TaxTMI 
TaxTMI 
2024 (4) TMI 228
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....- (Rupees Seven Crore eighty Lakhs forty four thousand one hundred twenty under Section 78 of the Finance Act 1994. four only) 4. I hereby impose a penalty of Rs. 10,000/- (Rupees ten thousand) under Section 77 of Finance Act, 1994. 2.1 The appellant is registered for providing various taxable services namely Management Consultants, Consulting Engineer, Manpower Recruitment Agency, Online Information and Data Retrieval services, Commercial Training & Coaching, Maintenance and Repair services, Erection Commissioning & Installation, Business Auxiliary Services, Sponsorship services, Business Support Services, Information Technology Software Services falling under Section 65 of the Finance Act, 1994. 2.2 During the course of audit of record of the appellant for the period March, 2009 to March 2010 it was observed that that the party have not paid service tax of Rs. 2,06,99,389/- on an amount in the foreign exchange equivalent to INR 17,84,35,798, pertaining to communication expenses paid to their related parties based in different foreign countries. Further, it was gathered that the payments relate to service provided by different service providers based in foreign countries viz. ....
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....ppellant, no service tax is leviable. The extended period of limitation is not invocable as there was no suppression of facts. Hence, the demand is wholly without jurisdiction and ought to be dropped. No penalty is imposable as the extended period of limitation is not invocable. No penalty is imposable, the benefit of Section 80 of the Finance Act may be available to the Appellant. 3.3 Arguing for the Revenue learned Departmental Representative reiterates the finding recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in the appeal and during the course of argument. 4.2 On merits the issue is whether the services provided by the appellant shall be classified under the category of "internet telecommunication services" as per Section 65 (57a) of the Finance Act, 1994 for the purpose of levy of service tax. The said definition is reproduced below: "65 (57a) "internet telecommunication service" includes,- (i) internet backbone services, including carrier services of internet traffic by one Internet Service Provider to another Internet Service Provider, (ii)internet access services, including provision of a direct conn....
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....display, call return, call screen, call blocking, automatic call-back, call answer, voice mail, voice menus and video conferencing; (vi) private network services including provision of wired or wireless telecommunication link between specified points for the exclusive use of the client; (vii) data transmission services including provision of access to wired or wireless facilities and services specifically designed for efficient transmission of data; and (viii) communication through facsimile, pager, telegraph and telex, but does not include service provided by- (a) any person in relation to on-line information and database access or retrieval or both referred to in sub-clause (zh) of clause (105); (b) a broadcasting agency or organisation in relation to broadcasting referred to in sub clause (zk) of clause (105); and (c) any person in relation to internet telecommunication service referred to in sub-clause (zzzu) of clause (105)." The taxable service under this category has been defined by Section 65 (105) (zzzx) "to any person, by the telegraph authority in relation to telecommunication service". 4.4 Appellant as such was not the service provider but the service r....
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....s case. Further, since the party did not submit requisite information called by the department, they appear to be liable for penal action as provided under section 77 of the Finance Act, 1994. And as the party did not discharged their service tax liabilities and have thereby evaded service tax in contravention of the statutory provisions, they have and have rendered themselves liable for penal action under Section 76 and 78 of the Finance Act. 1994." 4.7 The issue has been discussed in the impugned order in Para 4.11 & 4.12 and the same is reproduced below for ready reference:- "4.11 The assessee has contended that even if the amount of such services are assumed to be taxable in the hands of the assessee under reverse charge mechanism and the service tax is deposited under reverse charge mechanism, it would be a revenue neutral exercise since The assessee would be eligible for taking cenvat credit and refund of the service tax amount deposited by CSC India.. In this context, I found that the authority and the limitation of the collection of tax are enshrined in Article 265 of the Constitution of India. Chapter V and VA of the Finance Act, 1994 (as amended by subsequent Finance A....
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....overy of service tax with interest under Section 75 of the Act ibid.. I would like to discuss the judgement of the Hon'ble High Court Calcutta in the case of Naresh Kumar & Co. Pvt. Ltd. Vs. Union of India reported in 2014 (36) S.T.R. 271 (Cal.) which is relevant in the instant case, wherein it is held that, "28. the extended period of limitation can be invoked when there is a conscious act to evade tax, for example deliberate non-disclosure of some bills pertaining to any particular taxable service rendered by the assessee. Similarly, if an assessee withholds information in spite of requisition to provide the same, with intention to evade tax, the assessee would be guilty of willful suppression." In this regard, the assessee also relied upon various decisions of courts as discussed supra. I find that the facts and circumstances of he cases are different from this case, so, I find that the ratio of the decisions is not applicable in this case." 4.8 The period of demand is from April 2008 to June 2012, as after the change in regime of levy service tax to negative list of services, appellant started paying the service tax on the said services received by them. All the facts ....
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....cise, Bombay [1995 Suppl. (3) SCC 462], we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was not open to the CEGAT to come to a conclusion that the appellant was guilty of "suppression of facts". In Densons Pultretaknik v. Collector of Central Excise [2003 (11) SCC 390], this Court held that mere classification under a differe....
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....f fraud; collusion; wilful mis-statement; or suppression of facts; or contravention of the provisions of the Act and the Rules made thereunder with the intention to evade payment of service tax. In the present case, there is no allegation of any fraud or collusion. It is also apparent from the order-in-original that the Commissioner had proceeded on the basis that the proviso would be applicable notwithstanding that there was no intent on the part of the respondent to evade any tax. The Commissioner had proceeded on the basis that the extended period of limitation was applicable on account of suppression of facts and "wilful misstatements". 20. In the circumstances, the Tribunal had examined the question whether the proviso to Section 73(1) of the Act was applicable on account of any wilful mis-statement or suppression of facts. According to the respondent, the services rendered by it were covered under the taxable service of 'Works Contract' Services. It had, accordingly, filed its return disclosing that its services were covered under Section 65(105)(zzzza) of the Act. 21. Clearly, there was no suppression as to the activities being carried out by the respondent. It is also r....
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....e, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious. 33. It is also important to note that MTNL had declared the receipt of compensation as income in its books of account. The final accounts of MTNL are in public domain. In the circumstances, the allegation that MTNL had suppressed any material facts from the Service Tax Department is wholly without any basis. 34. Mr. Harpreet Singh, Learned Counsel appearing for the respondents, submitted that the allegation that MTNL had suppressed material facts was based on non-disclosure of the receipt of compensation in its service tax returns. However, he did not contest the contention that there is no provision in the Act to disclose receipt of any funds in the service tax returns, which are not regarded as consideration for rendering services (whether taxable or exempt). In the circumstances, there is no basis for the allegation that MTNL had suppressed any material facts. Me....