TaxTMI 
TaxTMI 
2025 (10) TMI 735
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....ice tax. (ii) I allow the cenvat credit of Rs.3,98,737/- and its adjustment against the above confirmed demand during respective periods. (iii) I confirm the demand of interest at appropriate rate on the aforesaid amount of service tax under Section 75 of the Finance Act, 1994 & order for recovery of the same. (iv) 1 drop the demand of Rs.5,48,896/-(Rupees Five Lakhs Forty Eight Thousand Eight Hundred and Ninety Six only). (v) I impose penalty of Rs.17,28,847/- (Rupees Seventeen Lakhs Twenty Eight Thousand Eight Hundred and Forty Seven only)under Section 78 of the Finance Act, 1994. If the amount as determined under Section 73 above is paid within 30 days from the date of receipt of the order along with the interest payable thereon as, per Section 75, penalty will be only 25% of the service tax determined under Section 73. The benefit of reduced penalty shall be available only if the amount of penalty so determined has also been paid within the period of30 days from the receipt of the order. (vi) I drop the demand of penalty under Section 76 of Fiancé Act,1994 (vii) I impose penalty of Rs.5,000/- (Five Thousand only) unde....
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....rvice tax as demanded at (i) above; (iii) Interest at applicable rates under the provisions of section 75 of the Finance Act, 1994, should not be demanded and recovered from them on the amounts of service tax as demanded at (i) above; (iv) Penalty under section 76 of the Finance Act, 1994 should not be imposed on them for failure to pay service tax on the taxable services; (v) Penalty under section 77(2) of the Finance Act, 1994 should not be imposed on them for their failure to assess the correct service tax and to file the periodical ST-3 returns on the due dates in respect- of the taxable service provided by them; (vi) Mandatory penalty under section 78 of the Finance Act, 1994 should not be imposed on them for their willful suppression and misstatement of the relevant facts -and contraventions of the above said provisions of the Finance Act, 1994 and rules made there under with intent to evade payment of service tax; 2.5 The show cause notice was adjudicated as per the order original referred in para 1 above. 2.6 Aggrieved appellant filed appeal before Commissioner (Appeal), which has been dismissed as per the impugned order. 2.7 Hen....
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....the overall facts and circumstances of the case he has confirmed demand of Service Tax to the extent of Rs. 17,28,847/- and allowed adjustment of CENVAT credit of Rs. 3,98,737/- 8. While challenging the confirmation of demand, the appellant submitted that the 'daily sale sheets' resumed during search conducted on 08.12.2017 pertain to M/s Dream Spa Centre and not to the appellant (M/s Dream Spa Enterprises). I observe that during recording of statement Shri Gufran Khan on 08.12.2017, proprietor of the appellant did not raise any such objection. During investigation or even in the reply to the Show Cause Notice filed on 24.08.2022 the appellant had not taken this ground. I further find that the said `daily sale sheets' were recovered from the premises of M/s RDS Hospitality Pvt. Ltd. wherein Shri Gufran Khan was one of the Directors. He could have explained at that point of time that M/s Dram Spa Centre is different firm and he was not proprietor of that firm. Rather he admitted that the said sheets belonged to him. Moreover, the appellant has not explained as to why such papers were found lying in and recovered from the premises of M/s RDS Hospitality Pvt. Ltd.....
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.... ⮚ Appellant is less educated person and was not aware of the documents which were signed by him on 11.12.2017 while tendering his statement. ⮚ The round taken for invoking extended period in the show cause notice was not applicable. ⮚ Demand of interest is not applicable. ⮚ The penalty under section 77(2) & 78 of Finance At, 1978 is not imposable. 4.4 Before I proceed further it will worthwhile to go through the extracts from the show cause notice reproduced below, which is enough to demolish the entire case put up by the appellant in their defence in appeal. "3. INTELLIGENCE AND INVESTIGATION: 3.1 Whereas during the search of the premises of M/s RDS Hospitality Pvt. Ltd. on 08.12.2017, month-wise daily sale sheets of noticee were resumed from the said premises and it was gathered that Shri Gufran Khan, one of the Directors of M/s RDS Hospitality Pvt. Ltd., is also a proprietor of M/s DSE, situated and operating from shop No. 320-321 & 314-315. First Floor, Supertech Shopprix Mall, Sector-61, Noida. The month-wise daily sale sheets resumed under Panchnama dated 08.12.2017 indicate turnover beyond e....
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.... is not proprietor or partner in any other proprietorship or partnership firm, and he has not provided any taxable service. ⮚ He is Director in M/s RDS Hospitality Pvt. Ltd. since January 2016. ⮚ He will provide all the bills which he has issued since 201516. After some days Payment receipts booklet for the period April 2016 to June 2017 were furnished, ⮚ He will provide all ITRs & Balance sheets since 2015-16 till date on his next visit. ⮚ He takes all the responsibilities of service tax due upon his aforesaid firm and will deposit the same. He has voluntarily deposited Rs. 5,00,000/- vide challans No. 50019 dated 11.12.2017. (ii) Summons dated 13.02.2018 was issued to Sh. Gufran Khan, Proprietor of M/s DSE for production of following documents and records: (a) Sale bills (b) Register 70% & 30% distribution of cash sale. (c) Bank Accounts statements and reconciliation chart in respect of Commission collected against payments for the last five years upto June, 2017. (d) ITR and Balance sheet for the last five year upto June, 2017 The noticee provided only copies of ....
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....ur 0 0 On perusal of the ST-3 Returns filed by the noticee, it appears that the notice have not filed ST- 3 returns for the period October 2016 to June 2017. In the returns filed for the period April 2015 to September 2016, the noticee has only declared provision of taxable value of Rs. 3,20,368/- and all the Service tax dues including Swatch Baharat Cess attributable to the said taxable value amounting to Rs. 46,454/- was paid through CENVAT credit. 5.1 It is further noticed that an amount of Rs. 1,602/- pertaining to Swachh Bharat Cess liability also paid through CENVAT credit which, is otherwise not admissible to them in terms of Rule 3 of CENVAT Credit Rules, 2004, as amended. Hence, Service Tax amounting to Rs.1,602/- paid through availing and utilising CENVAT credit on Swachh Bharat Cess in the ST-3 returns filed for the period October 2015 to March 2016 is apparently has not been paid by the noticee. (ii) BALANCE SHEET Balance Sheets for the financial years 2015-16 to 2017-18 furnished by the noticee are neither in proper format nor signed by proprietor and Chartered Accountant. Thus, the same are not statutory and reliable documents....
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....' onwards) 3254669 796462 161535 0 4336228 2016-17 6048600 1788410 871556 18555 8891700 April 17 to June-17 1338187 526818 195462 31141 2126608 G.TOTAL 10641456 3111690 1228553 49696 15354536 On collating the sale data reflected in aforesaid month-wise daily sale sheets, it is observed that the noticee have made total sale of Rs.43,36,228/-. Rs.88,91,700/- and Rs.21,26,608/- including cash sale of Rs.32,54,669/-, 60,48,600/- and 13,38,187/- during September 2015 to March 2016, 2016-17 and April-June 2017 respectively (v) BILL RECEIPTS BOOK Bill receipt books showing payments received from customers furnished by the noticee for the period April 2016 to June 2017 were collated and month wise annexed as Annexure-II, and year-wise details of the same has been summary is as under: (Amount in Rs.) Financial Year RECEIPT CREDIT CASH TOTAL April 16 to March 17 669691 2187654 2857345 April 17 to June 2017 206161 562782 768943 The receipt amounts reflected in bill receipts of the noticee confirm receipt of consideration as cash payment a....
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....6. Also no ST-3 returns have been filed for the period October 2016 to June 201 7 Thus, Cenvat credit of Rs.46,454/- only as availed in the ST-3 return filed for the period Oct 2015 to March 2016 appears to be admissible to the noticee in terms of Rule 4(7) of the CENVAT Credit Rules, 2004, which entails that the provider of output service shall not take CENVAT credit after one year of the date of issue of any documents specified in sub-rule (1) of Rule 9 of Cenvat Credit Rules, 2004, inasmuch as the purchase invoices furnished by the noticee during the course of investigation pertains to period prior to the completion of one year from the date of issuance of such invoices i.e. availment of CENV AT credit is barred from time limitation of one year. 6. ANALYSIS: 6.1 The noticee have taken service tax registration bearing No. AOYPK6859BSD001 on 16.09.2015 for taxable services viz. "Health Club & Fitness Centre Service and Beauty Parlour/Beauty Treatment, Other Taxable Services- Other than the 119 listed". Sh. GurfanKhan, proprietor of the firm M/s DSE in his statement recorded on 08.12.2017 has deposed that he has opened Dream Spa Centre in Shoprix Mall for....
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....de all the bills which he has issued since 201516. (After some days Payment receipts booklet for the period April 2016 to dune 2017 were furnished) 6.4 There is variation in amounts reflected in bill receipts book, month-wise daily sale sheet, amounts received in bank statements through various modes, ITR returns, Balance sheets and gross receipt amount shown in ST-3 returns. A summary of the same is as under: (Amount in Rs.) PERIOD GROSS RECEIPT ITR Month- Wise Daily Sale Sheet Amount Received In Bank ST-3 Returns Balance Sheet Bill receipt Book 2015-16 2463753 4336228 1144005 320368 2463753 Receipt book not provided 2016-17 4241262 8891700 3308112 0 4241262 2857345 2017-18 (upto Jun) NA 2126608 751923 0 NA 768943 The above data reflected in the noticee's documents/" record, apparently indicate that the noticee have not declared the correct gross taxable receipt in the ST-3 returns filed by them, other statutory returns/ records viz. Income tax returns, Balance sheets, and bill receipt book. As discussed in preceding paras, the revenue amount declared in B....
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....onth-wise daily sheets has been collated/ prepared and is annexed as Annexure-V, and summary of the same is as under : (Amount-in Rs.) Financial Year Amount received in cash as per Bank Statement Bill receipt Month-wise daily sale sheet 2015-16 75000 Not furnished 3254669 2016-17 50000 2187654 6048600 2017-18 (up to June) 0 562782 1338187 G.TOTAL 125000 1254395 10641456 It is noticed that the cash receipts reflected in the month-wise daily sale receipt sheets resumed during search is much higher than the cash receipts shown in their bill receipt and amount reflected in bank statement. It appears that the noticee have not issued bill receipts against every cash amount received from its customer for provision of taxable service and also have not deposited all the cash received from customers in their bank account. Thus, cash receipts shown in month-wise daily sale receipt shects resumed during search apparently is amount received in cash as consideration for providing taxable services during the period September 2015 to June 2017. 6.6 Further, it is observed that the noticee besides re....
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.... 10641456 5079043 15720499 6.8 Further on scrutiny of ST-3 return filed by the noticee, it appears that the noticee has declared availment of CENVAT credit of Rs. 46,454/- only in their ST-3 return filed for the tax period April 2015 to September 2016. The noticee furnished copies of input service invoices issued during the period from October 2015 to June 2017 involving service tax of Rs.3,77,900/- after initiation of investigation against the noticee However, as the noticee failed to take/avail said CENVAT credit, except for Rs.46,454- in the ST-3 return during the period from April-2015 to June-2017 in terms of Rule 4(7) of the CENVAT Credit Rules, 2004, which entails that the provider of output service shall not take Rule 9 of Cenvat Credit Rules, 2004, the same cannot be adjusted/ appropriated against CENVAT credit after one year of the date of issue of any documents specified in sub-rule (1) of The notice's service tax liability as quantified in succeeding para. STATUTORY PROVISIONS AND TAXABILITY OF SERVICES RENDERED: 7.1. After introduction of the negative list regime w.e.f. 01.07.2012. the legal provisions pertaining to levy 'of se....
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....was liable to pay service tax at the appropriate rate on consideration received for. providing taxable service. 8. QUANTIFICATION. 8.1 n terms of section 66B of the Finance Act, 1994, service tax is leviable: a. At the rate of 14% during 01.06.2015 to June 2017; b. Swatch Bharat Cess @ 0.5% during 15.11.2015 to June 2017; c. Krishi Kalyan Cess @ 0.5% from 01.06.2016 to June 2017 8.2 The under-mentioned documents were taken into consideration for quantification of service tax liabilitv of the noticee during 2015-16 to 2017-18 (upto June 2017). a. Bank Statement for the period from September 2015 to June 2017 b. Month-wise daily sale sheets of noticee for the period resumed premises of M/s RDS Hospitality Pvt. Ltd. on 08.12.2017 c. Bill receipt books for period April 2016 to June 2017 d. S. Tax returns for the period 2015-16 to June 2017 8.3 On examination of Bank Statement and month-wise daily sale sheet for the period September 15 to 2017-18 (up to June), and S. Tax amount paid as per ST-3 return, the detail of Gross receipt/ taxable value, S.Tax Payable, S. Tax Paid and S. Tax short ....
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....to credit the Tax or any part thereof to the account of Central Government within the prescribed period, shall pay simple interest at the specified rate for the period by which such crediting of Tax or any part thereof is delayed. (iii) The noticee also appear to have contravened the provisions of Section 119 of the Finance Act, 2015 (Chapter VI) and Section 161 of the Finance Act, 2016 in as much as they have not paid Swachh Bharat cess and Krishi Kalyan Cess. (iv) Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994 inasmuch as they failed to properly self-assess the tax due on the taxable services and file periodical returns within the prescribed time limits and with details of the value of services rendered by them; 8. APPLICABILITY OF EXTENDED PERIOD OF LIMITATION AND MANDATORY PENALTY: 8.1 The noticee was duly registered with the department prior to the date initiation of investigation and they were apparently aware of the provisions of the Act and rules made there under. In the era of self-assessment, the noticee should have assessed their Service Tax liability properly; paid the tax by the appointed date for....
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.... Tax liability properly and pay it by due date. However, it appears from foregoing facts/ discussion that the noticee has failed to discharge their statutory obligation in the instant case in as much as they have not correctly determined and assessed their Service Tax liability during the relevant period. Accordingly, the extended period of limitation, as stipulated in proviso to section 73(1) of the Act appears to be rightly invocable for demand of Service Tax including SBC and KKC (up to June' Rs. 1 7) along with appropriate interest as applicable under section 75 ibid aggregating to Rs.22,77,743/- only, during the period from September 2015 to 2017-18. 8.3 In view of apparent existence of willful suppression/ misstatement of facts with intent to evade payment of service tax in. view of above quoted provision of law, the noticee appears liable for mandatory penalty under Section 78 of Finance Act, 1994. 8.4 The noticee apparently did not pay service tax, including Swachh Bharat Cess and Krishi Kalyan Cess amounting to Rs.22,77,743/- only for the period from September 2015 to 2017-18 (up to June'l7) on their service consideration towards provision of taxa....
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....han is Proprietor of the Appellant). It is totally absurd on the appellant to claim, that Shri Gufran Khan is uneducated and not aware of law etc. Shri Gufran Khan having DIN 03381886 has been Director in M/s RDS Hospitality Pvt. Ltd. a private limited company incorporated on Feb 10, 2011. The second statement which has been relied upon in the show cause notice is the statement dated 11.02.2017 wherein he has again admitted to recovery of the document as above during search on 08.02.2017. 4.6 Further the fact that appellant was issuing invoices/ bills showing service tax (including cess) from its client (service recipients) is established from the Bill Book provided by the appellant during the course of investigation. Though appellant was collecting the service tax (including cesses) from his clients but was not depositing the same with the exchequer is evident from the ST-3 returns filed. Appellant has for some of the period not even filed the ST-3 returns and for the period during which they have filed the ST-3 return i.e. April 15 to September 2016 they have grossly under declared the Gross Receipts and service tax payable. In fact, in the returns filed for April 15 to Septem....
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....ed facts need not be established. Hon'ble Supreme Court has in case of System and Components Pvt. Ltd. [2004 (165) E.L.T. 136 (S.C.)] held as follows: "6 .....Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved. .." 4.11 Appellant has from the time of initiation of proceedings have taken a stand that his Chartered Accountant has fraudulently filed returns suppressing the gross receipt. For the fraud committed by the C A he has filed an FIR and also complaint with the ICAI. I observe that this submission is itself enough, to hold that appellant ST-3 returns were filed by suppressing the gross receipts/ taxable value of services provided with the intent to evade payment of service tax. It is act of commission of fraud, suppression with intent to evade payment of tax which is material for invoking the extended period of limitation as per proviso to Section 73 (1) and not the person who has committed the said act of fraud or suppr....