TaxTMI 
TaxTMI 
2025 (11) TMI 1879
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....common decision. Sl. No. APPEAL No. Period OIA SCN No & date Amount 1 ST/42458/15 April 2005 to March 2009 218/2015 dt 25.08.2015 35/2010 dt 23.04.2010 Rs.2,68,037/& Penalty u/s 78 of FA 1994 2 ST/40696,40697/ 2016 Oct 2011 to March 2012 &July 2012 to March 2013 395 to 397/2015 63/2013 dt 21.10.2013 11/2014 dt 06.05.2014, 39/2014 dt 10.09.2014 Rs.1,22,768/- Rs 64,232/- Penalty u/s Sec 76 3 ST/40936/2016 April 2013 to Sep 2014 11/2016 dt 17.02,2016 8/2015 dt 17.04.2015 Rs.97,054/- Penalty u/s Sec 76 2.1 The facts briefly stated as reflected in the Appeal records are that the appellant is engaged in printing and packaging business. Between April 2005 and March 2009, Oct 2011 to March 2012, July 2012 to March 2013 & April 2013 to Sep 2014 the appellant made outward remittances in foreign currency towards (i) annual membership fees / renewals, participation fees to the IPG, IFPN and BSC; and (ii) pre-shipment inspection fees to Intertek. 2.2 Department issued various show causenotices/SOD's alleging that the payments constituted taxable imported services for which the appellant was liable under the import/rev....
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....s they are only evaluating the contestants on industrial safety practices. 4.4 The demand of Service Tax under Technical Inspection and Certification services was upheld on the ground that the pre-shipment inspection conducted by M/s. Intertek International, UK on behalf of the Government of Uzbekistan was not shown to be a sovereign function attracting Service Tax merely on the ground that the Appellant had not produced any contract or agreement between the Government of Uzbekistan and Intertek International. The pre-shipment inspection is not a service required by the Appellant but it is a requirement for the Government of Uzbekistan. The Government of Uzbekistan has out-sourced the function of pre-shipment inspection to another body and Intertek is only acting on behalf of the Government of Uzbekistan. 4.5 The SCN issued for the period 2006-07 (from 194-2006) to 2008 is beyond the normal period of limitation. The issues raised in the present case involve essentially questions pertaining to interpretation of the provisions of the Finance Act, 1994. It is now well settled by a plethora of judgments that the extended period of limitation is not invokable where the issue invol....
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....k International Ltd. U.K. are exigible to service tax for the period from 2005 to 2009 and whether liability rests Indian recipient under reverse-charge basis? iv. Whether the Department is justified in invoking extended period for imposing penalties in respect of the above payments for the period 2005-2009? v. Whether Section 80 of Finance Act, 1994 can be invoked in this case for waiver of penalties? 8. In order to appreciate the rival contentions, it is necessary to advert to the relevant statutory provisions contained in the Finance Act, 1994, as it stood during the material period. (i.e. for the period of 2005-2014): - A. As per Section 66A of the said Act, "(1) Where any service specified in clause (105) of Section 65 is: (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and (b) received by a person (herein referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of resid....
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....94, Taxable Service means - any service provided or to be provided to any person, by a technical inspection and certification agency, in relation to technical inspection and certification agency, in relation to technical inspection and certification." As per Section 65(108) of the Finance Act, 1994 Technical inspection and certification means - "inspection or examination of goods or process or material or information technology software or any immovable property to certify that such goods or process or material or information technology software or immovable property qualifies or maintains the specified standards, including functionality or utility or equality or safety or any other characteristic or parameters, but does not include any service in relation to inspection and certification of pollution levels." G. As per Board's Master Circular No. 96/7/2007 dated 23.08.2007 (Reference Code No. 999.01), only the services rendered by Sovereign / Public authority is exempted from payment of service tax. H. As per Section 65B (44) of the Finance Act, 1994, "service" means any activity carried out by a person for another for consideration, and includes a declared se....
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....al members of the Association make contributions to meet the expenses for holding meetings in order to have a mutual exchange of ideas and with a view to improve quality and cost effectiveness of the products manufactured by them. Hence, the relationship of a Service provider and a service recipient is absent. In this connection, the Appellant relied upon the judgment of the Calcutta High Court in the case of Saturday Club Ltd. Vs. Assistant Commissioner of Service Tax - reported in 2005 (180) ELT 0347 (Cal.) = 2006 (003) STR 0305 (Cal.), wherein it was held as under: "Therefore, principally there should be existence of two sides/entities for having transaction as against consideration. In a members' club there is no question of two sides. 'Members' and 'club' both are same entity. One may be called as the principal when the other may be called as agent, therefore, such Transaction in between themselves can/not be recorded as income, sale or service as per applicability of the revenue tax of the country". 9.3 A Similar order was passed by the Hon'ble Gujarat High Court in the case of Sports Club of Gujarat Ltd. Versus Union of India 2010 (20) S.T....
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....r the expression "an association of persons or bodies of individuals, whether incorporated or not", uses the expression "a body of persons" when juxtaposed with "an unincorporated association". 82. We have already seen how the expression "body of persons" occurring in the explanation to Section 65 and occurring in Section 65(25a) and (25aa) does not refer to an incorporated company or an incorporated cooperative society. As the same expression has been used in Explanation 3 post-2012 (as opposed to the wide definition of "person" contained in Section 65B(37)), it may be assumed that the legislature has continued with the pre2012 scheme of not taxing members' clubs when they are in the incorporated form. The expression "body of persons" may subsume within it persons who come together for a common purpose, but cannot possibly include a company or a registered cooperative society. Thus, Explanation 3(a) to Section 65B(44) does not apply to members' clubs which are incorporated. 83. The expression "unincorporated associations" would include persons who join together in some common purpose or common action - see ICT, Bombay North, Kutch and Saurashtra, Ahmedabad v. Ind....
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.... its members shall be treated as distinct persons. Simultaneously, Section 65B(37) defined "person" to include an association of persons or body of individuals, whether incorporated or not, thereby statutorily deeming such associations as separate juridical entities capable of providing services to their members. 9.12 We note that the CBEC Education Guide, June 2012 (para 2.4.2) also clarified that "an unincorporated association or body of persons and a member thereof are to be treated as distinct persons; accordingly, any provision of service by an association to its members shall be taxable." 9.13 The Lower Appellate Authority has held the case Laws cited by the Appellant are not applicable in view of the explanation to the definition of Club or Association Service after 01.07.2012. Further by virtue of the Explanation and the expanded definition of "person," the relationship between a club and its members has been legislatively bifurcated into two distinct legal entities for the limited purpose of taxation. 9.14 We find that consequently, for the post-1 July 2012 period, once the club, association, or similar body receives consideration from its members for facilities o....
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.... the issue of payment in FOREX to British Safety Council for participating in the sword of honour contest held abroad. 10.2 We observe that the Lower Appellate Authority in Paras 9,10,12 held that: - "9. The appellant have contended that British Safety Council holds contest for choosing the winners of 'British word of Honour Award' and to participate in such contests, they paid the participation fee. The said Award is a prestigious International Health and Safety Accolade which many parties strive to achieve. From these submissions it is evident that what was paid by the appellant was participation fee for participating in a contest for winning an award, which, if won, would bring accolades and consequential commercial advantage to the appellant. 10. From the above facts, it is evident that services which will provide commercial advantages to the appellant were provided by the said Club or Association or Council to them. However, the appellant contests that the said activities cannot be termed as service provided by these bodies to bring the same under Club or Association Service. ....... 12. A plain reading of the said provisions reve....
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.... services performed in India or that the supply consisted of services consumed in India. There is no evidence on record that during the years of participation in the contest, whether the Appellant have been awarded the honour in the contest to show that the services were imported into India. 10.6 We find that the payments made by the appellant in foreign currency to the British Safety Council, U.K. for participation in the 'Sword of Honour' contest were payments for entry/participation fee and for adjudication conducted by the BSC abroad. There is no evidence on record that the appellant paid such fees as a member for member-only reciprocal benefits nor is there any evidence of continuous technical consultancy or online services supplied into India by BSC. For the period prior to 01.07.2012 the doctrine of mutuality (as enunciated in Saturday Club Ltd. discussed supra) protects genuine member-to-club reciprocal transactions; conversely, purely commercial supplies are taxable only if they fall within the specific entries in Section 65(105). On the basis of present material, the transaction is an overseas contest/award adjudication performed outside India and does not fall within ....
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....ing Services (U.K.) Ltd. for pre-shipment inspection and certification of Import consignments. The Department has classified the activity under "Technical Inspection and Certification Service" as defined in Section 65(105)(zzi) of the Finance Act, 1994, read with Section 65(108) and has demanded service tax from the appellant under the reverse-charge mechanism in terms of Section 66A. But the appellant has contended that the inspection was pursuant to the requirements of the Government of the Republic of Uzbekistan, and that Intertek (U.K.) acted as a designated agency of that Government, and therefore the function was in the nature of a sovereign or statutory certification not amenable to service tax. 11.4 On careful consideration, we find that the record does not disclose any notification or bilateral arrangement conferring statutory authority on Intertek (U.K.) to act as an instrumentality of the Uzbek Government. The engagement between the appellant and Intertek (U.K.) emanates from a commercial contract under which the appellant obtained certification for its import consignments in order to facilitate acceptance of goods in the importing country. The inspection and certific....
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....t. The Appellant having been issued Show Cause Notice on 22-62006 i.e. after a year of the visit by the investigating agency the proceeding is not time-barred for escapement of levy and for the reasons attributable to the Appellant who made a gross receipt of Rs. 41,34,000/- during the impugned period. There is no provision in law prescribing time limit for issuance of the Show Cause Notice except law stating that the Show Cause Notice in normal cases is issued within one year of the relevant date (relevant date explained in law) and in cases of subterfuge to Revenue within five years of the relevant date. Apex Court in para24 of the judgment dealt the cause of action in the case of Mehta & Co. in the decision supra. The Appellant falls within the fold of para-24 of the judgment of the Apex Court. Therefore issuance of the Show Cause Notice dated 22-6-2006 is well within time for the period escaping levy. In the present case, limitation can be reckoned from the date of knowledge of the department on 20-1-2005 giving rise to cause of action. Following the ratio laid down by the Apex Court, we hold that the Adjudication is not time-barred. Issue No. 3 is thus answered as above having....
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....at there had been a suppression on the part of the appellant". Undisputedly, in this case no information whatsoever relevant for initiation of action was submitted by the appellants during the period from April, 1997 to March, 1998. It is not the case of the appellants that during the said period there was any inspection of the appellants' premises. It is also not the case of the appellants that during the said period the departmental people had inspected the records maintained by the appellants. On the contrary it is an undisputed fact that there was search of the premises on 8-9-1998 and pursuant to that certain relevant facts were revealed to the department. Being so, it is a clear case of facts having come to the knowledge of the department pursuant to the efforts by the department and suppression thereof by the appellants. In these circumstances, therefore, the decision in Khushal Fertilisers (P) Ltd.'s case is of no help to the appellants. As far as the decision in Nizam Sugar Factory, it is essentially in relation to the issue as to whether the department can invoke the extended period of limitation by issuing second show cause notice in spite of the fact that the department....
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.... fide suppression. Mere non-payment does not by itself establish suppression. Accordingly, extended limitation and penalty are not justified on the present record. 12.4 Now, we proceed to consider whether the extended period of limitation (and consequential penal consequences) has been rightly invoked by the Department. The alleged short-payment/non-payment came to light only pursuant to departmental audit and investigation; the appellant did not voluntarily disclose the disputed transactions nor did it place the relevant facts before the Department at any earlier point; or request for advance clarification was placed on record by the appellant; and the appellant has not pleaded a bona fide legal doubt on the taxability of the transactions. 12.5 We find that the proviso to Section 73(1) of the Finance Act substitutes the ordinary one-year limitation by a longer period where the short-payment arises by reason of "fraud, collusion or any wilful mis-statement or suppression of facts ... with intent to evade payment of tax". The expression "suppression of facts" is not apt to cover mere omission or bona fide error: it denotes deliberate nondisclosure of material facts with the re....