TaxTMI 
TaxTMI 
2026 (9) TMI 190
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.... SI.No. 1 above, from M/s Sigma Trade Wings, D- 165, Faizabad Road, Indira Nagar, Lucknow under Section 75 of the Finance Act, 1994 was ordered. 3. I also impose a penalty of Rs. 1,78,36,694/- (Rupees One Crore, Seventy Eight Lacs, Thirty Six Thousand, Six Hundred Ninety Four only) upon M/s Sigma Trade Wings, D-165, Faizabad Road, Indira Nagar, Lucknow under Section 78 of the Finance Act, 1994. 4. I also imposed a penalty of Rs. 200/- for every day w.e.f. 01.04.2004 till the actual date of taking of registration for "Business Auxiliary Service upon M/s Sigma Trade Wings, D165, Faizabad Road, Indira Nagar, Lucknow under Section 77(1) of the Finance Act, 1994. 2.1 Appellant is a partnership firm and Shri Mahendra Dev Dixit, Shri Narendra Dev Dixit & Shri Kamla Prasad Dixit are the partners of the firm. They are engaged in providing services covered under category Advertising Agency Services' which is a taxable service in terms of Section 65 (105)(e) of the Finance Act, 1994. They were registered with the department and have Service Tax Registration No AAOFS9857RST001. 2.2 Acting upon intelligence that the party was not discharging its service tax liability....
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....estigations, it was found that the party had made an agreement with the Nagar Palika Parishad, Raebareli to collect the advertisement tax on advertisements displayed in the municipal limits on pre-decided rates as per agreement. 2.6 Appellant provided the balance sheets of their firm for the periods 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. In the profit & loss account of the balance sheets of the party, income is shown under the headings paper ad, service charges, misc. income, municipal tax, display charges & other receipts. The income shown under various heads in the Balance Sheet of the party is shown below in tabular form:- Receipt as per Balance Sheet 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Paper Ad 783647 542295 131141 0 0 Service Charges 18237282 34706040 41706913 0 0 Misc. Income 32541 6124 21407 0 0 Municipal Tax 0 1234245 166650 240900 Display Charges 0 0 0 72651280 63114477 Other Receipts 0 0 0 79569 14462 Gross receipts from Business 0 0 0 0 0 83992268 Total 19053470 ....
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.... display on boards within the Municipal Limits, on the basis of contracts entered between them and the Municipalities. They collect this tax on the basis of pre decided rate as per the agreement. They collect this tax on behalf of Nagar Palika Parishad, Raebareli as per agreement dated 31.03.2008. ⮚ M/s Sigma Trade Wings, Lucknow vide their statement dated 10.12.10 admitted that the value of taxable services shown in the ST-3 returns is reflected under the head income shown in the profit & loss account of the balance sheet. 2.9 A Show Cause Notice dated 12.01.11 was issued to the appellant asking them to show cause as to why: (i) Service Tax amounting to Rs 1,78,36,694.00 (Rupees One crore seventy eight lacs thirty six thousand six hundred ninety four only) should not be demanded and recovered from them in terms of proviso to Section 73(1) of the Act for violation of Section 68 read with Rule 6 of the Service Tax Rules, 1994. (ii) The interest amount should not be levied and recovered at applicable rate on the above amount of Service Tax & Education Cess under Section 75 of the Act for late depositing of Service Tax. (iii) Penalty shoul....
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.... We are unable to understand why the adjudicating authority failed to reconcile the figures between ST-3 Return and Sales Tax Return. But it was submitted by ld. Counsel that what they conceived to be taxable service, the charges thereon exhibited at pate 52 of appeal folder has suffered tax. 3. We notice that had there been a thread bare analysis of the facts, figures and evidence, such a huge demand would not have arisen. Therefore, without keeping the matter pending in the Tribunal, we remand the matter to the Id. Adjudicating Authority to consider grievance of Revenue properly and also the pleadings of the appellant testing the same with evidence. That authority should not hesitate to even call for the figures from the sales tax authority to find out the figures disclosed in ST-3 return whether agreed with the figures in the Sales Tax Return filed for the relevant period. If there is any discrepancy, the appellant should be given an opportunity to explain. 4. While remanding the matter, it is anxiety of the Id. DR that the matter should receive appropriate consideration by the Id. Adjudicating Authority following the ratio laid down by the Tribunal in the case....
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.... in relation to sale of goods on which VAT has been paid these activities cannot be subjected to service tax. ⮚ In respect of income from collection of advertisement tax. Undisputedly these taxes were levied as Uttar Pradesh Municipal Corporation Act, 1959. Appellant got the right to collect these tax as per agreement entered by them with Nagar Palika Parishad Raibareli as per the pre-approved rates. These ncome could not have been subjected to service tax, Reference is made to decision of Mumbai Bench in case of Ideal Road Builders (P) Ltd. [2015 (40) S.T.R. 480 (Tri. - Mumbai)] ⮚ In respect of demand of service tax on the basis of income reported in Profit and Loss Account, reliance is placed on the decisions in case of: ○ Firm Foundation & Housing (P) Ltd. [2018 (16) G.S.T.L. 209 (Mad.)] ○ Sigma Trade Wings [Final Order No 71658/2018 dated 17.07.2018 in ST/51726/2015] ○ Pappu Crane Services [Final Order No 72690/2018 dated 26.11.2018 in ST/70031/2016] ⮚ Demand is also barred by limitation as appellant had bonafide belief that these incomes are not subject to levy of service tax. Reliance....
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.... Commissioner of Sales Tax/Commercial Tax, Lucknow, wherein it has been intimated to them that a case in respect of M/s. Sigma Trade Wings, D-165, Faizabad Road, Indira Nagar, Lucknow, is under process of adjudication, and Trade Tax returns pertaining to the period of financial years 2004-05 to 2009-10, are required for verification of facts and figures regarding sale made by them. Accordingly, he was requested to furnish copies of Trade Tax returns/ annual financial details filed by M/s. Sigma Trade Wings, D-165, Faizabad Road, Indira Nagar, Lucknow/ accessed by his good-self, for the period of financial years 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10. 21. The Deputy Commissioner, Commercial Tax/ Trade Tax vide his letter dated 07.02.2015 has enclosed the acknowledgement and self assessment of annual tax return filed by the party for the Financial year 2007-08 to 2009-10 and also intimated that desired documents for the period 2004-05 to 2006-07 are not available with them and they would provide the same as soon as they locate the said documents. On the perusal of the documents submitted by the Commercial Tax department it is quite evident th....
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.... 10,26,07,560/-. 23. In their defense reply party has also contended that the demand on miscellaneous income, amount shown as sundry debtors has been confirmed against them. I have examined the issue and observed that my predecessor has discussed all these issues in detail while passing the order in original and I am convinced that the O-I-O has been passed as per established rule on these issues. It is worth mentioning here that party has not brought any fresh documents/evidence on this account before me to reconsider this issue. In short, I have found no infirmity in the order in original to intervene and therefore I pass the following order." 4.3 We find that matter has been decided in the de novo proceedings after being remanded back by the tribunal vide Final Order No ST/A55630/2013 dated 19.02.2013. We have reproduced the observations made by the CESTAT while remanding the matter back to adjudicating authority in para 2.10. From the perusal of the observations made by the CESTAT while remanding the matter back to adjudicating authority for reconsideration tribunal had set aside the earlier order in original dated 29.02.2012. The observations made in para ....
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.... reached a vanishing point in the judgment of this Court in A.K. Kraipak and Others v. Union of India and Others reported in AIR 1970 SC 150. 16. In Kesava Mills Co. Ltd. and Another v. Union of India and Others reported in AIR 1973 SC 389, this Court approvingly referred to the opinion of Lord Denning in Rigina v. Gaming Board Exparte Benaim [(1970) 2 WLR 1009] and quoted him as saying "that heresy was scotched in Ridge and Boldwin, 1964 AC 40". 17. The expression 'speaking order' was first coined by Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of Writ of Certiorari, referred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order. (See 1878-97 Vol. 4 Appeal Cases 30 at 40 of the report) 18. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the 'inscrutable face of a Sphinx'. 19. In the case of Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala and Others, AIR 1961 SC 1669, the q....
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....erely endorses the order of the State Government without specifying any reason, this Court, exercising its jurisdiction under Article 136, may find it difficult to ascertain which are the 'grounds on which Central Government upheld the order of the State Government (See para 9 page 1610). Therefore, this Court insisted on reasons being given for the order. 23. In M/s. Mahabir Prasad Santosh Kumar v. State of U.P and Others, AIR 1970 SC 1302, while dealing with U.P. Sugar Dealers License Order under which the license was cancelled, this Court held that such an order of cancellation is quasi-judicial and must be a speaking one. This Court further held that merely giving an opportunity of hearing is not enough and further pointed out where the order is subject to appeal, the necessity to record reason is even greater. The learned Judges held that the recording of reasons in support of a decision on a disputed claim ensures that the decision is not a result of caprice, whim or fancy but was arrived at after considering the relevant law and that the decision was just. (See para 7 page 1304). 24. In the case of M/s. Travancore Rayons Ltd. v. The Union of India and Other....
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....In Siemens Engineering and Manufacturing Co. of India Ltd. v. The Union of India and Another, AIR 1976 SC 1785, this Court held that it is far too well settled that an authority in making an order in exercise of its quasijudicial function, must record reasons in support of the order it makes. The learned Judges emphatically said that every quasi-judicial order must be supported by reasons. The rule requiring reasons in support of a quasi-judicial order is, this Court held, as basic as following the principles of natural justice. And the rule must be observed in its proper spirit. A more pretence of compliance would not satisfy the requirement of law (See para 6 page 1789). 28. In Smt. Maneka Gandhi v. Union of India and Anr., AIR 1978 SC 597, which is a decision of great jurisprudence significance in our Constitutional law. Chief Justice Beg, in a concurring but different opinion held that an order impounding a passport is a quasi-judicial decision (Para 34, page 612). The learned Chief Justice also held when an administrative action involving any deprivation of or restriction on fundamental rights is taken, the authorities must see that justice is not only done but manife....
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....d that while disposing of applications under Monopolies and Restrictive Trade Practices Act the duty of the Government is to give reasons for its order. This court made it very clear that the faith of the people in administrative tribunals can be sustained only if the tribunals act fairly and dispose of the matters before them by well considered orders. In saying so, this Court relied on its previous decisions in Capoor (supra) and Siemens Engineering (supra), discussed above. 36. In Ram Chander v. Union of India and Others, AIR 1986 SC 1173, this Court was dealing with the appellate provisions under the Railway Servants (Discipline and Appeal) Rules, 1968 condemned the mechanical way of dismissal of appeal in the context of requirement of Rule 22(2) of the aforesaid Rule. This Court held that the word "consider" occurring to the Rule 22(2) must mean the Railway Board shall duly apply its mind and give reasons for its decision. The learned Judges held that the duty to give reason is an incident of the judicial process and emphasized that in discharging quasi-judicial functions the appellate authority must act in accordance with natural justice and give reasons for its deci....
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....f a summary trial. The powers which are exercised are definitely quasi-judicial in nature and in such a situation the conclusions must be based on reasons and held that requirement of recording reasons is "too obvious to be reiterated and needs no emphasizing". (See Para 11, page 3141 of the report) 41. Only in cases of Court Martial, this Court struck a different note in two of its Constitution Bench decisions, the first of which was rendered in the case of Som Datt Datta v. Union of India and Others, AIR 1969 SC 414, Mr. Justice Ramaswami delivering the judgment for the unanimous Constitution Bench held that provisions of Sections 164 and 165 of the Army Act do not require an order confirming proceedings of Court Martial to be supported by reasons. The Court held that an order confirming such proceedings does not become illegal if it does not record reasons. (Para 10, page 421- 422 of the report). 42. About two decades thereafter, a similar question cropped up before this Court in the case of S.N. Mukherjee v. Union of India, AIR 1990 SC 1984. Aunanimous Constitution Bench speaking through Justice S.C. Agrawal confirmed its earlier decision in Som Datt (supra) i....
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.... 790 at 794-795), the reasons for the lower amount is not obvious. Mr. Cunningham is entitled to know, either expressly or inferentially stated, what it was to which the board were addressing their mind in arriving at their conclusion. It must be obvious to the board that Mr. Cunningham is left with a burning sense of grievance. They should be sensitive to the fact that he is left with a real feeling of injustice, that having been found to have been unfairly dismissed, he has been deprived of his just desserts (as he sees them)". 47. The learned Master of Rolls further clarified by saying : "..thus, in the particular circumstances of this case, and without wishing to establish any precedent whatsoever, I am prepared to spell out an obligation on this board to give succinct reasons, if only to put the mind of Mr. Cunningham at rest. I would therefore allow this application." 48. But, however, the present trend of the law has been towards an increasing recognition of the duty of Court to give reasons (See North Range Shipping Limited v. Seatrans Shipping Corporation, (2002) 1 WLR 2397). It has been acknowledged that this trend is consistent with the develop....
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....nt of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior Courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the Life blood of judicial decision making justifying the principle that reason is the soul of justice. (i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to princip....