TaxTMI 
TaxTMI 
2024 (10) TMI 328
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....Act. 2. M/s. Chaque Jour Outsourcing Solutions Pvt. Ltd. [the appellant] claims to be engaged in various activities like manpower recruitment, housekeeping, data entry, customer service, data sorting, data processing and other allied activities and to achieve this purpose, it entered into agreements with the clients to perform such activities for a consideration. 3. According to the appellant, for better efficiency of the work it has to send its personnel to the clients place for performance of work. These personnel perform their work under the supervision and direction of the appellant and not as per the supervision and direction of the service recipient. For providing such services to the clients, the appellant charges the clients and discharges payment of service tax. Apart from services charges, the appellant is reimbursed for the expenses incurred by the appellant towards the salary paid to the personnel deployed. 4. An audit was conducted by the department and it was observed that the appellant had entered into agreements with clients to supply manpower as per the requirement of the clients and under the terms and conditions of the agreements, the staff was not emplo....
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.... (v) The extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act is not applicable to the facts of the present case as there is no suppression of facts with intent to evade payment of service; (vi) No interest can be charged under section 75 of the Finance Act; and (vii) Penalty under section 78 of the Finance Act cannot be imposed as there is no fraud, collusion, willful misstatement, or suppression of facts by the appellant with an intention to evade payment of service tax. 9. Shri Anand Narayan, learned authorized representative appearing for the department, however, supported the impugned order and submitted that it does not call for any interference. 10. The submissions advanced by the learned chartered accountant for the appellant and the learned authorized representative appearing for the department have been considered. 11. The appellant has paid service tax under "manpower recruitment or supply agency services" on the value charged for providing such services i.e. the commission received by it. The department is seeking to impose service tax on reimbursement amount based on rule 5(1) of the 2006 R....
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....d to it to explain why service tax should not be charged on the gross value including reimbursable and out of pocket expenses. The provisions of rule 5(1) of the 2006 Rules were resorted to for this purpose. A Writ Petition was filed challenging the vires of rule 5 as being unconstitutional as well as ultra vires the provisions of sections 66 and 67 of the Finance Act. The Delhi High Court accepted the said contention and declared rule 5 to be ultra vires the provisions of sections 66 and 67 of the Finance Act. The Delhi High Court noted that both the amended and un-amended section 67 authorised the determination of value of taxable services for the purpose of charging service tax under section 66 of the Finance Act as the gross amount charged by the service provider for such services provided or to be provided by him in a case where consideration for such service is money. The Delhi High Court placed emphasis on the words "for such service" and took the view that the charge of service tax under section 66 of the Finance Act has to be on the value of taxable service i.e. the value of service rendered by the assessee and the quantification of the value of service can, therefore, nev....
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....nt on 01.05.2006 or after this amendment and if this be so, then rule 5 went much beyond the mandate of section 67 of the Finance Act. The Supreme Court, therefore, held that the reimbursement amount cannot be treated as "gross amount charged" as that is not a "consideration" for rendering the service. 15. The impugned order relies upon rule 5(1) of the 2006 Rules which rule, as noted above, has been struck down by the Supreme Court in Intercontinental as being ultra vires the provisions of section 67 of the Finance Act. 16. It needs to be noted that it is only w.e.f. 14.05.2015 that reimbursable expenditure or cost would form part of valuation of taxable service. However, in the present case, the transaction were made before 14.05.2015. Thus, inclusion of the reimbursable cost in the value of taxable service cannot be justified. 17. Learned chartered accountant for the appellant also contended that the extended period of limitation could not have been invoked in the facts and circumstances of the case. In this connection learned chartered accountant for the appellant placed a chart to show that an amount of Rs. 8,21,87,032/- was purposed for the extended period of limitat....
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....ection 65(105)(k) of the finance Act, 1994 as amended 'Register to Issue services' in their ST-3 returns filed with the department; that the non-payment of Service Tax had been noticed during the audit of the party by the Delhi Service Tax Commissionerate. Since the notice was registered under ---. It was incumbent upon him to cast onus of payment of Service Tax on the value as determined under Section 67 of the Finance Act, 1994. 8.3 The notice, on the other hand had argued that there was not even an iota if evidence to prove the suppression of facts was with intent to evade payment of Service Tax. They have submitted that no interest should be levied, no penalty should be imposed, as the demand raised had not been clearly covered under the Act. They have further stated that no penalty should be imposed as there had been no suppression of facts. ***** 8.6 ***** The Assessee had an obligation to comply with statutory provisions and to furnish the information as required thereunder. Section 68 (1) of the Act, as stood during the relevant period, provides that every person providing taxable service to any person shall pay service tax at the rate specified i....
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....ailed upon him to hold that the extended period of limitation was correctly invoked is the fact that the appellant had "abused the facility of self-assessment" and as the appellant had not disclosed the correct value of taxable service in the ST-3 Returns, the assessee suppressed the taxable value. The Commissioner (Appeals), thereafter, held that the appellant had suppressed facts with intent to evade payment of service tax. 21. It must be remembered that mere suppression of fact is not enough. There has to be a deliberate attempt to evade payment of excise duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice. 22. The provisions of section 11A(4) of the Central Excise Act, 1944, which are pari materia with the provisions of section 73(1) of the Finance Act, came up for interpretation before the Supreme Court in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay [1995 (78) E.L.T. 401 (S.C.)]. The Supreme Court observed that section 11A(4) empowers the Department to reopen the proceedings if....
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....se Officer to proceed to recover duties in the manner indicated in the proviso to Section 11-A 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 7 (2005) 7 SCC 749 11 E/52953/2018 not open to CEGAT to come to a conclusion that the appellant was guilty of "suppression of facts." (emphasis supplied) 24. The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (S.C.)] and the relevant portion of the judgment is reproduced below: "12. We have heard both sides, Mr. R.P. Batt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere non-payment as any of the three catego....
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....e, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. 25. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise & Customs on December 24, 2008 deal with "duties, functions and responsibilities of Range Officers and Sector Officers". It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below: ***** 26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT. ***** 27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so." (emphasis supplied) 26. In Commissioner of C. Ex....