TaxTMI 
TaxTMI 
2025 (7) TMI 72
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.... (in Rs.) Alleged short/non-payment of service tax on Government dues on reverse charge basis Service tax calculated on the Additional License Fee of Rs. 222.1 cr. for FY 2016-17 33,32,00,000/- Service tax calculated on the Additional License Fee of Rs. 69.41 cr. [i.e. Rs. 222.1 cr. + 25% (estimated on best judgment basis)] for the period 01.04.2017 to 30.06.2027 (i.e. 3 months) 10,41,00,000/- Total 43,73,00,000/- Interest under Section 75 of the Finance Act, 1994 Not quantified Penalty under Section 77 of the Finance Act, 1994 10,000/- Penalty under Section 78 of the Finance Act, 1994 43,73,00,000/- 2. Briefly stated facts of the present case are that the appellant were engaged in providing taxable services i.e. Telecommunication Service by Telegraph Authority as defined in the Finance Act, 1994 and Rules/Notifications issued thereunder. 2.1 An enquiry was initiated against the appellant vide letter C. No. IV(12)/GST-GGM/AE/Gr-10/Telecom/606/2019-20/18983 dated 19.02.2020 on the issue of short payment /non-payment of service tax on Government dues on Reverse Charge basis. In the aforesaid communication, following information/d....
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....CHEME"). The SCHEME was approved by Hon'ble High Court of Rajasthan and Bombay on 30 September 2016 and 7 October 2016 respectively. The SCHEME became effective on 31 October 2017. Consequent to demerger of telecom business undertaking, all the telecom licenses were cancelled by DOT. (ii) The Company is a party to the Civil Appeal Nos. 6328- 6399 of 2015 in the case of Union of India Vs. Association of Unified Telecom Service Providers of India etc related to the dispute with DOT on the concept of AGR. However, the Company has duly discharged its service tax liability under Reverse Change Mechanism ('RCM') on the payment made to DOT for License fee calculated on AGR basis for the services availed w.e.f. 1 April 2016 till 31 October 2017. W.e.f. 31 October 2017, SSTL has demerged the telecom business to RCOM pursuant to the approval of the Scheme of arrangement under Section 391-394 of Companies Act, 1956 by the Hon'ble High Courts of Rajasthan and Bombay. Further, on 20.10.2017, the DOT gave its approval to the SSTL and RCOM for the transfer of the SSTL's telecom business including spectrum to RCOM. In the said communication, DOT stated that the licenses held b....
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.... details of Service Tax/ Goods & Services Tax deposited under Reverse Charge Mechanism in respect of payment made for government dues from April 2016 to January 2020 along with challans and reconciliation of Service Tax/ GST paid under RCM with the financials. 2.3 On this issue another letter under C. No. IV(12)/GST- GGM/AE/Gr-10/Telecom/606/2019-20/588 dated 31.05.2021 was issued to the appellant wherein following clarification was sought: (i) copies of agreement with DOT. (ii) whether any additional amount has been paid / became payable to the DOT consequent to the order of the Hon'ble Supreme Court in CA No. 6328-6399 of 2015 and in case, additional amount has been paid to the DOT in view of Hon'ble Supreme Court Order, whether the additional liability of payment service tax/GST has been discharged or not. (iii) the month wise details of additional amount paid / payable to the DOT alongwith details of service tax/ GST amount paid / payable thereon. (iv) Copies of Demand Notice issued by the DOT for payment of additional amount subsequent to the order of the Hon'ble Supreme Court in CA No. 6328-6399 of 2015. (v) As per H....
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.... up to 2012-13 only. Since this payment pertains up to FY 2012-13, service tax is not applicable. From the above, it is clear that there is no liability of SSTL in pursuant to order of Hon'ble Supreme Court dated 01.09.2020. DOT by own admission vide affidavit in Hon'ble Supreme Court has shown AGR demand as liability of RCOM. There is no liability in the name of the Company (SSTL). Further, DOT has filed an affidavit dated 07.04.2021 before the Supreme Court in compliance of order dated 01.09.2020 placing on record the total outstanding AGR dues against the TSP's and respective payments received thereof against the RCOM and no amount is shown against Company. 2.5 Besides this, certain further information was also sought from DOT by the Revenue and after obtaining the information from DOT and the information supplied by the appellant, the Revenue entertained the view that the appellant have short paid the service tax pertaining to the additional license fees for the period FY 2016- 17 and FY 2017-18 (up to June 2017) on reverse charge basis. Thereafter, a show cause notice ('SCN') dated 07.10.2021 was issued to the appellant alleging short payment of service tax and ....
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....pient of services under this regime. Section 68 of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012 ('RCM Notification'), stipulates that the services provided by the Government by way of 'support services' shall be payable by the recipient on RCM. He further submits that the RCM Notification was further amended by Notification No. 18/2016-ST dated 01.03.2016, wherein the words 'by way of support services' were omitted and this Notification became effective from 01.04.2016. He also submits that under the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012, CBIC enlisted certain services that were made exempt from payment of service tax with effect from 01.07.2012; through Notification No. 22/2016 dated 13.04.2016, the Mega Exemption Notification was amended to exempt service tax on the services provided by the Government by way of allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the FY 2015-16; subsequently, vide Notification No. 39/2016 dated 02.09.2016, the Mega Exemption Notification was further amended to exempt service tax on license fee/spectrum charges during the period prior to 01.....
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....e DOT also gave its approval for transfer of the appellant's telecom business, including its all assets and liabilities in respect of Original License and New Licenses to RCOM vide its letter dated 20th October 2017; the Scheme became effective on 31.10.2017, i.e., when the same was filed before the concerned Registrar of Companies. 4.4 The learned Counsel further submits that on 23rd April 2015, the Telecom Disputes Settlement & Appellate Tribunal ('the TDSAT'), New Delhi bench, in the case of Association of Unified Service Providers of India & Others vs. Union of India [Petition No. 7 of 2003], decided that telecom operators are not liable to pay additional amount of license fee or spectrum charges to the Department of Telecommunications ('DOT'); the said order of the TDSAT was challenged by the Government before the Hon'ble Supreme Court and the Hon'ble Supreme Court on 24th October 2019, in the case of Union of India vs. Association of Unified Telecom Service Providers of India & Others [Civil Appeal Nos. 6328-6399 of 2015], ruled that AGR should also include non-core revenues of telecom operators; thus, the telecom operators became liable to pay additional license f....
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....following documents which are on record: Detailed circle-wise and year-wise break-up of the Additional License Fee of Rs. 222.1 crores showing that the amount pertains to 21 2G Licenses (i.e., the licenses correspond to the DOT's letter dated 21.04.2014). Certificate of Chartered Accountant certifying the detailed circle-wise and year-wise break-up of the Additional License Fee of Rs. 222.1 crores. Appellant's letter dated 25th February 2020 to the DOT providing circle-wise break-up of the Additional License Fee of Rs. 222.1 crores (i.e., initially self-assessed liability of Rs. 221.4 crores plus liability of Rs. 0.73 crores over and above the initially self-assessed liability of Rs. 221.4 crores). Appellant's letter dated 17th February 2020 to the DOT referring to the fact that the sum of Rs. 221.4 crores pertains the Cancelled Licenses. 4.6 He further submits that there is nothing on record to justify the Department's stand that the entire liability of Rs. 222.1 crores on which service tax has been demanded pertains to the period FY 2016-17; further, there is nothing on record to show that the appellant were liable to pay the Add....
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....he SCN on account of any shortfall of tax on the license fees/spectrum charges payable by the appellant to the Government; further, the alleged transactions forming basis for demand in the impugned order, were duly recorded in the books of accounts of the appellant. He further submits that the appellant duly discharged the amounts of service tax alongwith cess for the period FY 2016-17 and FY 2017-18 (up to June 2017) for the services availed from the Government on reverse charge basis. In order to prove that the entire demand is barred by limitation and extended period of limitation has been wrongly invoked, the learned Counsel relies on the following decisions: a) Anand Nishikawa Co Ltd vs. CCE, Meerut - (2005) 7 SCC 749 b) Continental Foundation Joint Venture vs. CCE, Chandigarh-I - 2007 (216) ELT 177 (SC) c) Cosmic Dye Chemical vs. CCE - 1995 (75) ELT 721 (SC) d) S. Lubrichem Industries Ltd vs. CCE - 1994 (73) ELT 257 (SC) e) Shahnaz Ayurvdics vs. CCE, Noida - 2004 (173) ELT 337 (All.) maintained by Supreme Court in 2004 (174) ELT A34 (SC) f) Shaik Iqbal Mohammed vs. CCE & ST, Hyderabad-IV - 2019 (25) GSTL 545 (Tri. Hyd.) ....
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..... CCE, Surat-II - Order dated 08.06.2023 in Excise Appeal No. 11893 of 2013, passed by CESTAT Ahmedabad 5. On the other hand, the learned Special Counsel (Authorized Representative) for the Revenue has filed the written submissions and reiterated the findings of the impugned order. 5.1 The learned Special Counsel submits that the points raised by the appellant in their written submissions dated 27.05.2024 are mostly repetitive and are not relevant to the current proceedings for the following reasons: a) Regarding their contention that service tax was not payable on the Telcom Services prior to 1.6.2016 is a matter of fact and it is not disputed by any departmental authority at any stage. In the SCN and OIO service tax has been demanded and confirmed for the period 2016-17 to 2017-18. The appellant has unnecessarily devoted much of the space of its appeal in asserting again and again that the demand is for the period 2008-09 to 2013-14 when the licensing of spectrum by the Government was not taxable at all. The above modified submission is clearly a correction of the appellant's position on the subject. b) Revenue has never disputed the fact that the appe....
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....chedule I, respectively shall be deemed to be transferred on the appointed date at the consideration provided therein. While Part II of the Schedule I available at page 425 of the appeal speak loudly about the deferred spectrum payment obligation of auction 2013 to DOT and various other liabilities, it does not have even a single word regarding transfer of its service tax liability. Thus, transfer of appellant's liability to pay addl. Licence fee to RCOM on account of demerger has no nexus with its service tax liability and its liability to pay service tax remains intact even after its demerger on 31.10.2017 and advent of GST regime by virtue of Sections 173 and 174 of the CGST Act, 2017. c) As explained in above sub-para b, the appellant's liability to pay additional license fee to DOT for receiving spectrum service on account of AGR is entirely different from its service tax liability. While spectrum charges are business related liability for which DOT has also been party to the demerger of the appellant's business, non-insistence by DOT for the recovery of the additional spectrum charges cannot be the basis for non-recovery of the service tax which has total....
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....ount is payable to DOT or not, is not provided until now in its appeal or in written submission. Several letters written to DOT as referred to in para 4 at page 4 of the Written Submission dated 27.5.2024 are not relevant to the main issue involved in the appeal under consideration. e) The contention that the liability to pay service tax in terms of point of Taxation Rules, 2011 did not arise is not a new argument. It is already raised in the appeal before the Hon'ble Tribunal for which I have already submitted in my Synopsis in detail (para 3.4 at page 4) that POT Rule 7 iş not applicable in this case as it is not a fresh case of levy of service tax and is rather a case of recovery of differential service tax only. The point of taxation in this case was already triggered when the appellant had paid service tax during the period 2016-17 and 2017-18 and in the current proceeding the issue is regarding recovery of differential service tax on account of revision of the value of spectrum charges by the Hon'ble Supreme Court. The above contention of the appellant is clearly based on its assumption that it is a fresh case of levy of service tax which in fact it is n....
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....ring the said period. The SCN and the OIO does not leave any doubt that the demand is clearly for the period 2016-17 to 2017-18 during which service tax was payable by the appellant on RCM basis and the appellant had paid the same on lower value. Even the appellant has accepted this fact in Para I, II and III of its Written Submission dated 27.5.2024 and thus the above argument is not compatible to its own admitted facts. Suppression of facts and contravention of Sections 67, 68, 70 of the Finance Act and Rules 6 and 7 of the Service Tax Rules are manifest in the case as the appellant did not inform the department by any mean regarding AGR decision and its consequential liability to pay differential tax, did not provide the detail of the additional fee payable to DOT in the wake of the AGR decision to determine its tax liability in spite of repeated correspondences from the investigating officers and has not paid, service tax arising out of the Supreme Court decision till now. Reliance on TDSAT decision is entirely out of context as the same was overruled by the Supreme Court in the said AGR decision on 24th October, 2019 after which they did not have any reason not to pay tax on t....
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....ady paid service tax was already available with the Department and therefore providing detail of service tax already paid did not have any relevance. The issue involved in the present proceeding is regarding payment of differential service tax over and above what is already paid which the appellant has not paid and also did not provide the required details necessary for determination of the same. The appellant has no response about the above irrefutable fact of not providing the additional amount payable to DOT in compliance of the AGR decision and has ignored it throughout the proceeding on one pretext or other and a baseless objection is made that the Revenue Counsels contention regarding non providing of relevant details is not correct. Its letter dated 14.6.2021 to the Superintendent referred to in sub-para 3 of para X informing that no service tax was payable by them on account of AGR decision since the appellant had neither paid the additional fee nor DOT demanded, instead of supporting the appellant's objection, manifestly demonstrate how the appellant has devised various tactics for not providing the required details of additional spectrum charges payable by them, even ....
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....uly recorded in the impugned order. 7.1 Further, we find that the entire demand has been raised on the basis of the AGR Judgment of Hon'ble Supreme Court. Further, we find that in the said AGR Judgment, the Additional License Fee was required to be paid by the telecom operators. But prior to the AGR Judgment of the Hon'ble Apex Court, the TDSAT vide its order dated 23.04.2015, in the case of Association of Unified Service Providers of India & Others vs. Union of India (supra), decided that telecom operator are not liable to pay additional amount of license fee or spectrum charges to the DOT, which clearly shows that it was an interpretation issue and suppression cannot be alleged against the appellant. As per the appellant, the liability to pay service tax on additional license fee pertains to FY 2008-09 to 2013-14 (up to September / 03 October 2013). 7.2 Further, we find that the Principal Bench of this Tribunal, in the case of Shyam Spectra Private Limited vs. Commr of ST, Delhi-II vide its Final Order No. 56196/2024 dated 31.07.2024 in Service Tax Appeal No. 50583 of 2017, has examined the issue in details as to when extended period of limitation can be invoked to confirm ....
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....rs of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder. 16. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis- statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word "one year", the word "five years" has been substituted. 17. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be "wilful‟ since "wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" bef....
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....om 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) 19. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise - 2005 (188) E.L.T. 149 (SC) and the observations are as follows: "26 ...........This Court in the case of Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay, while dealing with the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act held that the term must be construed strictly. It does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held :- "In taxation, it ("suppression of facts") can have only one meaning that the correct information was not disclosed deliberately to escape 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." 27. Relying on the aforesaid observations of this Court in the ....
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....the statement was not correct." (emphasis supplied) 22. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) -2018 (12) GSTL 368 (Del.) also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows; "27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word "suppression‟ in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty. Xxxxxxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the pr....
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....eir office memorandum dated 21.01.2014. It clearly proves that the amount of Rs. 222.1 crores self-assessed by the appellant pertains to 21 licenses cancelled in consequence to the 2G Spectrum Judgment on 11.03.2013 and 03.10.2013. 8.3 We also find that the appellant had also submitted a CA Certificate providing year-wise bifurcation of the license fee/spectrum charges of the entire amount of Rs. 222.1 crores, which the Chartered Accountant after going through the records of the appellant and the information given by the appellant, certified that the entire liability pertains to the FY 2008-09 to 2013-14. The Commissioner, vide the impugned order, has rejected the CA Certificate on the ground that the same was issued without any corroborative document; this finding of the Commissioner is not legally correct in view of the various decisions cited supra by the appellant. It is a settled principle of law that a CA Certificate cannot be rejected by the department without providing any evidence to contradict the same. 8.4 Further, we find that the department in complete disregard to the list of documents/information submitted by the appellant, has arbitrarily held that the self-as....
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....his case in terms of Point of Taxation Rules, 2011. We find that Rule 7 of the Point of Taxation Rules, 2011, which determines the point of taxation in case of specified services or persons, was amended by Notification No. 24/2016-ST dated 13th April 2016 and inserted a proviso providing as to where services are provided by the Government to a business entity, the point of taxation arises when the payment becomes due as specified in the invoice, bill, challan, or any other documents issued by the Government demanding such payment; whereas in this case, no invoice, bill, challan or any other document has been issued by the Government demanding additional license fee from the appellant. 9.1 We also find that in the instant case, the department could not establish that the consideration, for the services rendered, if any, has been paid by the appellant or is payable by them subsequently to the Government as evident from the affidavit discussed above. 9.2 We also note that as per the principle of ejusdem generis, the phrase "any other document issued by the Government demanding such payment" should only include documents of similar nature to an invoice, bill or challan. If we app....