TaxTMI 
TaxTMI 
2026 (9) TMI 655
X X X X Extracts X X X X
X X X X Extracts X X X X
....as per the impugned order dated 22.07.2014, denied the cenvat credit; held that reimbursed amount is includible in the assessable value to confirm demand, recovery of the service tax on the services provided to SEZ. Thus, demands were confirmed by invoking extended period of limitation & imposed penalties. Aggrieved by the said order, the present appeal is filed. 3. When the appeal came up for hearing, the learned Chartered Accountant (CA) for the appellant submits that the appellant is a private limited company engaged in providing investment advisory services and registered under the service tax. During the month of January 2012, the Audit Wing of Service Tax Commissionerate, Bangalore conducted an audit of the books of accounts of the appellant. Pursuant to the audit, certain discrepancies were communicated vide letter dated 18.01.2012. The appellant replied to the observations vide letter dated 07.02.2012. Subsequently, show cause notice dated 13.04.2012 was issued for the period from April 2010 to September 2011 to the appellant alleging irregular availment of CENVAT Credit and short payment of service tax. 4. As regarding allegation of excess availment of cenvat ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Jul-11 2,16,095 2,16,095 - - - Aug-11 2,39,173 2,39,173 - - - Sep-11 1,25,951 1,25,951 - - - Total 2,72,49,593 1,04,48,696 1,71,47,425 1,66,05,326 8,88,627 Excluding Opening balance 1,01,02,168 5. In this regard, learned CA submits that as per the above balance sheet, there was an opening balance of cenvat credit but it was not considered by adjudicating authority while calculating the tax payable and only adopted the cenvat credit availed and utilised in the said period. Learned CA for the appellant also drew our attention to the ST3 return filed for the period April to September 2010 and under the category of credit details, opening balance is shown as Rs.3,40, 016/-; however, the same was not considered while making finding regarding excess availment of cenvat credit. Learned CA further submits that there is an allegation regarding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vt. Ltd.: Services in relation maintenance of books of accounts and other related regulatory compliance works. These are essential for functioning of the business organization. Further, accounting is specifically included in the definition of the input services. Therefore, this is an eligible input service. KARRA & Co - These relates to the professional services provided in relation to the fund raising. Fund raising services are part of investment advisory services provided to customers and therefore, directly related to output services. ALMT Legal: Legal services in relation to advisory services provided by the appellant. Legal services are specifically covered under input service definition. AKK Entertainment Pvt Ltd: These services related to consultancy services provided in relation to Media Fund and Marketing Structure engagement. This service is directly related to output service. BMA Stainless Ltd.: These are the advisory services provided by the services provider in relation to the investment. This service is directly related to output service. Prozone Advisors Pvt. Ltd: These services include professional Fee towards drafting Board....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s are related to maintenance and repair services of UPS, etc. which are essential for the functioning of the business. Amruta Engineers: These services are related to maintenance and repair services of generator, etc. which are essential for the functioning of the business. KPMG v. Commissioner - 2014 (33) S.T.R. 96 (Tribunal) 13. Group Booking at Singapore Appellant had a meeting with the various clients in Singapore for which booking was made. Since the investor team is from Singapore, appellant was compelled to use this service to book the meeting hall and accommodation facility for the team. The expense is the same which was incurred for travelling to Singapore. This forms part of the promotional activity of the organisation. Since business promotion is specifically included in the input services definition, this is an eligible input service. 7. As regarding cenvat credit on professional services and house-keeping charges & security charges, learned CA submits that it was allowed for the period from October 2011 to March 2014 vide Order-in-Appeal No.603/2018-CT dated 04.03.2019. Further, for the said services as well as on repair and maintenance serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riod, service tax was payable on receipt of consideration, whereas the financial statements were prepared on the accrual basis in accordance with established accounting principles. In view of this, the figures reflected in the financial statements and those reported in the ST-3 returns operate on entirely different bases and are inherently incomparable. Any mechanical comparison of turnover reported on receipt basis with turnover recorded on accrual basis is fundamentally flawed and cannot form the basis for raising service tax demand. The appellant relied upon the decision in the case of Alpa Management Consultants Pvt. Ltd. v. Commissioner - 2007 (6) S.T.R. 181 (Tribunal) wherein it was held as follows: 4.1 In terms of the above order, Service Tax cannot be recovered based on the returns shown in the Income Tax Returns, as the provisions of Income Tax requires declaration of amounts still due from the debtors, while in the case of Service Tax, the same has to be paid when recoveries are made. The appellants have been paying the amounts as and when they are recovering the amounts. They have also not taken the credit as alleged by the Commissioner in his written submission....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., learned CA submits that the appellant failed to pay the service tax on a bona fide belief that the services to SEZ units are exempted from payment of service tax owing to exemption Notification No.17/2011-ST dated 01.03.2011. However, when the customers failed to provide supporting documents, the appellant accepted the liability and paid service tax. Thus, it is a fit case to waive the penalty under Section 80 of the Finance Act, 1994 since there was reasonable cause for the said failure. In this regard, learned CA relied upon the judgment of Hon'ble High Court of Karnataka in the case of CCE&ST, LTU, Bangalore Vs. Adecco Flexione Workforce Solutions Ltd. [2012(26) STR 3 (Kar.)]. 13. Learned AR for the Revenue reiterated the finding in the impugned order and further submits that the impugned order is issued after considering the submissions made by the appellant before the adjudicating authority. As regards excess availment of cenvat credit. Learned AR drew our attention to the finding in the impugned order and submits that the appellant has availed Excess CENVAT Credit in ST-3 in comparison to the actual credit available as per the register for the period April 2010 to Septem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ayment of Service Tax. As per Rule 5 of the Service Tax (Determination of Value) Rules 2006, these receipts were appeared to be taxable. Therefore, there was short payment of Rs.6,99,742/-being the ST on the said reimbursement amount and adjudicating authority rightly held that it is recoverable along with interest. 16. As regarding penalty against short payment of Service Tax due to wrong availment of SEZ exemption, the appellant has provided Management Consultancy services to M/s. SFO Technologies Limited (SEZ Unit situated at Kochi, Kerala) and has not discharged the Service Tax liability on the value of Rs.2, 92, 00,000/ being the value of service provided to SEZ, on the ground that the same was exempted under Notification No 4/2004 Service Tax dated 31.03.2004 (SEZ Exemption). Thus, the appellant paid the Service Tax of Rs 30,07,600/-involved on the said services, for the period April 2010 to September 2011, since there was an omission on the part of the appellant to pay service tax in time, adjudicating authority rightly imposed penalty for such non-payment of tax. 17. As regards short payment of Service Tax noticed on reconciliation of Balance Sheet and ST-3 Ret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....expenses, we find that the demand is for the period from April 2010 to September 2011 and considering the judgment of the Hon'ble Supreme Court in the matter of Intercontinental Consultants and Technocrafts Pvt. Ltd. (supra) such reimbursable expenses can be excluded from the service tax liability. Further, we find that the demand confirmed by the adjudicating authority alleging short-payment of service tax is confirmed only by comparing the turn over between financials and ST-3 returns. We find that considering the ratio in the case of Alpa Management Consultants Pvt. Ltd. (supra), the figures reflected in the financial statements and those reported in the ST-3 returns operate on entirely different bases and are inherently incomparable. Thus, in the absence of any classification of the service provided by the appellant, demand of service tax against the said amount is unsustainable. 23. As regarding the demand confirmed against services provided to SEZ units, we find that there is a bona fide mistake on the part of the appellant to pay service tax since services to SEZ units are exempted. However, when the service receivers failed to furnish the documents as required, the appel....