TaxTMI 
TaxTMI 
2025 (10) TMI 968
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....enses as a "pure agent" and paid Service Tax on the net amount which is the management fee received as a consideration for the services provided. After exchange of various correspondence on the turnover, P&L accounts and Balance sheet, the SCN dated 20-07-2021 was issued. The demand of Rs.7,28,32,738 was raised by invoking the extended period provisions, by comparing Form 26AS, ST-3 Returns and audited financial statements of the Appellant. The appellants made detailed submissions about the reimbursements received by them, which are not part of the consideration so as to qualify for valuation under Service Tax. The demand was also raised in respect of Legal Services availed by the appellant, on the ground that they were not paying the Service Tax on Reverse Charge basis. The appellant explained that though the expenditure was booked under 'Legal Expenses', the same was incurred towards payment made to various consultants, who had actually charged and paid the Service Tax on forward charge basis. The appellants also made their pleadings on time bar aspect of the demand, since all the facts were properly disclosed in the ST 3 Returns. However, the Adjudicating authority, after due pr....
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....nal Order No. 60330/2024 dated 25.06.2024- CESTAT Chandigarh * M/s. Rishu Enterprises vs. Commissioner of CGST & CE, Dibrugarh, 2024 (2) TMI 566 - CESTAT KOLKATA, 2.6 It is submitted that the arrangement with the political parties (service recipients) was as follows: ⮚ For the campaign management and consultancy services provided - agreed consideration was given, and ⮚ For various campaigning and promotional activities undertaken such as various advertisement on TV, newspaper, social media, hoardings and banner, the Appellant used to incur the expenditure on half of the recipient which was reimbursed by the service recipient at actuals. 2.7 The Appellant claimed deduction of these reimbursable expenses in its ST-3 returns since they were acting as a "pure agent" of the service recipients i.e., political parties. 2.8 Explanation 1 to Rule 5 and Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 deals with "pure agent". Relevant portion of the provision is extracted hereunder: "(2) Subject to the provisions of sub-rule (1), the expenditure or costs incurred by the service provider as a pure agent of the recipie....
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.... of this Agreement, Indian PAC shall use reasonable commercial efforts, to find and introduce the target persons to the JDU as per JDU's requirements during the election campaign. It is also agreed that India PAC shall coordinate, negotiate, receive, finalize, execute and deal with the transaction on behalf of the JDU, relating to procurement of goods and / or services as may be required by JDU during the election campaign. (b) neither intends to hold nor holds any title to the goods or services so procured or provided as pure agent of the recipient of service. 3.3 Notwithstanding anything contained anywhere in this agreement, INDIAN PAC shall not claim any right, title or ownership of whatsoever nature in and in relation to the transactions and/or goods/services procured by virtue of the transactions at any time. (c) does not use such goods or services so procured; and 3.4 (c) It shall not use any goods or services procured by virtue of the transactions for its own purposes in any manner. (d) receives only the actual amount incurred to procure such goods or services. 4.3 INDIAN PAC shall be separately paid and/or advance paid such amount as may be incurred or....
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....nt submits that the computation of demand for the FY 2017-18 is incorrect as the said demand for the period April-June 2017 has been computed by taking the total expenditure incurred in FY 2017-18. Whereas the period in dispute is concerned only from April to June 2017. Even otherwise, it is submitted that the Appellant is not liable to pay service tax under RCM for the FY 2017-18. 2.15 In the instant case, demand has been raised by invoking extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 only on 20-07-2021 or the period FY 2015-16, 2016-17 and FY 2017-18 (till June). 2.16 The ST-3 returns have been filed on the following dates during the disputed period: Period Due Date Date when return filed Apr - Sep 15 25-10-2015 25-07-2016 Oct 15 - March 16 29-04-2016 11-08-2016 Apr - Sep 16 25-10-2016 28-11-2017 Oct 16 - March 17 30-04-2016 28-11-2017 Apr - June 17 28-08-2017 05-02-2019 2.17 Under Section 73(1) of the Finance Act, 1994 (normal period of limitation) the demand could have been raised till 28-02-20201. It is submitted that as per Section 73(6)(i) of the Finance Act, 1994, period ....
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....hat there was a huge gap. This gap was taken as the additional consideration received by the appellant, so as to demand the Service Tax on this amount. As pointed out by the appellant, mere comparison of the ST3 Return with the turnover shown in IT Return would not be sufficient to come to a conclusion that the figures shown in the IT Returns are to be taken as the consideration value for payment of Service Tax. 7. This Tribunal in the case of Piyush Sharma Vs. Commissioner of CGST & Excise, Patna I vide Final Order No.77332/2023 dated 17th October, 2023, has held as under : "10. In this case, the appellant has contended that the demand has been raised on the basis of Form-26AS supplied by the Income Tax department. Although summons were issued to the appellant and the appellant did not join the proceedings, therefore, the demand has been raised on the basis of Form-26AS. Admittedly, no investigation has been conducted in this case at the end of the appellant by the adjudicating authority. Being the appellant a registered service provider and filing their Service Tax returns, in that circumstances, the demand cannot be raised on the basis of Form26AS obtained from the I....
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....mes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such 'taxable service'. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 01, 2006) or after its amendment, with effect from, May 01, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 10. Though the above judgement is rendered in the context of the earlier provisions, even subsequent to th....
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....0000 14.50% 2900000 Apr- Sept'201 6 11615000 0 11500000 0 1150000 169500 42945826 27000000 0 15.00% 4050000 0 Oct'16- Mar'17 19379382 7 19189600 0 1897827 284674 2017- 18(upto June. 2017 18 30000000 30000000 15.00% 4500000 April- June, 2017-18 20000000 20000000 0 0 4500000 Total 511165000 511165000 74647100 459750639 447336000 1241463 7,29,50,269 Note: The noticee have claimed deduction of huge amount under the category of 'Pure Agent' in the ST-3 returns but he has not submitted any requisite documents related to pure agent. Therefore, amount reflected in ST-3returns in the column of Pure Agent has not been considered for deduction. 1.8 Further on perusal of ST-3 Returns of the relevant period, it appears that the noticee has declared Rs.45,97,50,639/- as gross receipt under the category of "Management or business consultant service for the period April, 2015 to June, 2017, however Rs. 44,73,36,000/- out of the said gross receipt was claimed as deduction from taxable value on account of "pure agent cha....
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....utral since, in the facts of the case, the entire duty paid by the assessee in respect of the clearances of MS tanks and radiators to its transformer unit was available to the transformer unit as Cenvat credit. In other words, the Cenvat credit was available not to a third party buyer of the assessee's manufactured goods but to the assessee itself in its transformer unit. Since the situation was revenue neutral, this was an additional ground which weighed with the Tribunal to hold that the extended period could not be invoked. 6. Having considered the judgment of the Tribunal, we see no reason to interfere with the finding of fact that if a scrutiny had been made by the Range Officer of the ER-1 returns, that would have revealed that the assessee had cleared its MS tanks and radiators to the owning company for the manufacture of transformers. This indicated that there was no fraud, collusion, misstatement or suppression of facts. Besides, since the situation was revenue neutral, no intent to evade the payment of duty could be ascribed to the assessee. Once, there was no intent to evade the payment of duty, the Tribunal was justified in coming to the conclusion that the ext....
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....he Return to question the huge difference between these values, till the SCN was issued in 20.07.2021 demanding the Service Tax for the period 2015-16 to 2017-18. 17. We find that for the factual matrix of the present case, the cited decisions are squarely applicable. Hence, we hold that the extended period could not have been invoked. The confirmed demand in respect of the extended period gets set aside on account of time-bar 18. Coming to the demand on account of non-payment of Service Tax on RCM basis for the payments made under the heading "Legal Charges", the appellants have made efforts to show that major amount has been paid to 'consultants', who are not providing any service under the category of 'Legal Services'. The appellants have also brought in evidence to the effect that these consultants have discharged the Service Tax for the services rendered by them. We find that the Revenue has not rebutted the claim of the appellant effectively while confirming the demand under this heading. Be that as it may, we also find force in their argument that the Service Tax, if payable / paid would be 'Input Services' for the appellant in terms of Rule 2 (l) of the CCR 2004. This....