him, which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded] [Provided that where such service tax as determined under sub-section (2) of Section 73, and the interest payable thereon under Section 75 is paid within thirty days from the date of communication of order of the [Central Excise Officer] determining such service tax, the amount of penalty liable to be paid by such person under this section s....
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....nly a case of fraud, collusion etc. is made out but it is also established that the defaulter did not pay or short-paid or got refund of the tax paid with intent to evade the payment of service tax. In such a case, the person who is liable to pay such service tax or is erroneously refunded the tax can be levied the penalty which shall not be less than the amount of service tax evaded/refunded subject to maximum of the twice the said amount of the non-levy/non-payment/short-levied/ short- payment/erroneous refund. However, in case the service tax as determined under Section 72(2) of the Act is paid along with the interest payable under Section 75, within 30 days from the date of communication of the order, this penalty is to be reduced to 25% of the service tax so determined. 15. By their very nature, Sections 76 and 78 of the Act operate in two different fields. In the case of Assistant Commissioner of Central Excise v. Krishna Poduval - (2005) 199 CTR 58 = 2006 (1) S.T.R. 185 (Ker.) the Kerala High Court has categorically held that instances of imposition of penalty under Section 76 and 78 of the Act are distinct and separate under two provisions and even if the offences ....
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....able as rightly held by Kerala High Court in Krishna Poduval (supra), the appellant cannot contend that once penalty is imposed under Section 78, there should not have been any penalty under Section 76 of the Finance Act. 18. We, thus, answer question no. 3 against the assessee and in favour of the Revenue holding that the aforesaid amendment to Section 78 by Finance Act, 2008 shall operate prospectively. 19. Coming to questions Nos. 1 & 2, the case of the appellant is that having regard to the provisions of Section 80, there was no reason to impose the penalty under Section 76 and 78 of the Finance Act. Section 80 is couched in the following language :- "80. Penalty not to be imposed in certain cases: Notwithstanding anything contained in the provisions of Section 76 {Section 77 or Section 78}, no penalty shall be imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure." 20. The facts narrated above, clearly disclose, and there is no dispute about the same, that there was failure on the part of the appellant to pay full service tax. I....
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....d or erroneously refunded by reasons of fraud, collusion or any wilful mis- statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub- section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined : [Provided that where such duty as determined under sub- section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty so determined : Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso : Provided also that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, the....
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....d be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC. 19. From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the....
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..... It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. "27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered.........". 21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows: ....
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....ntumacious conduct but for the contravention of the provisions of statute and hence cannot be faulted. In case of Gujarat Travancore Agency [1989 (42) E.L.T. 350 (S.C.)] Hon‟ble Supreme Court has held as follow: "4. Learned Counsel for the assessee has addressed an exhaustive argument before us on the question whether a penalty imposed under Section 271(1)(a) of the Act involves the element of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in order to demonstrate that the proceedings by way of penalty under Section 271(1)(a) of the Act are quasi criminal in nature and that, therefore, the element of mens rea is a mandatory requirement before a penalty can be imposed under Section 271(1)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal. It is sufficient for us to refer to Section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total ....
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....se of N & N Chopra Consultants Pvt. Ltd [2019 (24) G.S.T.L. 550 (Del.)] has upheld the penalties imposed simultaneously under Section 76 and Section 78, for the period prior to amendments made in Section 78 in 2008, observing as follows: "4. The facts of this case, in the opinion of this court, notes that the assessee was aware about its service tax liability; despite this knowledge, it filed its returns claiming that no liabilities were attracted. When it smelt investigation and adverse orders, it apparently approached the service tax authorities and deposited the amounts which they were admittedly liable to pay. Such being the case of foreknowledge, in the opinion of the court, itself is an important factor that ought to have been and was taken into account by the lower revenue authorities. Hence, foreknowledge lead to the imposition of recovery of dues assessed as well as imposition of the penalty under Section 78. The court is of the opinion that the invocation of Section 78 cannot be faulted with having regard to the facts of this case. Depositing the amount due, by the appellant, before issuance of show cause notice per se does not absolve the appellant of its respon....
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....1AB and if the facility is available, on compliance of the same, the party would not be liable to pay interest. Taking into consideration that the tail piece relied upon by learned Counsel is included in the Explanation to particular sub-section (2B), we are unable to accept the interpretation as tried to be attributed by the learned Counsel for one simple reason that an explanation ought to be therefore the purpose of explaining the main provision, it cannot nullify the effect of main provision. If Explanation (2) interprets as attempted by learned Counsel due to the phrase with which it ends "but for this sub-section", the explanation will have to be ignored being in conflict with sub-section (2B), which it explains. However, the meaning of this clause "but for this sub-section" can be enlightened when we refer to Section 11AB (1), we have reproduced two portions of this provision (in parts) in the earlier part of this judgment and for the sake of convenience, now we are quoting entire sub-section (1) of Section 11AB, which reads: "11AB. Interest on delayed payment of duty (1) where any duty of excise has not been levied or paid or has been short levied or short....
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....f service tax is evident from conduct of the noticee. The Noticee did not obtain registration and did not file returns as per the statutory provisions of FA1994 and STR-1994 2. In the facts and circumstances of his case and in view of above foregoing discussions and analysis hold that during the relevant period the Noticee had provided BAS of taxable value Rs.9,18,01,58,795 inclusive of service tax but the service tax payable thereon has not been paid. The liability of Service Tax is to be calculated hereunder in the light of various decisions of the Cour/Tribunal given in GOl Vs. MRF Ltd. 1995(97)ELT 433(SC) and K.R. Choksey and Company vs Commissioner of Central Excise, Mumbai-I 1996 (88) ELT S66. The value of taxable service shall be calculated as under: Assessable value = (Cum duty price - Permissible deductions)/ (1+ R/100). Here in the instant case, the formula will be as under: Assessable Value = Gross amount inclusive of Service Tax/ (1+R/100) Sl. No Period Assessable Value (In Rs. ) Service Tax (ln Rs. ) Ed. Cess (ln Rs...) As per SCN Revised As per SCN Revised As per SCN Revised 1 01.07.03 to 09.09....
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....tion on the account of such expenses matter needs to be remanded back to the original authority. 5.1 Appeal is partly allowed to the extent indicated in para above. Commissioner should recompute the demand and penalties imposable on the appellant after allowing the appellant to produce their claim to reimbursable expenses and allowing the same if admissible. 5.2 Needless to say as the matter is sufficiently old in the remand proceedings Commissioner should finalize the issue with regards to determination of duties and penalties as per para 5.1 within a period of three months from the date of receipt of this order. (Pronounced in open court on 29 January, 2024) ============= Document 1 13 14 15 16 7. आवेदन-पतà¥à¤° • बोनस : 6.75% • नया • चिलà¥à¤¡à¥à¤°à¥‡à¤¨ वेलफेयर पà¥à¤²à¤¾à¤¨ HANK-4 73 अहारा सà¥à¤ªà¤° 5. सहारा सहारा इणà¥à¤¡à¤....
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.... मारà¥à¤—ाला अपे (f) 2. नई दिलà¥à¤²à¥€ TWATE निदेशक दà¥à¤µà¤¾à¤°à¤¾ (*) . à¤à¤¨ (क) कारà¥à¤¯à¤• () . निदेशक कारà¥à¤¯à¤• (ग) शà¥à¤°à¥€ जय • विदेश कारà¥à¤¯à¤• (क) (ल) frice mere . ferme (क) fretre 6. लाठका का à¤à¥à¤—तार के साà¤à¤¾ वितà¥à¤¤à¥€à¤¯ सà¥à¤¥à¤¿à¤¤à¤¿ देर (टिल) "पà¥à¤°à¤¾à¤°à¤•à¥à¤·à¤¿à¤¤ à¤à¤µà¤‚ अधिशेष सà¥à¤°à¤•à¥à¤·à¤¿à¤¤ ऋण Semifin डिफरà¥à¤¡ टैकà¥à¤¸ लाईट 31 and 200....
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.... है। 10 अनकà¥à¤²à¥‡à¤®à¥à¤¡ जमा धनराशि नहीं 11.1987 के कम है। (ख) दायश के अनà¥à¤ªà¤¾à¤²à¤¨ का तातà¥à¤ªà¤°à¥à¤¯ यह नहीं है कि जमा धनराशि की वापसी à¤à¤¾à¤°à¤¤à¥€à¤¯ रिजरà¥à¤µ बैंक दà¥à¤µà¤¾à¤°à¤¾ पà¥à¤°à¤¤à¥à¤¯à¤¾à¤à¥‚त है। (१) दà¥à¤µà¤¾à¤°à¤¾ (घ) मा धन की सà¥à¤µà¥€à¤•à¥ƒà¤¤à¤¿ à¤à¤µà¤‚ है। 12) हमारे (39.00% और/अथवा पैक के रूप में होगी 24 कà¥....
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....¤°à¥‹à¤•à¤¾à¤° अथक को पà¥à¤°à¤¾à¤°à¥à¤¥à¤¨à¤¾ पर कमà¥à¤ªà¤¨à¥€ à¤à¤µà¤‚ जमाकरà¥à¤¤à¤¾ के रोचनिदा के नियम à¤à¤µà¤‚ शरà¥à¤¤à¥‹à¤‚ के अनà¥à¤¸à¤¾à¤° तिथि के पहले (सममृतà¥à¤¯à¥ 2% उस दर से उसके लिठदेय होता यदि पूरी अवधि के लिठदर करो नॉन टेकिंग कमà¥à¤ªà¤¨à¥€ दà¥à¤µà¤¾à¤°à¤¾ दिया जाता है उससे 3% कम कर दिया जायेगा है। ....