TaxTMI 
TaxTMI 
2024 (10) TMI 328
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....[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 employed by the recipients of services, but serve under their directi....
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....nce 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 Rules. The issue that would arise for consideration is whether the reimbursement amount can be subjected to levy of service tax ....
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....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, never exceed the gross amount charged by the service provider for the service provided by him. On that analogy, the Delhi High Court opined that the scope of rule 5 goes beyond the scope of section 67 of the Finance Act which w....
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....oss 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 limitation and an amount of Rs. 5,82,82,158/- was proposed for the normal period of the limitation. The said chart is reproduced is below: S. No. Period ST-3 filing date Due date to serve the show cause notice Remarks Demand 1. 0....
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.... 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 in Section 66 in such manner and within such period as may be prescribed. Section 66 provides the rate of tax as well as levy of the tax on the services specified therein. Sub-clause (a) and (zm) of Clause (105) of Section 65 had been specified under Section 66 for the purpose of levy of tax. Section 69 mandates that every person liable to pay the service tax shall apply to the proper officer for registration. Undoubtedly, ....
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....1. 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 levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. The relevant observations....
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.... 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 categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso....
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....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. & Customs vs. Reliance Industries Ltd. [2023 (385) E.L.T. 481 (S.C.)], the Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it the r....