TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 155
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....ported at 2019 (28) GSTL 116 (Tri. All.) wherein, it has been categorically stated that: - "However, as regards imposition of penalty in terms of Section 77 of the Act, we find that as already full penalty stands imposed under Section 78, there may not be justification for imposition of separate penalty under Section 77 of the Act. The same is accordingly set aside." In view of the above, I set aside the penalty imposed upon the appellant under 77(1)(a), 77(1)(c) & Section 77 (2) of the Finance Act, 1994. In the light of discussions made in the foregoing paras, the impugned order is modified to the above extent and the appeal is disposed of accordingly." 2.1 Appellant is not registered with the department and is having PAN No.BIDPS9791N. 2.2 On the basis of information received from the Income Tax Department, it was observed that during the period 2015-16 they had declared in their ITR about receipt of Rs.18,70,310/- in lieu of services rendered and TDS had been deducted on this amount in their Form 26AS. Thus, it was observed that appellant has short paid service tax as detailed in table below:- Receipts towards Services Service tax (including cess) ....
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....d with Section 174 of CGST Act, 2017 1994 as discussed here-in-above. b. I confirm the liability of interest at the appropriate rates on the aforesaid short paid Service Tax of amount of Ra. 271195/- and order for its recovery under the provisions of the Section 75 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017 as discussed here-in-above. c. I also impose a penalty of Rs. 271195/- upon the aforesaid Noticee, under Section 78 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017, for contravention of various provisions of the Act/Rules. However, an option is given to the Noticee under Clause (ii) of sub Section (1) of Section 78 of the Finance Act, 1994 that if the Service Tax along with interest is deposited within thirty days of communication of this order, the amount of penalty liable to be paid by the party shall be twenty five percent of the Service Tax so determined in the order. Provided that the benefit of reduced penalty under the second proviso shall be available only if the amount of such reduced penalty is also paid within such period. d. I also impose a penalty of Rs. 10,000/-[Rupees Ten Thousand only) upon the Not....
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.... 5.3 Before discussing the contentions of the appellant, I consider it to be in the fitness of things to examine the bills submitted by the appellant. From mere cursory perusal of the contents of the photocopy of the invoices submitted by the appellant it is conspicuously noted that separate entries of professional fee, conveyance, photograph charges are present which have been charged by the appellant from National Insurance Company and United India Insurance Company. I find that the appellant has brought on record copy of their Form 26AS for the period 2015-16 and 2014-15. From there it is apparent that the TDS has been deducted under Section 194 J of the Income Tax Act, 1961, relating to 'TDS on Fees for professional or technical services. This establishes that undisputedly, the appellant is engaged in rendering professional or technical service. The bone of contention in the present appeal relates to inclusion or exclusion of reimbursement of expenses in the assessable value for determining the service tax liability. Answering this question will enable me to take-up subsequent contentions of the appellant. The statutory provisions relating to 'inclusio....
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....(a) enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service, (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, (c) does not use such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services The above statutory provision makes it amply clear that the service provider and recipient should have entered into an agreement that the service provider will be acting as Pure Agent to incur expenditure or costs in the course of providing taxable service and should not have used such services. The appellant has failed to bring any documentary evidence to establish the same. Also, the invoices submitted by the appellant also indicate that the appellant used the transport services and then charged expense incurred on such travelling which is in violation of clause (c) as provided in the explanation above. 5.4 Further, the Hon'ble Apex Court in Civil Appeal No. 2013 of 2014 in the matter of Union o....
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....of invoices raised by them to the insurance companies. On going through these invoices, I find that the appellant has not charged any services tax against such receipts. Thus, I find that the appellant is eligible for cum tax value benefit under Section 67(2) of the Finance Act, 1994 as it is clear from the copy of invoices raised by the appellant to insurance companies that they had not charged any service tax on the same. Thus, the correct service tax liability which the appellant is required to pay is calculated as under: - Value Taxable value after cum tax value benefit Service Tax 14.50% 1870310 1633459 236852 4.3 I find from the above impugned order that the issue is purely revolving around interpretation of the amount claimed by the appellant as reimbursable charges from where appellant as they claimed they had acted as pure agent while collecting the same. 4.4 Impugned order denies that reimbursement claim would not be admissible as the appellant was not acting as a pure agent. It is also on record that appellant was not charging any amount towards service tax in the bills/invoices raised by them. 4.5 Thus I find that the issue is in respect of in....
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....cept such blanket submissions. However as already mentioned, in the facts and circumstances of this case, we do not find that there was any suppression of relevant facts and therefore extended period of limitation cannot be invoked. For the same reasons we also hold that the appellants are not liable to any penalty." 4.7 Hon'ble Kerala High Court has in case of Cochin Minerals & Rutiles Ltd. [2010 (259) E.L.T. 182 (Ker.)] observed as follows: 10. The learned counsel for the appellant therefore very strenuously argued that the Tribunal erred in allowing the appeal of the respondent herein. The learned counsel placed reliance on the following judgments of the Supreme Court. In Continental Foundation Jt. Venture v. Commr. of C.Ex., Chandigarh-I - 2007 (216) E.L.T. 177 (S.C.) at paragraph 10, the Supreme Court considered the meaning of the expression 'suppression' occurring under the proviso to Section 11A(1) of the Central Excise Act and held as follows : "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or 'collusion' and, therefore, has to be construed strictly. Mere omission to g....
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...."In other words, in the absence of any element of deception or malpractice the recovery of duty can only be for a period not exceeding one year. But in case the non-payment etc. of duty is intentional and by adopting any means as indicated in the proviso then the period of notice and a priory the period for which duty can be demanded gets extended to five years." 11. An examination of the above three judgments makes it abundantly clear that it is not in every case where there is short levy or short payment or non levy, etc. that the extended period of limitation is made available to the department for recovery of the amount of tax which escaped assessment. It is only in those cases where there is wilful and deliberate suppression of the fact, such extended period of limitation is available to the department. An 'element of deception or malpractice' is a necessary concomitant of wilful and deliberate suppression of fact. The Supreme Court also opined that in order to invoke the extended period of limitation under the proviso to Section 11A(1) of the Act, there must be some positive act other than mere inaction or failure on the part of the manufacturer. 4.8 Further, I fi....
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....in doing so, also accordingly, they appears liable to a penalty under Section 77(1)(a) for their failure to take registration and a penalty under Section 77(2) of the Act for their failure to file the required ST-3 returns as per provisions of Section-70 of the Act." 4.9 Similarly, Order-in-Original records as follows:- "Thus it is amply clear that for availment of exemption from Service Tax for the claimed re-imbursement, the condition prescribed under sub-Rule 2 of Rule 5 of Service Tax (Determination of Value) Rules 2006 are required to be satisfied by the Noticee failing which all the amounts received by him are taxable under Rule 5(1) of these Rules. Thus the only contention of the Noticee for exclusion of the Conveyance Charges and photo charges is not sustainable on account of non-submission of any documentary evidence. Further they have also claimed SSI exemption based upon their calculation that the conveyance charges and photo charges incurred by them were not part of taxable value. As their claim of exclusion from taxable value is not sustainable; It thus also rejects the claim of the Noticee for SSI exemption. Further, it has already been accepted by them in....
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.... comes to pass... An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..." 23. In the present case, from the evidence adduced by the appellant, one will draw an inference of bona fide conduct in favour of the appellant. The appellant laboured under the very doubt which forms the basis of the issue before us and hence, decided to address it to the concerned authority, the Development Commissioner, thus, in a sense offering its activities to assessment. The Development Commissioner answered in favour of the appellant and in its reply, even quoted a letter by the Ministry of Commerce in favour of an exemption the appellant was seeking, which anybody would have found satisfactory. Only on receiving this satisfactory reply did the appellant decide to claim exemption. Even if one were to accept the argument that the Development Commissioner was perhaps not the most suitable repository of the answers to the queries that the appellant laboured under, it does not take away from the bona fide conduct of the ap....
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....tatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act.' It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held : ...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the alleg....