TaxTMI 
TaxTMI 
2026 (3) TMI 1530
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....23.07.2014 was issued demanding Rs.41,07,109/- for the period May 2011 to September 2012, followed by a Statement of Demand dated 09.12.2014 demanding Rs.20,20,402/- for October 2012 to March 2014. The adjudicating authority confirmed the demands with interest and imposed penalties under Sections 76, 77, and 78. The Commissioner (Appeals) upheld the order, setting aside only the penalty under Section 77. Hence, the present appeal. 3. The learned Advocate Shri N. Viswanathan appeared for the appellant and Ld. Authorized Representative Smt. O.M. Reena appeared for the respondent. 3.1 Shri N. Viswanathan Ld. Counsel for the appellant submitted that: A. The appellant is engaged in industrial and residential construction and is duly registered under various taxable services, holding centralized registration and regularly discharging service tax and filing statutory returns. B. Construction activities involve a large workforce, including migrant labour employed directly and through sub-contractors. C. To meet its Corporate Social Responsibility (CSR), the appellant incurred substantial expenses for common accommodation, drinking water, medical camps, educ....
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.... No double taxation arises, as contractors were taxed for construction services, while the assessee is taxed for support services. She prayed that the appeals may be rejected. 4. We have heard the parties to the dispute and perused the appeals. 5. The admitted facts are that the appellant incurred expenses for common labour welfare facilities such as accommodation, drinking water, medical camps, education for workers' children, and safety measures. A contribution towards these facilities was recovered by deducting 0.5% from sub-contractors' bills, initially described as "administrative charges" and later renamed "rebate/discount" from July 2012. The dispute arises because the appellant claims the activities were CSR initiatives and that the recoveries were merely partial reimbursement of welfare expenses, not consideration for any service, and hence not taxable. No alternative classification of the service has been averred by the appellant as an alternate plea. Per contra revenue contends that no evidence was produced to substantiate this claim. Further CSR activities are not exempt, and the percentage-based recovery linked to bill value indicates administrative and operation....
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....nt collected is not consideration, which is examined below. 7. The appellant has submitted that the impugned activity is part of its CSR. No evidence of the same has been submitted. We find that companies exceeding the threshold limit specified under section 135 of Companies Act, 2013 are expected to undertake CSR activity. These activities are not exempt from tax. CSR also excludes activities undertaken in pursuance of the normal course of business of the company. 8. The appellant has stated that they are only collecting partial reimbursement of welfare expenses and this amount is not a consideration for any service rendered by them. It was initially termed "administrative charges" and later i.e. from July 2012 (after the introduction of the negative list), it was renamed "rebate/discount". However, it was stated by revenue and not refuted by the appellant that the sub-contractors while claiming payment did not mention any discount/rebate in their invoices/bills. The Hon'ble Supreme Court in Indian Chambers Of Commerce Vs C.I.T., West Bengal II, Calcutta [AIR 1976 SUPREME COURT 348 / 1976 (1) SCC 324], has cautioned that verbal labels are convenient but not infallible. We ha....
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....quivalent to for loss or expense". 31. Black's Law Dictionary [Sixth Edition], defines the expression 'reimburse' as follows: "Reimburse. To pay back, to make restoration, to repay that expended; to indemnify, or make whole. Los Angles County v. Frisbie, 19 Cal.2d 634, 122 P.2d 526." In P. Ramanath Aiyer's The Law Lexicon [2nd Edition page 1641], the meaning of the expression 'reimburse' has been defined thus: "To reimburse is to pay back, and this primary meaning to the word is to be imputed to it, where the meaning is not controlled by context or contract stipulations. The primary meaning of the word "reimburse" is to pay back; to make return or restoration of an equivalent for something paid, expended, or lost; to indemnify; to make whole." Justice C.K.Thakker's, Encyclopaedic Law Lexicon [Vol.4 page 4038 ], adverts to the meaning of expression 'reimbursement' as: "To pay back an equivalent for what has been spent or lost, to indemnify, to refund to recompense, to return the money." (emphasis added) From a conspectus of the decisions above, it can be stated in the....
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....se, however, recovery has been made at a uniform rate of 0.5% of the contractors' bill value, which is variable and not payments towards a fixed cost. The recovery, being variable and value-linked, assumes the character of consideration for services rendered. In the absence of documentary evidence regarding the alleged welfare activities, the description of the recovery as "administrative charges" itself indicates the understanding of the parties to the nature of services provided. If the activity were purely in discharge of a welfare or CSR obligation, there would be no occasion for recovery from contractors. The recovery thus constitutes a quid pro quo for services rendered. Hence the judgment of the Hon'ble Supreme Court cited by the appellant does not help their cause. 12. It is settled law that the burden to establish the taxability of a service lies on the Revenue, which must discharge this burden by adducing proper evidence. However, in tax matters, the standard of proof is one of 'preponderance of probability' and not 'proof beyond reasonable doubt' as required in criminal cases. Mathematical precision is not necessary. At the same time, the onus to produce relevant deta....
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.... "28. We do not find any merit in the appellant's submission that there was double taxation in this case. The expression "double taxation" is often used in different senses, namely, in its strict legal sense of direct double taxation and in its popular sense of indirect double taxation. Double taxation in the strict legal sense means taxing the same property or subject matter twice, for the same purpose, for the same period and in the same territory. To constitute double taxation, the two or more taxes must have been (1) levied on the same property or subject matter, (2) by the same government or authority, (3) during the same taxing period, and (4) for the same purpose." (emphasis added) The impugned activity fails the above test of double taxation. Further service tax is a value added tax and service tax is imposed every time service is rendered to another person. Hence if distinct service activities are involved, as in this case, then the purpose is not the same and there can be no double taxation. Hence the appellants plea fails in this regard also. 14. As regards the question of time bar, we find that the issue has been examined at para 6.4 of the OIO and is repr....