TaxTMI 
TaxTMI 
2026 (5) TMI 1096
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....vice Tax Commissionerate, Kolkata ('SIV unit' for short) dated 11.07.2013 wherein, required various details and documents as per requisition were provided by the company. Upon scrutiny of the said documents / records as tendered by the appellant, it appeared to the SIV unit that the declaration made by the appellant/declarant in Form VCES-1 under the Service Tax Voluntary Compliance Encouragement Scheme, 2013 (VCES) was substantially false inasmuch as the appellant had not correctly paid Service Tax dues to the tune of Rs.6,34,60,359/- (inclusive of cesses) during the period from 01.10.2007 to 31.12.2012 as they had declared their tax dues as Rs.6,54,845/- only. 3. Pursuant to the above, a Show Cause Notice dated 19.12.2014 was issued, proposing to demand Service Tax amounting to Rs.6,34,60,359/- (inclusive of cess) for the period from 01.10.2007 to 31.12.2012, along with interest and penalties thereon. The amount of Rs.6,54,845/- as deposited by the appellant towards VCES was proposed to be appropriated against the aforesaid liability. 4. During adjudication proceedings, on the basis of the submission made by the appellant-company vide reply dated 20.11.2015, vide the impugn....
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....financial year wise, in defence of the above demand confirmed against them, which can be broadly summarized as under: - (I) Incorrect Demand of Service Tax on Transportation Charges Already Discharged For FY 2008-09 [Amount Involved: Rs.39,077/-] (i) The total transportation charges incurred during the relevant period amounted to Rs.3,15,63,736/-, on which service tax of Rs.9,66,224/- was duly paid and appropriately declared in the ST-3 Returns filed with the Department. Copies of the said returns were also submitted to the SIV team. Notwithstanding this, the Department has once again raised a demand for the same period, without appreciating that the service tax liability had already been fully discharged. In support of this claim, the appellant submitted copies of the ST-3 Returns. The Department has alleged that the transportation charges incurred during this period was Rs.3,25,34,059/-, on which the value of taxable service (25%) has been calculated as Rs.81,33,515/- and Service Tax liability as Rs.10,05,302/-; considering the Service Tax paid by the assessee as Rs.9,66,225, the Service Tax payable by the appellant has been calculated as Rs.39,077/-. (....
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....,60,038/- was incurred towards transportation of goods sold in the domestic market (i.e., other than exports), and the remaining Rs.3,96,000/- related to transportation of imported goods. The said transportation charges were liable to service tax under the reverse charge mechanism. Due to a bona fide misunderstanding, the appellant could not discharge the said tax liability within the prescribed time; however, the entire liability to the tune of Rs.6,11,733/-(10.3% of 25% of Rs.2,37,56,638/-) was subsequently paid under the Voluntary Compliance Encouragement Scheme (VCES), 2013. (ii) Further, transportation charges amounting to Rs.7,26,83,776/- were incurred for transport of goods by road directly from the appellant's place of removal to the port of export. In this regard, Notification No. 18/2009- Service Tax dated 7th July 2009 exempts taxable services of transportation of goods by road received by an exporter and used for export of goods. Since the said notification was newly introduced, the appellant was unaware of certain procedural requirements, such as timely filing of Forms EXP-1 and EXP-2. It is submitted that the Form EXP-1 and EXP-2 showcasing Transportation cha....
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....rges for FY 2010-11 [Amount involved: Rs.1,24,65,363/-] (i) The appellant incurred total transportation expenses amounting to Rs.48,40,91,770/-, towards movement of goods by road directly from the appellant's place of removal to the port of export. In terms of Notification No. 18/2009- Service Tax dated 7th July 2009, services of "transport of goods by road" received by an exporter and used for export of goods are exempt from payment of Service Tax. (ii) The sole basis for the impugned demand is the alleged non-compliance by the appellant with certain procedural requirements, namely the delay in filing Forms EXP-1 and EXP-2 as prescribed under the said notification. It is submitted that Forms EXP-1 and EXP-2, reflecting transportation charges for export consignments amounting to Rs.48,40,91,770/-, were in fact submitted and duly acknowledged on 27.02.2014 by the Adjudicating Authority, as recorded in para 7.5.2 of the Order-in-Original. However due to delay in filing of such forms as stipulated in the Notification No. 18/2009- service tax dated 7th July 2009 and the same was disallowed. It is also submitted that the appellant had duly fulfilled all substantive con....
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.... No. 4(a) of the Profit and Loss Account. 2011-12 Sl No. Particulars Amount (in Rs.) a Total Transportation Charges as per Balance Sheet 33,59,70,666 b Filed EX-01 & EXP-02 EXP-2 Filed for 1st half 10,78,14,450 33,08,14,045 EXP-2 Filed for 2nd half 22,29,99,595 c Transportation charges on which ST is collected by the Service provider 47,82,121 d Filed through VCES 3,74,500 e Total Transportation Charges discharged (b+c+d) 33,59,70,666 Net taxable value(a-e) - (ii) From the above-mentioned table, out of the total transportation charges of Rs.33,08,14,045/-, a sum of Rs.10,78,14,450/- relates to the first half of the year, which qualifies for exemption under Notification No. 18/2009-Service Tax dated 7th July 2009, granting relief to exporters for transportation of goods by road used for export. The appellant was fully eligible for the said exemption; however, due to lack of awareness of procedural requirements, the prescribed Forms EXP-1 and EXP-2 were not filed within the stipulated period for the half-year ended 30.09.2011. The appellant subsequently submitted all requisite forms and supporting doc....
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....vailable, and disregards taxes already discharged. The appellant submits that there is no service tax liability payable by them, if the benefit of exemption as claimed by them in the Exp-1 and Exp-2 statements and other exemptions eligible to them are extended. The liability of service tax arose as the adjudicating authority has not condoned the procedural requirement to be followed by them and not allowed the other exemptions claimed by them. As there is no dispute regarding the rendering of the transportation services in relation to exports and they have submitted necessary documentary evidences required for claiming the other exemptions, the appellant prayed for condonation of the procedural violation and allow the benefit of export and other exemptions as claimed by them. Thus, the appellant submits that the demand of service tax confirmed for the FY 2011-12 is not sustainable. Hence, the impugned demand is liable to be set aside in toto. (V) Incorrect Computation and Denial of Service Tax Exemption on Transportation Charges for FY 2012-13 [Amount involved: Rs.1,45,98,682/-] (i) The impugned Order-in-Original (OIO) has incorrectly computed total transportation....
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....at the transportation charges were incurred exclusively for export purposes and are therefore fully exempt from service tax. Although the order partially accepted the exemption to the extent of Rs.70,54,72,686/-, the remaining amount was disallowed on the erroneous presumption without any justifiable reason. Thus, the denial of exemption in the impugned order is arbitrary, misconceived, and devoid of legal justification. Such a finding is factually incorrect and contrary to the documentary evidence furnished by the appellant. (iii) With regard to transportation charges of Rs.50,99,549/-, incurred for transport of goods to the port that were subsequently exported in the next financial year, it is submitted that under Notification No. 31/2012-ST, effective from 01.07.2012, such services are clearly eligible for exemption since the transportation was integrally connected to exportation. The rejection of exemption on this count, merely citing "non-submission of records," is baseless and unsustainable. (iv) As regards transportation of rice amounting to Rs.26,63,952/- between Dec'12 and Mar'13, it is submitted that Notification No. 25/2012- Service Tax dated 20th June ....
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.... the transportation services in relation to exports and they have submitted necessary documentary evidences required for claiming the other exemptions, the appellant prayed for condonation of the procedural violation and allow the benefit of export and other exemptions as claimed by them. Thus, the appellant submits that the demand of service tax confirmed for the FY 2012-13 is illegal, invalid, and liable to be quashed in its entirety, with all consequential benefits to the appellant. 6.1. In view of the foregoing, the Ld. Counsel for the appellant has prayed for setting aside the demands confirmed against them vide the impugned order, along with interest and penalties thereon, to the extent as challenged by them, and allowing their appeal, with consequential reliefs, as per law. 7. On the other hand, the Ld. Authorized Representative representing the Revenue has reiterated the findings in the impugned order. Accordingly, he prays for rejection of the appeal filed by the assessee. 8. Heard both sides and perused the records of the case. 9. We find that the demand of Service Tax under dispute in this case, has been made on transportation charges on the basis of the data....
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....y have not been considered by the investigation. 10.3. We have examined the documents submitted by the appellant and find force in the appellant's contention that the demand of Service Tax of Rs.39,007/- raised during this period has arisen on account of erroneous computation by the Revenue. Hence, we the hold that the said amount of Rs.3,25,34,059/- reflected in their Profit & Loss Account actually represents the gross amount which includes the Service Tax component of Rs.9,70,323/- already paid by them along with interest [Rs.3,15,63,736/- + Rs.9,70,323/- (Rs.3,25,34,059/)]. Accordingly, we hold that the demand of Service Tax of Rs.39,007/- confirmed in the impugned order for the Financial Year 2008-09 is not legally sustainable in view of the above findings and hence we set aside the same. (II) Financial Year 2009-10 [Service Tax demand of Rs.24,83,340/-]: 11. The details of the transportation charges incurred by the appellant during the Financial Year 2009-10 are tabulated below: - Sl No. Particulars 2009-10 A Total Transportation Charge as per SCN 9,64,40,414 B Total Transportation Charge as per Balance Sheet 9,64,40,414 1 Transportati....
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....rt, however, took note of the fact that no contention had been raised before the Tribunal that the appellants should be permitted to meet the requirements of Rule 56A of the Central Excise Rules and, therefore, they cannot be permitted to avail of that benefit in a Writ Petition brought under Article 226 of the Constitution. That indeed was a technical view to take because if the appellants were entitled to the benefit of the Notification No. 71/71-C.E., dated 29th May, 1971, to deny that benefit on the technical ground of noncompliance with Rule 56A would tantamount to permitting recovery of double duty on the intermediary product. The circumstances in which the appellants did not pay the duty on the intermediary product before putting the same to captive consumption for producing that stage, the appellants contested the correctness of the classification and had, therefore, not paid the duty on the intermediary product. When it was found that they were liable to pay duty on the intermediary product and had not paid the same, but had paid the duty on the end product, they could not ordinarily have complied with the requirements of Rule 56A. Once the Tribunal took the view that they....
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....ated below: - Sl No. Particulars 2010-11 A Total Transportation Charge as per SCN 48,40,91,770 B Total Transportation Charge as per Balance Sheet 48,40,91,770 1 Transportation charge for which EXP-1 and EXP-2 has been filed 48,40,91,770 2 Transportation charge for which EXP-1 and EXP-2 has been and accepted - 3 Transportation charge for which EXP-1 and EXP-2 has been rejected 48,40,91,770 4 Grounds Of Rejection EXP-1 & 2 to the tune of Rs 48,40,91,770/- was rejected as filed beyond time 5 Amount on which ST is paid by the service provider - 6 Total declaration amount paid under VCES 2013 - 7 Amount of Transportation charges paid on procurement of goods for export but yet not exported (i.e. stock-in-trade) - 8 Transportation charge paid for transport of food grains - 9 Service Tax included in the Transportation Charge - Total [1+4+5+6+7+8] 48,40,91,770 [*in INR] 12.1. As far as the demand raised for the period 2010-11 is concerned, the appellant has not disputed the total transportation charges as computed by the Revenue (i.e. Rs.48,40,91,770/-), bu....
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....n rejected 15,37,09,967 4 Grounds Of Rejection EXP-1 & 2 rejected by the lower authority as filed beyond time and also on other grounds 5 Amount on which ST is paid by the service provider 47,82,121 6 Total declaration amount paid under VCES 2013 3,74,500 7 Amount of Transportation charges paid on procurement of goods for export but yet not exported (i.e. stock-in-trade) - 8 Transportation charge paid for transport of food grains - 9 Service Tax included in the Transportation Charge - Total [1+4+5+6+7+8] 33,59,70,666 [*in INR] 13.1. The appellant has disputed the computation of total transportation charges of Rs.75,02,68,740/- by the Revenue for the above said period and contended that the actual figure of transportation charges incurred during the said period is Rs.33,59,70,666/-, as has been reflected in their audited Balance Sheet. In support of their above claim, an Auditor's Certificate certifying to the above extent has also been produced by the appellant, which is reproduced below: - 13.2. From the above certificate, it is evident that the transportation charges for the Financial Year 201....
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....for an amount of Rs.47,82,121/- out of Rs.33,59,70,166/-, Service Tax has already been charged and paid by the transporters / service providers and hence, no further liability would arise on the part of the appellant. The said submission of the appellant is not acceptable as they could not produce any evidence to support their arguments. Accordingly, the demand in respect of this issue stands confirmed. However, for discharging their Service Tax liability under transportation service, the appellant shall be eligible for abatement of 75% from the taxable value. Thus, the Service Tax liability of the appellant in this regard is to be calculated after allowing abatement of 75%, as eligible in respect of transportation service. 13.6. In respect of the balance amount of Rs.3,74,500/-, out of the above amount of Rs.33,59,70,166/-, it can be seen from the records that the appellant has already discharged their Service Tax liability, under the VCES, 2013. The appellant has also enclosed documentary evidence to substantiate the above payment made by them under the VCES to this extent. Thus, this portion of the demand stands settled by the appellant. 13.7. Consequently, we set aside th....
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....of the facts, the said certificate is reproduced below:- 14.2. In the absence of any corroborative evidence being brought on record by the respondent to the contrary, we accept the above certificate furnished by the assessee. Accordingly, we agree with the submission made by the appellant that the computation of total transportation charges of Rs.1,17,79,21,922/- by the Revenue is without any basis. We observe that although the appellant had made this submission and claimed this amount as the actual Transportation charges for the FY 2012-13, the ld. adjudicating authority has not considered it, even though he has recorded it in the impugned order in paragraph 7.7.2 of the impugned order. The appellant has now submitted the Chartered Accountant's Certificate, reproduced above, establishing that the actual transportation charges for the Financial Year 2012-13 was only to the extent of Rs.77,60,38,602/.Consequently, we hold that the total transportation charges incurred during the said period is to be construed as Rs.77,60,38,602/-, as per the documentary evidence available on record. 14.3. The appellant has also provided a table indicating the break-up of the amount of Rs.77,60....
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....sport of goods to the port that were subsequently exported in the next financial year and thus also eligible for exemption in terms of the above said Notification(s). However, no documentary evidence has been placed on record to substantiate their above claims. Therefore, considering the facts and evidence available before us, we do not find any merit in the argument advanced by the appellant on this count. Accordingly, the demand of Service Tax in respect of the said amount is hereby upheld. The appellant is liable to pay Service Tax on the above amount under the category of transportation service, for which they are eligible for abatement of 75% from the taxable value. Thus, the Service Tax liability of the appellant in this regard is to be calculated after allowing abatement of 75%, as eligible in respect of transportation service. 14.6. The amount of Rs.26,63,952/-, as seen in the above Table, has been claimed by the appellant to have been incurred in the transportation of rice between December, 2012 and March, 2012. The appellant's plea is that they are eligible for exemption in relation to the transportation of "food grains" and "foodstuffs" from levy of Service Tax in ter....
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....the Financial Year 2012-13 to the extent as discussed hereinabove, except those demands which have been confirmed and upheld at 14.5, 14.6 and 14.8 of this Order (supra). The amount paid by the appellant under the VCES stands appropriated against their corresponding Service Tax liability, as already observed hereinabove. 15. We also note that an amount of Rs.53,082/- has been confirmed against the appellant vide the impugned order owing to late payment of Service Tax during the periods October, 2007 to March, 2008 and the Financial Year 2008-09. However, the appellant has not contested the said amount. Therefore, we do not interfere with the above demand confirmed vide the impugned order. The same is thus upheld. 16. Regarding the imposition of penalties, it is evident from the records that the entire demand has been raised on the basis of the records/documents submitted by the appellant. No evidence has been adduced by the Revenue to indicate mala fide intent on their part so as to evade payment of Service Tax. We also do not find that any corroborative evidence has been brought on record by the Revenue to show that the appellant has indulged in any activity amounting to sup....