AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 220
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....ufactured printing inks falling under Central Excise Tariff Item [CETI] 3215 19 90 of the Central Excise Tariff Act, 1985 [the Tariff Act]. In terms of the policy of its parent company, Siegwerk Druckfarben AD & Co KGaA [the Parent Company], the appellant invested its surplus funds on the first day of every month in 'Short Term Pure Liquid Debt Fund' under mutual funds and redeemed it at the end of the same month. 3. An audit was conducted of the records of the appellant and it was noticed that the appellant was engaged in trading of mutual funds to the extent of Rs. 6,22,20,898/- as 'Dividend Income on Current Investment' under the head of 'Other Income'. The department formed a view that redemption of mutual funds qualifies to be 'trading of goods', which is an exempted service in terms of the exclusion under the negative list warranting proportionate reversal of credit availed on common input services such as 'chartered accountancy services', 'laptop and computer maintenance services', phone and internet services', and SAP IT services under rule 6 of the Credit Rules. 4. This led to the issue of a show cause notice dated 10.04.2018 to the appellant in earlier proceedings t....
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....missioner (Appeals). 9. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Shri S.C. Vaidyanathan and Ms. Mehek Mehra made the following submissions: (i) Investment in mutual funds is not akin to 'trading of goods' which alone is an exempted service in terms of section 66D(e) of the Finance Act read with rule 2(e) of the Credit Rules. Thus, no proportionate reversal of CENVAT credit is required to be made. In support of this contention reliance has been placed on the following decisions: (a) M/s. Ambuja Cements Ltd. vs. Commissioner of Customs, Central Excise & GST, Nagpur [2023 (5) TMI 806- CESTAT Mumbai]; (b) Ace Creative Learning Pvt. Ltd. vs. Commissioner of Central Tax, Bengaluru South GST Commissionerate [2021 (4) TMI 687 - CESTAT Bangalore]; (c) M/s. Tata Sons Ltd. vs. Commissioner of Service Tax-I, Mumbai (vice-Versa) [2022 (11) TMI 325 - CESTAT Mumbai]; and (d) Space Matrix Design Consultants Pvt. Ltd. vs. Commissioner of Central Tax, Bangalore North [2019 (4) TMI 1599 - CESTAT Bangalore]; (ii) The activity of investment in mutual funds cannot be termed as a 'service' for the purposes of the Finance ....
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....es is transferred from one person to the other. 14. It is seen that the main ingredients of 'trading' are - (i) there should be two parties and a market to purchase and sell the goods involved; (ii) there should be transfer of right/title involved from the seller to the buyer while selling the same; and (iii) there should be a fixed price known in advance while selling or buying the said goods. 15. The activities undertaken by the appellant, namely, the activity of subscription and redemption of the units of mutual funds cannot be said to be an activity of sale and purchase of the securities. When the units of mutual funds are redeemed, the mutual funds units cease to exist. Thus, investment activities undertaken by the appellant would be different from 'trading in securities'. 16. In this connection, reference can be made to the decision of the Tribunal in Ambuja Cements. The Tribunal noticed the view of the department in paragraphs 2.3 and 2.4 and the said paragraphs are reproduced below: "2.3 During the course of audit, from the Annual Reports of ACL for the period 2011, 2012, 2013 and 2014, it was noticed that they were engaged in 'Trading of Securities....
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....inguishable as it is in respect of the trading of goods and not in the case where the Education Guide itself clarifies that buying and selling of the unit of mutual funds is not service itself." (emphasis supplied) 19. In view of the aforesaid decisions of the Tribunal, it has to be held that the activity of subscription and redemption of the units of mutual funds cannot be said to be an activity of sale and purchase of the securities. It would, therefore, not be an activity relating to trading and securities. The activity undertaken by the appellant would, therefore, not be an exempted service in terms of section 66D(e) of the Finance Act and proportionate reversal of credit was not required to be made. 20. Even otherwise, the activity of investment in mutual fund cannot be termed as 'service' under the Finance Act. For an activity to fall under the ambit of 'exempted service' under rule 2(e) of the Credit Rules, the activity has to first qualify as a 'service'. Section 65B(44) of the Finance Act stipulates that 'service' means any activity carried out by a person for another for consideration, and includes a declared service, but excludes a transfer of title in goo....
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.... levied or paid or short levied or short paid or erroneously refunded. It is as follows; "73.(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful 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, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "eighteen months", the words "five years" had b....
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....normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." (emphasis supplied) 30. The burden of proving that the appellant had suppressed facts with an intent to evade payment of service tax was clearly upon the department. It was necessary for the department to illustrate any positive act on the part of the appellant. According to the appellant, it was under a bonafide belief that it was not liable to pay service tax and the matter also involved interpretation o....
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....on of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances." (emphasis supplied) 32. The impugned order holds that it is because of the audit that the correct facts came to the notice of the department and so the extended period of limitation can be invoked. 33. It is not possible to accept this contention as such a contention was repelled by the Tribunal in M/s. GD Goenka Private Limited vs. Commissioner of Central Goods and Services Tax, Delhi South [2023 (8) TMI 995 - CESTAT New Delhi]. The relevant portions of the orde....