AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 221
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....cement of the inquiry they filed service tax returns but they were not found to be proper and complete. Though the appellant furnished certain primary records including audited financial statements but could not furnish the consignment notes and railway receipts due to non-availability of all the records at respective times on account of destruction by white ant. The appellant pleaded before the inquiring officer that the services of transportation of goods by road undertaken by them were not liable to service tax in their hands and therefore they shall not be held liable to pay the tax. Pursuant to the inquiry, the revenue had proceeded to issue the show cause notice demanding the service tax of Rs. 2,77,83,558/- from the appellant under forward charge mechanism. Furthermore, the revenue demanded the service tax of Rs. 18,82,617/- shown to have paid by way of utilization of CENVAT Credits in service tax returns furnished after commencement of inquiry. Show cause notice also proposed to demand the service tax of Rs. 62858/- and Rs. 14247/- under reverse charge mechanism in respect of legal services and security services on the basis of ledger accounts furnished by the appellant dur....
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....e documents such as Form ST-2, confirmation letters and Form 26AS. Furthermore, they submitted that the show cause notice was issued merely on the basis of balance sheet which is not tenable in eye of law and thus all the demands arising from the show cause notice, irrespective of the findings of the adjudicating authority, are to be found baseless, arbitrary and bad-in-law. He also pressed that the show cause notice was issued in violation of the provisions of section 73 inasmuch as it invoked larger period of limitation and issued without affording opportunity of pre-show cause notice consultation as per requirements of the Board instruction. Therefore all the demands arising from the order are liable to be dropped. 3. Shri Tara Prakash, learned Authorised Representative appearing on behalf of the revenue reiterates the findings given in the impugned order. 4. We have carefully considered the submissions made by both sides and perused the case records. The primary and significant issue arising from the appeal and the arguments presented by the learned Chartered Accountant on behalf of the appellant and the grounds taken in appeal memorandum and synopsis, is whether the tax ....
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....ain exemptions were granted with respect to services by way of transportation of goods by GTA c. Rule 2(1)(d) read with Entry No. 2 of Table to Notification No. 30/2012-ST whereby liability to pay tax was shifted to recipient for the purpose of section 68(2) of the Act 4.2 Accordingly the appellant vehemently pressed and submitted that the service tax cannot be recovered from the appellant having found by the revenue that the turnover was relating to services by way of 'transportation of goods by road' unless established that the services classifiable as services by GTA, exemptions were inapplicable and recipients were not falling in the specified categories of rule 2(1)(d). 4.3 We find that there was no dispute as regards classification of the services i.e. services by way of 'transportation of goods by road' and thus we prefer to analyse the grounds and arguments placed by the appellant in context of legal as well as factual matrix. Section 66D(p) of the Finance Act, 1994 treated the all the services by way of transportation of goods by road to be negative list activities except when they were provided by GTA or courier agency. Section 66D "(p) of....
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....y the outcome of investigation and reproduction of the statement of Shri ManharbhaiAmrutlal Solanki and find that no consignment notes were found by the revenue during the course of investigation nor they had brought them on record before issuing the show cause notice. We also find that the appellant was not having practice of issuing consignment notes in all cases and therefore it was matter of paramount significance to ascertain as to which transactions involved issuance of consignment notes by the appellant themselves and which did not involve. We also find from the outcome of investigation incorporated in the show cause notice did not reveal exact information, quantifications and basis thereof with respect to services provided by the appellant by issuance of consignment notes. Based on the facts and contentions presented in the show cause notice and looking to the complete absence of crucial and necessary evidence in form of consignment notes, the turnover taken from the balance sheet cannot be attributed towards the services by way of GTA. Consequently, we find that the revenue has not made out a case in the show cause notice as well as in adjudication to bring the amount of t....
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....her the liability of service tax was recoverable from them as proposed in the show cause notice. The appellant has provided various documentary evidences on a sample basis in support further support of their pleading of non-taxability. These included copies of consignment notes, registration certificates of the recipients issued in Form ST-2 indicating their legal status, extracts from the Registrar of Companies (ROC) to demonstrate the legal status of the recipients, and confirmation letters from recipients affirming that the tax liability would be discharged by them under the reverse charge mechanism. Having carefully examined those records especially the registration certificates, confirmation letters and some of consignment notes, which were available with the revenue during the course of adjudication, we find that the claim of the appellant as regards nontaxability was multifold. We also find the adjudicating authority rejected these consignment notes, questioning the appellant's ability to provide them in light of ability expressed by appellant during the course of investigation due to "white ant". We find that excuses taken by the adjudicating authority in guise of "whit....
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.... scheme and was strongly emphasized by the learned Chartered Accountant in his argument, is the non-recoverability of the taxes if leviable, in the appellant's hands. Through sample documents, including consignment notes and other relevant materials, it was demonstrated that the recipients of the appellant's services were liable for tax under Section 68(2), read in conjunction with Rule 2(1)(d) and Notification No. 30/2012-ST. Section 68 (2) Notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66B and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by ....
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....o inclined to follow the principle of preponderance of probabilities and weight of evidences, which significantly balanced in favour of the appellant, to hold a contention that the appellant was not the person liable to pay tax under section 68 of the Act, in respect of such turnover. 4.13 After reviewing the facts presented in the show cause notice, the impugned Order, and the various submissions made by the appellant, and considering the preceding discussion, we find that the demand of tax was not recoverable from the appellant. Consequently, the tax demand confirmed in the impugned Order is unsustainable both in terms of the facts and the legal position. 4.14 We also find that the appellant has challenged the demand of tax on ground of unsustainability since the demand was computed on the basis of comparative difference of turnover reflected in balance sheet and amount reported in ST-3 returns filed belatedly and after initiation of the inquiry. We find from the show cause notice as well as Relied Upon Documents listed in Annexure 'A' to the show cause notice that the demand was solely based upon the turnover reflected in balance sheet. It is well-established in law that a....
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....n and it has to be established by the investigation by affirmative and cogent evidence. CESTAT in the case of Sober Plastic Pvt. Ltd. v. CCE [2002 (139) E.L.T. 562 (T)] has held that demand based on weighment slips, slips recovered from Dharamkanta etc. relied upon for raising demand not verified with reference to transactions is not sustainable. Further, it is settled position of law that proof and evidence of purchase of raw materials and sell of final product clandestinely is necessary in to establish the allegation of suppression of production and clandestine removal of goods and that the allegation are to be proved with affirmative evidences. Tribunal in case of Emmtex Synthetics Ltd. v. CCE [2003 (151) E.L.T. 170 (Tri.) has held that the charge of clandestine removal has to be established by the revenue by adducing tangible, convincing and cogent evidences, CESTAT in the case of Esvee Polymers (P) Ltd. v. CCE [2004 (165) E.L.T. 291 (Tri.)] dealt with a case of alleged clandestine production and clandestine removal. The case was based on some private slips. The CESTAT observed that the mere slips or statement are not sufficient for confirmation of demand and allegation of clan....
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...., the impugned demand of central excise duty is liable to be dropped for lack of evidences. 5. In view of the foregoing, we hold that the charges of clandestine removal against M/s. Rajputana Stainless Ltd. are not sustainable. Thus, we hold that the impugned order is not sustainable and we set aside the same." 4.15 We also note that the Tribunal has extensively addressed this issue in the case of Goyal and Co Construction Pvt Ltd v. C.S.T. - Service Tax Ahmedabad - 2022 (4) TMI 735, where it was determined that a service tax demand cannot be sustained solely based on income declared under the Income Disclosure Scheme (IDS). Similarly, we have no reservation in adopting this principle, consistent with the ratio decided in that case and other similar cases discussed therein, that service tax cannot be levied based merely on amounts reported in financial statements. 4.16 We also find that in catena of other decisions such as MPA Marketing Pvt Ltd v. Commissioner of CE & ST - 2020 (1) TMI 370 - CESTAT Chandigarh, GodawariSpherocast Ltd v. CCE - 2018 (5) TMI 1349 - CESTAT Chandigarh, Go Bindas Entertainment Pvt Ltd v. CST - 2019 (5) TMI 1487 - CESTAT Allahabad, Deltax En....
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....ansportation services is not sustainable for the reasons discussed in earlier paragraphs the demand of tax involved in utilization of CENVAT credits becomes unsustainable. 4.18 Furthermore, we find that the ST-3 returns were filed by the appellant without payment of late fees prescribed in rule 7C. We also find that the late fees have been demanded by impugned Order and which were not paid by the appellant. Section 70 of the Act required every person liable to pay service tax to self-assess tax due on the services provided and shall furnish the return in prescribed time limit and with such late fee not exceeding Rs. 20000 for delay in furnishing of returns. Having looked at the scheme postulated by section 70 read with rule 7C, it is necessary to hold that the returns were furnished contrary to the procedures laid down in the law inasmuch as the late fees were not paid and therefore the returns were required to be deemed as defective returns liable to loose the sight of law. Accordingly, the returns as well as facts stated therein became non estfor the purpose of investigation as well as adjudication and therefore nothing can be based upon the facts stated in the said defective ....
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....laims any exemption, in the present case on the basis of negative list, than it is incumbent on the department to strictly examine the admissibility of such exemption. Once the assessee has declared as per their belief that the service falls under negative list and the same has been declared in their ST-3 return, it cannot be said that there is a suppression of the fact on the part of the appellant. In the present case the appellant have acted legitimately by entering in to legal contract with their service recipient M/s FCPL. All the transaction were recorded in their books of account and all documents such as invoices for their services were issued. Moreover, the issue involved in the present case is strict interpretation of the taxable service. Therefore, considering the overall facts of the case, we are of the opinion that extended period of limitation could not have been invoked. Therefore, the demand for the extended period is not sustainable on limitation also. The above view is supported by the following Judgments: (a) In the case of Pahwa Chemicals Pvt. Ltd Vs. Commissioners of Central Excise, Delhi reported in 2005 (189) ELT 257 (Supreme Court) the Hon'ble Apex C....