TaxTMI 
TaxTMI 
2025 (7) TMI 74
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....ect to the maximum of the amount of service tax payable under Section 76 of the Finance Act, 1994 in respect of the demand made. 2.1 Brief facts of the case are that M/s. Sutherland Global Services Pvt. Ltd. are one of the subsidiary companies of Sutherland Global Services Inc USA engaged in providing IT enabled services, Technical Help Centre service, call centre service on behalf of clients viz., Microsoft, HP etc., whose customers are located outside India. 2.2 It appears that the Appellant was paying certain amounts in foreign currency under the head "Other expenses" including salary to the trainers from foreign companies. But for availment of connectivity services and trainers / coaches, the call centre service and the technical help desk service could not have taken place and hence it was alleged that the Appellant is liable to pay Service tax on the aforesaid charges under the category of "Business Auxiliary Service" w.e.f. 01.07.2003 in terms of Section 66A of the Finance Act, 1994 read with Rule 2(1) (d)(iv) of Service Tax Rules, 1994. It appears that the above facts have been suppressed by the Appellant intentionally so as to evade payment of appropriate service tax....
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....of demand as stated above in respect of SCNs issued for 2003-2004 to 2007-2008 listed above at Sl.Nos. 1 and for 2008-2009 as listed at Sl.No. 2, demand of service tax on 'other expenses', the Appellant has come before this forum. As both the SCNs involve the identical issue, these two appeals are being taken up together for disposal by this common order. 3.1 The Ld. Advocate Shri Raghav Rajeev has argued for the Appellant. In his submissions he has principally argued that the SCN and OIO have not invoked any specific sub-clause under Section 65(19) of the Finance Act, 1994 which is a major flaw invalidating the proceedings. He submits that "other expenses" recorded in the books of accounts will not be taxable under BAS and explained the nature of expenditure as follows: - i. Provision for Bad Debts: This provision is made when consideration for services rendered to customers abroad is not received. There is no import of service. Such expense will not qualify as consideration paid by the Appellant to any service provider. Hence, the same cannot be taxed. ii. Discount to Customers: For services rendered to Non-residents, the Appellant has offered discounts to cu....
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....ed that expenses are incurred by Appellant are taxable without examining the transactions as explained by the Appellant in their replies. 3.4 Further, he has contended that extended period of limitation is not invokable in SCN dated 21.10.2008 and the other demand notice being issued for normal period. He would submit that even if the service tax under RCM is paid, they would be eligible for credit of the same and the entire exercise is a revenue neutral situation. The first SCN has been issued invoking the extended period alleging suppression of facts with intention to evade payment of service tax. When the situation is revenue neutral one, wherein, the Appellant would be eligible for credit, it cannot be said that the appellants are guilty of suppression of facts with intention to evade payment of Service Tax. He submits that it is a settled position in law that extended period of limitation cannot be invoked when the entire exercise is revenue neutral as the Appellant could not have achieved any purpose to evade payment of tax placing reliance on Nirlon Ltd. vs. CCE, Mumbai [2015 (320) E.L. T 22 (S.C)]. 3.5 He has contended further that the issue on invocation of extended ....
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....bad, [2011 (22) S.T.R. 571 (Tri. - Bang.)], which held that failing to specify the sub-clause render the notice invalid. 9. We note that the impugned order has confirmed the demand against the appellant under the category of 'Business Auxiliary Services' without specifying which specific sub-clause has covered the activities rendered by the Appellant. It is essential that liability is indicated in the notice with reference to the specific statutory provision. In the instant case, the impugned proceedings did not allege at the show-cause notice stage or there is any finding at the adjudication stage as to the specific provision under which the services rendered by the Appellant are classifiable. 10. The Ld. counsel for the Appellant submitted that the Tribunal in plethora of cases has set aside the demand on sole ground that there is no specific sub-clause under Section 65(19) of the Finance Act, 1994 invoked in SCN and OIO without going into further merits of the arguments relying on the decisions in the following judgements: - i. Vatsal Resources Pvt Ltd. v. Commissioner of Central Excise & Service Tax, Surat-I, 2023 (68) G.S. TL. 279 (Tri.-Ahmd.) ii. Unite....
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....espondent is liable for service tax." [emphasis supplied] 13. We notice that in this particular case, the service has been classified as Business Auxillary services under Section 65(19) of the Finance Act 1994 without mentioning the sub clause. This case is squarely covered by the above Case Laws and therefore the demand cannot be legally sustained. 14. Even without going into further merits of the arguments on various counts, on this sole ground that the Department has failed to issue the Show Cause Notice/Impugned Order with specific allegation specifying the sub-clause of BAS under Section 65(19), the present Appeals confirming demand of Rs.2,07,33,703/- is required to be allowed. 15. We observe that the Impugned Order has confirmed the demand on "other expenses" without proving that such amounts will qualify as consideration paid for receipt of any service and that there is a service provider and service recipient relationship. In fact, the SCN and impugned order have failed to identify the specific service provider in the instant case. It is a well settled position of law that onus to prove taxability is on the Department. The Appellant has placed reliance in this ....
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.... reason to evade the Tax and there will not be revenue loss to the exchequer and is revenue neutral for the Taxpayer. 20. The impugned order discusses about the suppression theory that but for Audit conducted by the officers, this issue would not have come to light and also stated about the difference between the ST3 and the balance sheet figures. Extended period of limitation has been invoked in SCN 324/2008 dated 21.10.2008 on the ground that the non-payment would not have come to knowledge had the audit not been conducted. In this case, we refer to decision in M/s. Vandana Global Ltd. Versus Commissioner (Appeals) Central GST, Central Excise & Customs, Raipur [2022 (12) TMI 450 - CESTAT NEW DELHI], where it has been held that it is not correct to say that had the audit not been conducted, the alleged errors in assessment would not have come to light because they would have come to light if the officers had scrutinized the returns in time and called for any data or records which they needed. The fact that audit has pointed out the alleged mistakes only shows that the officers have not scrutinized the Returns properly. 21. The LAA in the impugned order has held that the liab....