TaxTMI 
TaxTMI 
2026 (2) TMI 1279
X X X X Extracts X X X X
X X X X Extracts X X X X
....is reduced to Rs.21,81,352/- along with applicable interest u/s 75 of the Act and equal penalty u/s 78 of the Act. However, I set aside the penalty u/s 77(1)(d) of the Act." 1.2 By the Order-in-Original dated 22.12.2023 following has been held:- "ORDER i. I confirm the demand of Service Tax amounting to Rs. 32,84,675/- (inclusive all cess) (Rupees Thirty two lakh eighty four thousand six hundred seventy five only) on M/s Orane Consulting Pvt. Ltd., Noida under sub-Section (2) of Section 73 of Chapter V of the Finance Act, 1994, on the taxable value of services provided by the noticee during the financial year 2016-17.l however drop the balance demand of Rs. 30,36,750/- as the same was not found sustainable in law, as discussed above. ii. I order that the noticee shall pay interest, under section 75 of Chapter V of the Finance Act, 1994, on the above said service tax amount of Service Tax Rs. 32,84,675/- from the next day of due date for monthly payment of tax till the date of payment of the tax amount. iii. I impose a penalty equal to the tax amount of Rs. 32,84,675/- under sub-section (1) of section 78 of Chapter V of the Finance Act, 1994, upon th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x Department, it was observed that appellant has short paid service tax as detailed in table below by suppressing the relevant facts from the department with intent to evade payment of service tax:- Financial Year Gross Receipts Higher of 2-4 and 3-4 Service Tax ITR 26AS ST-3 @% Payable 1 2 3 4 5 6 7 2016-17 42142833 37216263 0 42142833 15 6321425 2.6 Show cause notice dated 07.10.2021 alleging suppression with intent to evade payment of service tax and invoking extended period of limitation was issued to the appellant asking them to show cause as to why:- "(i) The Service Tax amounting to Rs. 63,21,425/-/- (Rupees Sixty Three Lakh Twenty One Thousand Four Hundred Twenty Five Only) should not be demanded and recovered from them under proviso to Section 73(1) of the Finance Act, 1994. (ii) The due interest on the amount of Service Tax mentioned at (i) above should not be demanded and recovered from them under Section 75 of the Finance Act, 1994. (iii) Penalty should not be imposed upon them under Section 78 of the Finance Act 1994 for failure to pay service tax & ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emises of the assessee, the demand is time barred and extended period of 5 years cannot be invoked. ○ Aban Lyod Chiles Offshore Ltd. v СС, Maharashtara 2006 (200) ELT 370 (SC), it was held that department was aware of the general nature of the activity of the assessee. Therefore, the assessee cannot be accused of willful suppression of facts when all facts were in the knowledge of the department. Hence, there is no justification in invoking the extended period of limitation. ○ CCE, Vadodara v Pioneer Scientific Glass Works 2006 (197) ELT 308 (SC) relying upon the decision in the case of M/s Pushpam Pharmaceuticals v Collector 1995 (78) ELT 401 (SC), the Supreme Court held that omission by one party to do what he might have done and not that he must done does not render it to the suppression of fact. The act has to be deliberate and not merely an omission to allege suppression on the part of the assessee. The Court also held that the act of withholding by the assessee to be positive and deliberate to withhold the information to escape from payment of duty before it is saddled with any liability for the extended period. ○ Jaipr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... In above context I find that the provisions of Notification No. 40/2012-S.T., dated 20-6-2012 as were in operation upto 01.07.2013, read as under :- "In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) read with subsection 3 of section 95 of Finance (No. 2), Act, 2004 (23 of 2004) and sub-section 3 of section 140 of the Finance Act, 2007(22 of 2007) the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the services on which service tax is leviable under section 668 of the said Act, received by a unit located in a Special Economic Zone (hereinafter referred to as SEZ) or Developer of SEZ and used for the authorised operations, from the whole of the service tax, education cess and secondary and higher education cess leviable thereon. 2. The exemption contained in this notification shall be subject to the following conditions, namely:- (a) the exemption shall be provided by way of refund of service tax paid on the specified services received by a unit located in a SEZ or the developer of SEZ and us....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bject to the following procedure and conditions, namely:- (a) the SEZ Unit or the Developer shall furnish a declaration in Form A-1, verified by the Specified Officer of the SEZ, along with the list of specified services in terms of condition (1); (b) on the basis of declaration made in Form A-1, an authorisation shall be issued by the Jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be to the SEZ Unit or the Developer, In Form A-2; (c) the SEZ Unit or the Developer shall provide a copy of said authorisation to the provider of specified services. On the basis of the said authorisation, the service provider shall provide the specified services to the SEZ Unit or the Developer without payment of service tax; (d) the SEZ Unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement, in Form A-3, furnishing the details of specified services received by it without payment of service tax; (e) the SEZ Unit or the Developer shall furnish an undertaking, in Form A-1, that in case the specified services on which exemption has been cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies made to the following SEZ units :- S No Name of SEZ unit Consideration received against such supply of services in Rs, 1 M/s Danta Technologies Pvt. Ltd., Plot no.07, Sector 144, Noida 2,72,500 2 Seal Infotech Pvt. Ltd., Plot no. 42A, Cochin SEZ, Kalkhand, Cochin-682037 7,06,090 3 Meterner Limted, Knowledge Park-V, Greater Noida, Distt. G.B. Nagar, UP 8,62,500 4 M/s Motherson Sumi Infotech & Designs Limited, Plot no.202, Sector KP, Greater Noida 1,35,667 5 M/s NTT Data Global Services Pvt. Ltd., 47A & B(Phase-2) NOIDA-201305 4,80,000 6 Nucleus Software Export Limited, Plot No. TZ 04, Noida, Distt. Gautam Buddha Nagar 22,88,000 7 Rattanindia Nasik Power Limited, SEZ Codeveloper, Plot No. A1, Village Musalgaon & Gulvanch, Additional MIDC, Sinner, Nashik 26,10,726 Total 73,55,483 In view of the above I hold that the Service tax on the above consideration of Rs.73,55,483/- against supply to the SEZ units; amounting to Rs. 11,03,322/-; is not liable to be paid and is exempt from payment of Service tax. However, as regards the remaining amount of Service tax of Rs.21,81,352/- the same has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....turnover of Rs. 4,21,42,832/- for the financial year 2016-17, there was non-taxable turnover of Rs. 2,02,44,996/- (Rs. 54,05,226/- on account of export of services and Rs. 1,48,39,770/- on account of services provided to SEZ units), (ii) they had provided taxable services of 2,18,97,836/- only during the said financial year whereon the Service Tax liability was. 32,72,492/-, (iii) they are liable to pay Rs. 26,46,677/- in cash after adjusting available Cenvat credit of Rs. 6,25,819/- on the said taxable value of Rs. 2,18,97,836/-. 5.3. The case records show that M/s. Orane Consulting Pvt. Ltd. having Service Tax Registration No. AABCO2224JSD001 is engaged in the domestic sales and export of services namely SAP software development and its consultancy and maintenance. I have perused the documents furnished by the noticee. As per copy of 26AS for FY 2016-17, the value of services on which TDS under provisions of Income Tax Act had been made during the said financial year, is R. 3,72,16,263/-, whereas the value of services shown in the Income tax returns for the corresponding period is R. 4,21,42,833. The noticee has provided the break-up of revenue from ope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 2,90,861 Oct,16 Sameer Agriculture & Livestock Ltd. PO Box 10200507, Olesol Road Off-Lunga road, industrial Area Nairobi, Kenya 22 USD 5,200 3,45,696 Mar, 17 ITGEST Software E Sisemas RUA TOMAS RIBEIRO, 625 LOJA 8 R/c 4450-298, Matosinhos Portugal 23 EURO 4,497 3,10,264 ITGEST Software E Sisemas RUA TOMAS RIBEIRO, 625 LOJA 8 R/c 4450-298, Matosinhos Portugal 24 EURO 17,09 0 11,79,238 TOTAL 2016-17 54,05,227 6.1. The noticee in the above regard has claimed the export was in respect of software services to their various foreign customers against which payment was received in foreign currency and, accordingly, it has been claimed that such services were exempt from payment of Service Tax being export of services. From the perusal of relevant Invoices, I observe that the currency mentioned therein is Euro, USD & SGD. 6.2. Before proceeding further, it is imperative to discuss the relevant provisions pertaining to Export of services as laid down under Rule 6A of Service Tax Rules, 1994 which reads as under: "Rule 6A Export of Services. (1) The provisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ple copies of invoices furnished by the noticee, I observe that recipient of service are independent entities and not merely an establishment of a distinct person in accordance with Item (b) of Explanation 3 of clause (44) of section 658 of the Act. Thus, the last condition as laid down under the clause (f) Rule supra is also fulfilled. 6.7 Thus, I find that the criteria for Export of Services as laid down in the Rule 6A, ibid, is complied with by the noticee and therefore, the services of Rs. 54,05,226/- provided by them appropriately fall under the category of Export of Services for the financial year 2016-17, and were therefore exempt from payment of service tax. 7. Services provided to SEZ Units: Now I proceed to examine the taxability of Rs. 1,48,39,770/-on account of services which are claimed to have been provided to SEZ units. On perusal of the Invoices and copy of form 26AS submitted by the noticee, I observe that they have provided services of SAP Consultancy to M/s IGT Solutions Pvt. Ltd., SEZ Infospace buliding No. 1, Tower-B, Sector21, Dundahera, Gurgaon; M/s Interglobe Technologies International Pvt. Ltd., SEZ Infospace Building No. 1, Tower-B, Secto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r and used for the authorised operations: Provided that where the specified services received by the SEZ Unit or the Developer are used exclusively for the authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio, subject to the conditions and procedure as stated below. 3. This exemption shall be given effect to in the following manner: (I) The SEZ Unit or the Developer shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations (referred to as the 'specified services' elsewhere in the notification) on which the SEZ Unit or Developer wish to claim exemption from service tax. (II) The ab-Initio exemption on the specified services received by the SEZ Unit or the Developer and used exclusively for the authorised operation shall be allowed subject to the following procedure and conditions, namely:- (a) the SEZ Unit or the Developer shall furnish a declaration in Form A-1, verified by the Specified Officer of the SEZ, along with the list of specified services in terms of condition (1); (b) on the basis of declaration ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r-21, Daruhera, Gurugram iii. M/s Mestro India private Limited, DLF SEZ, 12th Floor, Tower C, SEZ,DLF Cyber City, Phase-3, Gurugram, Haryana-122002. iv. M/s Ratanindia Nasik Power Ltd., Plot no. A1, Multiproduct SEZ, Additional MIDC Sinnar, Nashik (MH). v. M/s. InterGlobe Technologies Pvt. Ltd., SEZ Infospace Building No. 1, Tower-B, Sector-21, Dundahera, Gurugaon 7.3 Thus, I find that for the specified services of 'Information Technology software Services' provided by the noticee to said SEZ Units for use in authorised operations, the noticee was eligible for exemption from payment of Service Tax in terms of Notification No. 12/2013-ST, dated 01.07.13, as amended, read with the provisions of SEZ Act, 2005 and SEZ Rules, 2006. Thus, in respect of the amount of. 1,48,39,770/- pertaining to the aforesaid services rendered to SEZ Units during 2015-17, the contention of the noticee is sustainable, and no service tax was leviable thereon during the said period. 8. In view of above discussion and findings, I derive that out of the total turnover of . 4,21,42,832/-, the services valuing. 2,02,44,996/- were exempted from payment of Servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t was admissible to them during the relevant period. Secondly, the noticee has not furnished any evidence regarding maintenance of any records for receipt and consumption of such services as required under Cenvat Credit Rules, 2004 and have not claimed such services tax CENVAT credit in the ST-3 returns for the period 2016-17. Therefore, in absence of any CENVAT documents and relevant record, benefit of CENVAT Credit claimed by the noticee cannot be extended to them under CENVAT Credit Rules, 2004. 9. As per sub-section (1) of section 68 of Chapter V of the Finance Act, 1994, every person providing taxable service to any person was liable to pay service tax In such manner and within such period as was prescribed. As per clause (1) and second proviso to sub-rule (1) of rule 6 of the Service Tax Rules, 1994, the service tax was liable to be paid to the credit of the Central Government- * for the months of April to February of a financial year, by the 6th day of the month Immediately following the month in which service was deemed to be provided, and * for the service deemed to be provided in the month of March, by the 31 day of the said March. Ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....caping from tax. Had they provided the required Information to the department, and in case the department issued Show cause notice without consideration of the records submitted by the noticee, would have made their case. Hence, I hold that the noticee had not-paid the service tax amounting to Rs.32,84,675/- (inclusive all cess) for the financial year 2016-17, by reason of suppression of material facts from the department with an Intent to evade payment of service tax, liability of which has also been admitted by them, and thus the same is recoverable from them under the proviso to Section 73(1) of the Finance Act, 1994, by invoking the extended period of limitation. 11. Penalty under Section 78 of the Act ibid:- Coming to the question of penalty, I observe that as I have already arrived at the conclusion that the assessee had suppressed material facts from the Department, contravened the provisions of the Act with intent to evade payment of service tax and therefore, I find that it is a fit case for Imposition of penalty under Section 78 of the Finance Act. 1994. In support, I rely on the case law in the matter of Union of India Vs. Dharamendra Textile Processors 2008TIOL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Appellate Authority to the appellant. In para 3.4 of the Order-in-Original following has been recorded:- "3.4 Further, during the personal hearing held before the earlier Adjudication authority on 15.12.2022, Sh. Manuj Gupta, CEO of the company pleaded their case and reiterated on the submission made by them vide their defense reply dated 05.10.2021, which was submitted before the issuance of Show Cause notice wherein it was contended that they were not able to file Service Tax return and pay service tax dues for the F.Y. 2016-17 due to unavoidable reasons, however, the service tax liability was calculated and accounted by them in their books of accounts; that out of the total turnover of Rs. 4,21,42,832/- there was non-taxable turnover of Rs. 2,02,44,996/- for the F.Y. 2016-17 (Rs. 54,05,226/- on account of export of services and Rs. 1,48,39,770/- on account of services provided to SEZ units); that their net Service Tax liability was Rs. 26,46,677/- (after adjusting Cenvat credit of Rs. 6,25,819/-) on the taxable value of Rs. 2,18,97,836/-. He was asked to submit the defense in respect of the non-taxable services as shown in their letter." 4.6 On perusal of the above....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It was held that its object is to prevent fraud and secure justice between the parties by promotion of honesty and good faith. It was therefore, further held that when one party makes a representation to the other about a fact he would not be shut out by the rule of estoppel if that other person knew the true state of facts and must consequently not have been misled by the misrepresentation. 12.2 In the decision in Pratima Chowdhury v. Kalpana Mukherjee [AIR 2014 SC 1304], while considering Section 115 of the Evidence Act, this Court held that four salient conditions are to be satisfied before invoking the rule of estoppel. Firstly, one party should make a factual representation to the other party. Secondly, the other party should accept and rely upon the aforesaid factual representation. Thirdly, having relied on the aforesaid factual representation, the second party should alter his position. Fourthly, the instant altering a position, should be such, that it would be iniquitous to require him to revert back to the original position. After holding so, it was further held that the doctrine of estoppel would apply only when, based on a representation by the first party, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not apply if lapse of time is of no importance or consequence." The position expounded as above certainly request consideration with reference to the facts of this case. In that regard we will have to consider whether there was acquiescence on part of the respondent and if so, whether lapse of time, if any, is of no importance or consequence, with reference to the factual position, in view of the exposition thereunder „that acquiescence would not apply if lapse of time is of no importance or consequence'. 14. What is crystal clear from the enunciation of law in catena of cases is that the equity will follow the law and it would tilt in favour of law and further that to claim equity the party must explain previous conduct." 4.7 It is also observed that appellant was collecting service tax from its service recipient to whom services were provided in the GTA. Reference is made to para-8 of the Order-in-Original (reproduced earlier in para 4.3 above) wherein specific invoice has been referred on which appellant has charged service tax @14%, SBC @0.5% and KKC @0.5%. It is clearly establishes that appellant was illegally and deliberately collecting the service tax in r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that the rule in question is not applicable in regard to the credits acquired by a manufacturer prior to coming into force of the rule. Disagreeing with the said proposition, the Apex Court observed that a plain reading of the said sub-rule clearly shows that it applies to those cases where a manufacturer is seeking to take the credit after the introduction of the rule and to cases where the manufacturer is seeking to do so after a period of six months from the date when the manufacturer received the inputs. It was held that the said sub-rule operates prospectively in regard to those manufacturers who seek to take credit after coming into force of the rule. Agreeing with the Tribunal, the Apex Court has observed as follows :- "Therefore, in our opinion, the Tribunal was justified in holding that the rule in question only restricts a right of manufacturer to take the credit beyond the stipulated period of six months under the rule." 9. The ratio of the above judgment is that the said sub-rule is in the nature of period of limitation restricting the right of manufacturer to take the credit within the specified period of limitation and beyond the period of limitati....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... limitation that once the period of limitation has began, no subsequent event can stop it, the argument of the applicant is liable to be rejected. 16. Though in a slightly different context the Apex Court while interpreting Section 11A of Central Excise and Salt Act has observed that:- "Limitation period should not be stretched more than the elasticity supplied in the Section itself. So, the eventuality envisaged in S. 11A for the further lengthening of the limitation period must be strictly construed." 17. In Gurusahai Saigal v. Commissioner of Income Tax, Punjab, AIR 1963 SC 1062, a case under the Income-tax Act, the Apex Court while construing the relevant provision of the Act has held that the proper way to deal with such a provision is to give it an interpretation which, to use the words of the Privy Council in Mahaliram Ramjidas's case, AIR 1940 PC 124, "makes the machinery workable, ut res valeat potius quam pereat." 18. Reference was made by the learned counsel for the applicant to the case of Commissioner of C.EX., Jaipur v. Parasrampuria Synthetics Ltd., 2000 (116) E.L.T. 581 (Tribunal) wherein it has been held that the bar created by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... than six months old on the date of amendment and no credit was taken on them, to take credit on such documents, the appellant replied upon the Hon'ble Supreme Court case Union of India v. Harnam Singh (Supra). We find that Hon'ble Supreme Court in the case of Miles India Limited v. Assistant Collector of Customs, reported in 1987 (30) E.L.T. 641 (S.C.) and in the case of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills, reported in 1988 (37) E.L.T. 478 (S.C.) held that authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation, prescribed in the Act will prevail. We find no such provisions under the Central Excise Act or under the Rules where the Tribunal can issue such directions as given by the Hon'ble Supreme Court in the case of Union of India v. Harnam Singh (Supra). Therefore there is no merit in this plea of the appellants. The appellants also relied upon the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. Union of India, reported in 1999 (106) E.L.T. 3 (S.C.) = 1999 (30) RLT 829 (S.C.) to say that ....