TaxTMI 
TaxTMI 
2026 (1) TMI 158
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....t the respondent were not depositing Service Tax properly though they were collecting Service Tax form the above mentioned clients. 2.1. Accordingly, the registered premises and other premises of the respondent were searched on 18.07.2013 by the DGCEI, Kolkata. The above search operation resulted in the recovery and seizure of various incriminating documents and balance sheets for the period from 2008-09 and 2009-10. 3. From scrutiny of the records and statements furnished by the Representative and Partner of the respondent, it appeared to the Revenue that the respondent was evading payment of Service Tax, by collecting the same from their clients and not depositing the same in the Government exchequer and also by short payment / irregular payment of Service Tax on the services rendered by them to their clients. 4. The respondent submitted a statement showing the balance sheet reconciliation along with quantification of their Service Tax liability for the period from 2008-09 to 2010-11. From that, it appeared that during the material period, the respondent had provided both taxable as well as exempted services to their various clients in connection with works contract serv....
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.... that the respondent had paid more than their tax dues under the VCES, while in terms of Section 109 of the Service Tax Voluntary Compliance Encouragement Scheme, 2013, the excess amount paid by the assessee was not refundable. In view of this, the ld. adjudicating authority has dropped the proceedings against the respondent. 5.2. Against the said order, the Revenue is before us, on the ground that the ld. adjudicating authority has granted the benefit of the composition scheme to the respondent, which is erroneous and illegal; the respondent had admitted that only few of the materials were provided whereas steel items and cement were provided by their clients free of cost; while availing the benefit of 67% abatement, the respondent had considered the material used therein, but failed to produce any evidence towards supply of such materials to their clients during the entire proceedings of the instant case. It is further challenged that the ld. adjudicating authority has considered the payment of Service Tax under the VCES scheme, but has not discussed as to whether the said Service Tax dues as declared by the respondent were one and the same as the one which has been investigat....
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....of service tax as required under the said Rules and not paid service taxof Rs (7,43,71,054-21,61,882) i.e. Rs.7,22,09,172/- during the period 2008-09 to 2010-11 ii) the assessee provided manpower supply service and realized an amount of Rs.83,27,271/- but they have not paid service tax of Rs.9,06,344/- during the year 2008 to 2010 The assessee has submitted the copies of 26AS, a reconciliation statement showing the project wise value, amount of bill raised, copies of work order, letter of acceptance and relevant copy of agreement during the period in dispute which have been taken into consideration. Before going into the details of this issue I find it necessary to discuss the origin of the demand. I find SCN alleges that the assessee has not submitted the relevant copies of invoices/bill inspite of several summons have been issued. I find the quantification has been made on the basis of gross bill/amount raised/received as enumerated below; Table 1 SI No. Year Name of the assessee Work order No. & date/ Description of works Gross bill raised Figure taken from 1 2008-09 Larson & Turbo Ltd. 05.03.2008/Construction of ....
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.... 0 12 2008-09 Power Grid Corporation of India 531677 From RA bill statement 2009-10 2010-11 (Up to 31.12.2010) 0 13 2008-09 BHEL 12 2360941 Figure from BHEL 2009-10 17 2596873 2010-11 (Up to 31.12.2010) 13 3369457 14 2008-09 NBCC, Noida NBCC/GM- RBG(E&I)/CRPF/2008/ 4157 dated 17.01.2008 valued at Rs. 8193154 From RA bill statement 2009-10 121074560 -do- 2010-11 277640000 148372286 Work Order valued minus RA Bill 10.4. Discussion on project at Sl. No. 1 of Table under para 4.3 of SCN (05.03.2008/Construction of 400/220KVA G.I.S. Sub-Station at Gurgaon of Total value of Rs. 692.90 lakh.) and 11KV Distribution Line in Rann of Catch Gujrat valued at Rs. 390 lakh. The demand has been raised on two different work orders under this Sl. No. I will discuss the taxability of each work order separately. I find that the first work was for construction of 400/220 KVA G.S.I. Sub Station at Gurgaon under Work Order. The SCN has justified the inclusi....
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....itted by the assessee. The suspicion deepens if one looks into the letter dated 10.9.2013 issued by DGCEI and the response of the assessee dated 23.9.2013. If the annexed statement was voluntary in nature and was obtained from the assessee against specific query DGCEI would not have any reason to ask for veracity of the statement. The response of the assessee dated 23.9.2013 challenged the inclusion of this work in their portfolio. It is clear that investigation could not prove anything contrary to that because if it were so the same would have been accommodated in the SCN. In fact from the issuance date of the SCN it becomes clear that no investigation was done in this regard; even if it was undertaken it certainly yielded nothing. The assessee has justified their stance by highlighting the fact that no such amount is reflected in their 26AS. I thus, find that the manner and method applied in the SCN to include this amount as taxable lack all the necessary ingredients to survive the legal test. Under such circumstances I find the demand in this regard fails to survive. 10.5. Discussion on project at Sl. No. 2 of work order no. R/213 dated 05.08.2008 of Rs.42,598/- and Sl.....
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..... The assessee is liable to pay s tax on these issues. 10.9. Discussion on project at Sl. No. 9 of work order no. WBSLB CLD Building of Danesh shekh lane valued Rs.597.56 lakh; The SCN has justified the demand for the project under Sl. No.9 referring to the list of works completed in last 3 years claimed to be submitted by the assessee. From the records 1 find that the so called statement is signed on 18.7.13 by the assessee. However, the SCN has nothing in it to show why such statement was prepared and submitted by the assessee. The suspicion deepens if one looks into the letter dated 10.9.2013 issued by DGCEI and the response of the assessee dated 23.9.2013. If the annexed statement was voluntary in nature and was obtained from the assessee against specific query DGCEI would not have any reason to ask for veracity of the statement. The response of the assessee dated 23.9.2013 challenged the inclusion of this work in their portfolio. It is clear that investigation could not prove anything contrary to that because if it were so the same would have been accommodated in the SCN. In fact from the issuance date of the SCN it becomes clear that no investigation was don....
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....ients to survive the legal test. Under such circumstances I find the demand in this regard fails to survive. 10.12. Discussion on Manpower supply at Sl. No. 13 to BHEL on Rs (23,60,941+25,96,873+33,69,457) i.e. Rs.83,27,271/-; I find that this issue was stirred in course of summons proceedings on 18.07.2013 and the assessee accepted tax liability on this amount. In their reply they have remained silent in this regard. Such silence is nothing but tacit acceptance of them on the tax liability in this regard. The assessee is thus liable to pay s tax on this issue. 10.13. Discussion on project at Sl. No. 14 of work order no.NBCC/GM-RBG(E&I)/CRPF/2008/4157 dated 17.01.2008 for Rs.27,76,40,000/-; The SCN has justified the inclusion of Rs.81,93,154/- and Rs.12,10,74,560 referring to the RA bill. The SCN then subtracted these two values from the total value of the work order. However, the SCN ultimately demanded tax on the entire value of the work order. The assessee has contested that their liability is to be calculated only on the basis of the 26AS figure because only that much amount was received by them during the material period. L....
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.... & T was limited to Rs.33,56,299/- in 2009-10, M/s NBCC Ltd. at Gujrat was limited to Rs.22,49,02,373/- during the period from 2008-09 to 2010-11. 1, thus, find that the discussion / inference made above conforms with the financial records of the assessee. 10.15. Quantification of tax liability On going through the SCN I find that in course of raising the demand there was complete absence of mathematical accuracy, coherent reasoning and carefulness expected in such exercise. I have failed to understand how an assertion like the following one can be made. On scrutiny of the ST-3 Returns it is seen that they have deposited Service Tax to the Govt. exchequer in the category of Works Contact Service at the rate of 4.12% after availing abatement 67% on the Gross value as per following table:... The table clearly shows that after availing 60% abatement the assessee paid s tax at full rate. Careless attitude in the SCN becomes magnified as it goes on to argue that the assessee was not eligible to follow composite scheme and thus, they were not eligible to avail any abatement at all. On the basis of such inventive logic the demand was raised applying ful....
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....6AS the assessee received Rs. 1,47,42,793/-. This is taxable and in this case as this amount represents the total receipt this value should be considered as cum tax value. The tax liability on this comes to Rs.6,94,545/-. [(1,47,42,793/104.944) X100X4.944%-6,94,545/-] (4.944% is the effective rate when the abatement is 60% and rate of tax is 12.36%) In 2009-10 as per the 26AS the assessee received Rs.6,85,26,533/-. This is taxable and in this case as this represents the total receipt this value should be considered as cum tax value. The tax liability on this comes to Rs.27,11,576/-. [(6,85,26,533/104.12)X100X4.12%-27,11,576/-] (4.12% is the effective rate when the abatement is 60% and rate of tax is 10.30%). In 2010-11 as per the 26AS the assessee received Rs.8,22,34,300/-. This is taxable and in this case as this represents the total receipt this value should be considered as cum tax value. The tax liability on this comes to Rs.32,53,989/- [(8,22,34,300/104.12) X100X4.12%-32,53,989] (4.12% is the effective rate when the abatement is 60% and rate of tax is 10.30%) Thus, the total liability against Work....