TaxTMI 
TaxTMI 
2025 (1) TMI 1322
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....nd fixed line connections; the waiver is allowable only to the employees of the Appellant and not their relatives and employees of other group companies; CFA limit is on a monthly entitlement basis and any unused portion is not carried forward to the next month; in case an employee exceeds the CFA limit granted to him, the excess amount is collected by the Appellant along with appropriate amount of service tax payable, which is deposited by the Appellant; (Bills raised by Appellant are at pg.157-166 of the Appeal Memo); however, if the employee proves that the excess usage was directly related to work then exemption can be granted subject to approval from Function Heads or CEO/COO as specified under the Scheme; in case of the approval of the said waiver, waived amount is reimbursed as per a laid down process. Revenue conducted an Audit of the appellants circle in Karnataka; appellant was as ked to submit details of the waiver granted by the Appellant to its employees; show cause notices dated 21.08.2008 and 20.04.2009 (for the period April 2006 to March 2007and April 2007 to September 2008) were issued to the Appellant for the Bangalore Circle proposing the demand of service tax un....
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....E&C2012 (286) E.L.T. 26 (Bom.) * M/S. Max Life Insurance Company Ltd Vs CCE&ST2022 (67) GSTL 569. * M/S Max Life Insurance Company Limited Vs CCE&ST, New Delhi Final Order No. 50767/2023 dated 30.05.2023-CESTAT New Delhi * M/S Bharat Sanchar Nigam Limited Vs CST, Delhi Final Order No. 51311/2019 dated 03.10.2019 - CESTAT New Delhi * Minutes of the 2nd Regional Advisory Committee for year 2009-10 held on 17.12.2009. * M/S SI Group India Ltd Vs CCE, Raigad 2015 (38) STR 81 (Tri. - Mumbai) * M/S Leo Coal Movers Private Limited Vs CCCE&ST (Appeals), Raipur 2019-TIOL-3081-CESTAT-DEL 4. Learned Counsel submits further that the learned commissioner wrongly concludes that the Appellant earned goodwill by providing services to the employees under the Scheme and also receiving services of the employees constitute consideration for services rendered by the Appellant; that supply of free telephone services up to certain limits to the employees, does not create goodwill of the Appellant; also, there is no provision under service tax to treat goodwill as additional consideration; TRAI does not charge any license fee on free services; work ....
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....ought by the department, to which the Appellant responded vide letter dated 20.04.2010 to share the same after 25.04.2010 as the Appellant was busy in filing returns; however, the SCN was issued in complete disregard to the said request of the Appellant by invoking best judgment assessment and without providing sufficient time to the Appellant for producing proper documents and without considering relevant documents; no order was passed under section 72; the appellants were not given opportunity to represent against such invocation; as the conditions specified under Section 72(b) of the Act, were not satisfied, the best judgment assessment could not have been invoked. He places reliance on Ms Blue Star Communication and others Vs CCE&ST-Ludhiana 2019-TIOL-3789-CESTAT-CHD. 6. Learned Counsel submits also that the demand proposed in SCN was based on the figures given by the Appellant for the Bangalore circle for the period from April 2006 to September 2009 vide letter dated 15.04.2010; the same was divided by 7 (seven) to arrive at a half year figure which was multiplied three times to arrive at one and half years' figure; it was further multiplied three times, to make up for the ....
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....; even if the appellant has to pay service tax, the Appellant was eligible to avail Cenvat credit of the service tax so paid; entire demand is revenue neutral. Further, the issue involves interpretation of complex provisions and as held in the following demand cannot be sustained. * Hyundai Motor India Pvt Ltd Vs CCE&ST, Chennai 2019(29) GSTL 452 (Tri. - Chennai) [affirmed in 2020 (32) GSTL J154 (SC)] * Delhi Airport Metro Express Pvt Ltd Vs CCCE, Final Order No. 50031/2024 dated 11.01.2024, 8. Learned Counsel submits in addition that when the assessee believes that amount is not subject to service tax, there is no requirement for seeking clarifications; the reasoning of the department that the Appellant should have approached the service tax authority for clarification is fallacious. He submits that there is no specific column under the returns for showing the grant of free services to the employees and non-disclosure of the same does not amount to suppression of facts. He submits that self-assessment by the assessee cannot be the ground for invoking extended period of limitation; it is the duty of the central excise officer to scrutinize the returns files by ....
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....3.1. of policy; exemption/waiver limit (CFA limit) varies from Rs. 400 to Rs. 13000 per month as per stakes of employees. The employees of UC cadre were allowed one landline/broadband service and 2 mobile numbers as per Section 3.3.3; charges for mobile phone are indicated at Section 3.3.4; fixed telephone/Broadband are indicated at Section 3.3.5; of policy; mobile handset was provided to employees as per Section 5 of the policy along with ISD/STD/Roaming facilities; Special mobile number provided @50% discount on market rates as per Section 6.2. of policy; policy also provided that E-Bills to be generated for employee's number only in case it exceeds CFA limit and family members bills to be generated in employee's name as per Section 6.4; Excess amount over CFA limit will be deducted directly from the salary account or credit card; No carry forward of balance/ unused CFA amount allowed; Waiver needs to be reimbursed as per normal reimbursement process as per Section 6.4; exemption was permitted beyond CFA limit if employee proves that excess usage was directly related to work, in exceptional casesas per Section 6.4; Payment will be made like a normal customer (through various m....
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....T-Mum). 11. Learned special Counsel adverting to the submission that the appellant that they did not provide service to its employees, but they provided facility incentive in terms of employment or contract of service, submits that Income Tax Act recognizes it as perquisite; appellant is undisputedly engaged in providing telecom services/telephone services including to their employees and others treating them as regular postpaid consumer; hence, the appellant were employer and service receiver were employees; the appellant being a service provider is obliged to collect service tax from service receivers and remit the same to Govt exchequer as per Service Tax laws; the provision of telephone services to employees were not for business purposes; if so, there was no scope of billing to each employee, providing partial exemption from charges, charging of cash beyond permissible CFA limit; no scope for giving allowance to relatives of employees etc; the policy nowhere states that beyond CFA limit only, the employee shall be treated as regular postpaid subscriber; the scheme clearly considers each such employee as a regular postpaid consumer for the purpose; in absence of any exemptio....
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....r Ltd 2019 (26) GSTL 224 (T-Mum) and Bharti Hexcom Ltd 2019 (24) GSTL 588 (T-Del), wherein in similar circumstances Hon'ble Tribunal has held service tax is payable on cellular telephone free services provided to employees; the case of BSNL relied upon by the appellant has not discussed the issue in detail but arrived at final decision without any reason or justification; cases of Carrier Point and Resonance relate to coaching classes, hence not relevant to the facts of the case; Circular dated 13.10.1997 quoted by the appellant stands withdrawn by circular No. 96/7/2007-ST dated 23.08.2007 and even otherwise, the context was different. 12.1. On the submission of the appellant that no non-monetary consideration not taxable till 18.04.2006, learned special counsel submits that in view of explicit legal provisions contained in Section 67 (i), (ii) & (iii), the argument is not valid; Cases of Assam Gas Company-2008 (11) STR 73 (T) & Shri Pillai & Sons Motor Co-2008 (10) STR 403 (T)as well as Bharti Infotel Ltd-2006 (3) STR 554 (Tri. Del.) are interim orders and therefore not persuasive in nature; in the case of European Court of Justice, as per the Article 11A (1)(a) of Sixth direc....
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.... failed to put forward the exact amount of waiver/relaxation in mobile charges allowed to employees and others during the relevant period. 13.1. The calculation adopted by the department is not arbitrary but based on proper justification which stands uncontroverted by any material evidences produced by appellant. The 5 CA certificates submitted did not take into account the number of employees of Bharti Group of companies and relatives; hence the same are not admissible being incorrect. 13.2. Learned special counsel submits that in the case of Kachwala Gems Vs JCIT 2006 (12) TMI 83 (SC) or 288 ITR (10) (SC), it was held that if the assessee did not maintain books of accounts, he himself has to be blamed for Best judgment assessment; in case of NBC Corporation Ltd Vs CST 2014 (1) TMI 151 (Del HC), it was held that best judgment order passed will be akin to ex-parte order when assessee fails to produce records/details and officer passes the order on the basis of other information or data available. He submits that the appellant's reliance on Rajasthan Spinning-2007 (218) ELT 641 (SC), RS Enterprises-2003 (159) ELT 766 (Tri. Del.)and Yogesh Sood-2001 (129) ELT 674 (Tri. Del.), V....
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.... as held in Bipin Singh Rana, Proprietor M/s. Shivalik Construction and Shivalik Hotel Vs ACIT, Circle-3, Nainital-2023 (2) TMI 447-ITAT, Delhi. 15. Learned special counsel submits, on the issue of Cenvat credit admissibility & revenue neutrality, that undisputedly the appellant treated all employees including relatives and Group company as regular post-paid consumers; if the contention of the appellant is presumed to be correct, they could have possibly taken credit of tax paid in respect of each consumer; moreover, Moreover, the link of employees of Bharti Group Companies cannot be justified; in fact, the telecom service provided to these employees is an output service to the appellant and not input service within the meaning of sec 2(l) of CCR, 2004; it is not clear if the appellant were availing credit of service tax paid on the amounts recovered from others and employees over above, the credit limit; appellants produced no evidence to establish the nexus between free services/discounted services provided by the appellant and its output services or in relation to activity of business of the appellant; In view of non-admissibility of credit, question of revenue neutrality doe....
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....er registered under same formation whereas in this case, Delhi/Gurgaon jurisdiction was never informed by the appellant about the affairs until investigation commenced. He submits that the claim of Bona fide belief was negated and extended period demand upheld in following cases. * Provident fund department 2006 (2) STR 369 (T-Del) * Bharti Cellular Ltd. 2005 (179) ELT 334 (T-Del) * Mysore Rolling Mills P Ltd 1987 (28) ELT 50 (SC) * Idea Cellular Ltd 2019 (26) GSTL 224 (T-Mum) * Bharti Hexcom Ltd 2019 (24) GSTL 588 (T-Del) 17. Learned special counsel submits on the chargeability of interest that it is leviable when demand is sustained on merit; even otherwise it is a Civil liability gets attracted by virtue of law. He relies on Pratibha Processors Vs UOI 1996 (88) ELT 12 (SC) and UOI vs Valecha Egg Ltd 2010 (249) ELT 167 (Bom). 17.1. Learned special counsel submits on the issue of penalties that mala fide intent is vividly clear from their contumacious conduct, evasive reply and deliberate concealing the material facts leading to evasion of service tax to the tune of Rs. 118 crores; once extended period is invokable, equal penalty ....
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....s to their employees, referred to as CFA is to be included for the purpose of calculating the service tax payable by the appellants. The appellants are discharging the applicable service tax on the amounts collected for the telephone services rendered by them to their employees. There is no dispute on this count. We find that Department is of the opinion that the appellants are required to include the CFA also in the service tax payable by the appellants. In certain cases, it is provided that allowance over and above the CFA is granted to the employees, of different grades, subject to the approval by their superior authorities. We find that as per the Bharati Airtel Ltd. Employee Phone Policy dated 05.09.2007, it is stated that: 1. ELIGIBILITY The policy is applicable to all employees of Bharti Airtel Limited (The Company). For the purpose of this policy, the following people are deemed to be 'employees': * Those who are on the employment rolls of The Company. * Selected relatives of those who are on the employment rolls of the Company (relatives defined as Parents / Children / Spouse / In Laws (Father and Mother In law) / Siblings)* ....
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....rns and to their employees from whom they do not recover any air time charges and only recover "land line charges" which represents the value of the calls made through the network other than cellular phones (DOT Number) Decision: The value of taxable services in relation to telephone connection provided to subscribers is the gross total amount received by the telegraph authority from the subscriber. In case the service is provided free and no amount is received by the telegraph authority, the question of service tax liability does not arise. Only land line charges will be liable for tax. 23. It is clear from the above that telephone service providers are required to pay service tax on the consideration received by them, the consideration being the gross amount charged; in this case, the gross amount charged by the appellant is the amount they collected from their employees and not the discount given to the employees in the form of CFA. We find that learned Counsel for the appellants relies on a number of cases, including that of M/s Bhayana Builders (supra) wherein the principle of law was settled to state that the value of goods or material supplied free of cost would ....
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....Bharati group of companies and their relatives are also receiving free usage of telephone/mobile services up to certain limits it is not the case that assessee is providing this facility free of charge to others also. By providing its services to its employees and their relatives in the guise of CFA, the assessee has increased its volume of service and earned "goodwill" in the competitive market. Thus, taking services of the employees, providing them telecommunication services vis-à-vis CFA is one of the consideration received by the assesses. Hence it is wrong to contend that they are not receiving any consideration from the employees and therefore, there is no justification in not paying service tax on taxable services provided to them. The value of CFA limit, not directly paid by the employees, is also not paid by the assessee to them along with their pay packages, but adjusted. The contention of the assessee that they have not received any payment in terms of Sec. 68 (1) and Rule 6 of the Act & rules and liability to pay tax does not arise is not correct. As per Sec. 68 (1) "Every person providing taxable service to any person shall pay service tax at the rate specified ....
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....didates. We find no reason to consider the concessional portion of fee which is as per the pre-declared publicity material, as part of non-monetary consideration requiring addition to the monetary consideration to arrive at the gross value. We find no reason to invoke valuation rules in the present set of facts. There is no sustainable reason to reject the scheme published by the appellants for fee concession as long as it is a bona fide trade practice. We could not find any reason to hold that the scheme is other than a bona fide practice. As this is the only dispute in the present appeals, we hold that the appellants will succeed on this point. 26. We find that it is not provided in the Service Tax law to amortize the goodwill to arrive at the gross value of consideration for the purpose of levy of service tax. It is not correct on the part of learned Commissioner to come to a conclusion that the appellants are receiving goodwill for the free telephone services provided to their employees. For the purpose of valuation of service tax, the goodwill cannot be taken into consideration. We find that learned Commissioner did not arrive at the value of the goodwill for the purpose of....
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....effect only with effect from 18.4.2006, the immovable property which is part of consideration of Settlement Agreement dated 1.3.2006 would not be subject to levy of service tax. 28. We also find that in the Scheme of Service Tax, no liability to tax arises when consideration is not received and is not receivable. We find that Tribunal in the case of M/s S.I Group India Ltd. (supra) held as follows: 7. We have gone through the Technology Licensing Agreement. We find that under Article 5 technical services are indeed to be rendered to the appellants by way of training of personnel, selection of suppliers of machinery, for commissioning and testing of the plant and machinery as well as for testing of samples of products for inspection and examination by SSI. It is Article 7.2 which refers to payment of royalty. It states that "in consideration of SII providing technical services to the Indian company, the Indian company shall pay to SII royalty at the rate of 4% on the Net Sales subject to ......" We do not agree with the argument of the ld. Sr. Advocate that the service provided is Intellectual Property Service and service of Engineer Consultancy is not provided, notwiths....
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....culation/ computation of the tax liability was incorrect and erroneous. The demand was based on figures given by the appellant for the Bangalore Circle for the period from April 2006 to September 2009; the figure was divided by seven to arrive at a half yearly figure; such figure was then multiplied by three to obtain figure for one and half year; thereafter, such figure was multiplied by three times under the assumption that the work force of the appellants must have grown threefold because of the increase in business; finally, such figure has been multiplied by eighteen times to cover all the eighteen circles of the appellants. As can be seen the computation is totally based on assumptions as follows: (i) Six months' turnover of each of the Circles was assumed to be 1/7th of the turnover of Karnataka Circle for a period of three and half years. (ii) The number of employees must have grown three times. (iii) Periodical turnover of all the Circles across India is equal. (iv) Free allowance was also extended to relatives of the employees and to the other group companies. 31. We find that such approximation has no place in demanding and confirmi....
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....vice which may appropriately govern rendition of these services. In any event officers are not handicapped and the Act provides ample powers including of search under Section 82 of the Act to obtain information necessary to pass a proper, disciplined and legally sustainable adjudication order. The disinclination to employ the ample investigatorial powers conferred by the Act is illustrative of gross Departmental failure and cannot afford justification for passing an incoherent and vague adjudication order. The failure to gather relevant facts for issuing a proper show cause notice cannot provide justification for a vague and incoherent show cause notice which has resulted in a serious transgression of the due process of law. 32. In view of the above discussion, we find the following: (i) Service tax cannot be levied when there is no consideration received. Free allowance given to the employees by the appellant is in the nature of discount/ concession and as the same has not accrued to the service provider-appellant, the same cannot form part of the consideration for the purpose of levy of service tax. (ii) Under the facts and circumstances of the case, Departme....