TaxTMI 
TaxTMI 
2026 (10) TMI 311
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.... Ltd. (DPL), McNally Bharat Engineering Co. Ltd., Otto Projects Pvt. Ltd., Essar Projects (India) Ltd., Super Smelters Ltd., Offshore Infrastructures Ltd., UltraTech Cement Ltd., Batliboi and Darcel Logistics Ltd. The Appellant was holding Service Tax Registration No. AALFM3170GST001, in respect of three taxable services, namely (i) Maintenance or Repair Service, (ii) Erection, Commissioning and Installation, and (iii) Construction Services in respect of Commercial or Industrial Buildings and Civil Structures. The Appellant filed its ST-3 Returns and paid Service tax throughout the period in dispute, ie, 2008-09 to 2012-13. During this period, the Appellant has paid aggregate service tax of Rs. 22,93,252/-, which has been recorded in paragraph 5.8(vii) of the impugned Order. 2. Pursuant to enquiries made by the Divisional Anti-Evasion Unit and by the jurisdictional Range Officer, the Appellant furnished its audited Balance Sheets, Form 26AS, ST-3 Returns and tax payment challans for the years 2008-09 to 2012-13. The Department thereupon compared the gross receipts appearing in the audited Balance Sheets / Form 26AS with the taxable value declared in the ST-3 Returns and treated ....
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....that the demand under the prenegative list regime is incapable of being made in the abstract; it can be made only under an identified sub-clause of Section 65(105). Identification of the taxable service is not a matter of form but the very foundation of the charge. A.3 In the present case, the Show Cause Notice does not mention under which sub-clause of Section 65(105) that service falls, and what value is attributable to each such service. There is no finding whatsoever as to the nature or scope of the work, the period during which it was executed, whether the contract was composite or otherwise, or indeed whether the receipt represented consideration for a taxable service at all. A.4 The impugned Order does not cure the defect; it compounds it. Paragraph 5.10 records a violation of "Sections 66, 67, 68 & 70" without at any point identifying the taxable service or its classification. At paragraph 5.13 the Ld. Commissioner proceeds on the footing that the Appellant had rendered 'Supply of Tangible Goods service' and 'Manpower Recruitment and Supply Agency service' - services in respect of which no value was ever classified or quantified in Annexure-A. At paragraph....
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....ewise ceased to apply with effect from 01.07.2012, by Notification Nos. 20/2012-ST and 21/2012-ST, both dated 05.06.2012. In their place, Section 66B, inserted by the Finance Act, 2012 and brought into force with effect from 01.07.2012 by Notification No. 19/2012-ST dated 05.06.2012, became the charging section, levying tax on the value of all services other than those specified in the negative list, "provided or agreed to be provided" in the taxable territory. B.2 The Show Cause Notice in the present case was issued on 23.04.2014, that is, nearly two years after the negative list regime came into force. Yet it invokes only Sections 66, 67, 68, 69 and 70 of the Finance Act, 1994, and continues to describe the demand exclusively by reference to the erstwhile positive-list categories, viz. MRS, CAI, CCS and STG, defined in Section 65. Section 66B finds no mention whatsoever in the Show Cause Notice. Nor does it find any mention in the impugned Order, which at paragraph 5.10 once again confirms a violation of "Sections 66, 67, 68 & 70 of Finance Act, 1994". B.3 A demand for the period 01.07.2012 to 31.03.2013, raised and confirmed under Section 66, a provision which ....
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....ed as per the receipt in Form 26AS". No enquiry whatsoever was made from any service recipient; not a single work order, invoice or agreement was examined to ascertain whether the receipts represented consideration for a taxable service; and no positive act of suppression has been identified anywhere in the Show Cause Notice or in the impugned Order beyond the existence of the difference itself. C.3 A difference between two sets of returns cannot, by itself, constitute suppression of facts with intent to evade payment of tax. The audited Balance Sheets are statutory documents and Form 26AS is generated from the records of the Department's own sister wing; nothing was concealed. The Appellant was a registered assessee, filed its ST-3 Returns throughout the period, and paid Service tax of Rs. 22,93,252/- during the material period as recorded in paragraph 5.8(vii) of the impugned Order. Significantly, the impugned Order records no evidence of intent to evade at all; it rests, at paragraph 5.11, upon a finding of "gross negligence", which is not an ingredient of the proviso to Section 73(1). Suppression must be wilful and with intent to evade; mere omission, error or negligen....
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....tes. The reverse charge mechanism therefore applied ex proprio vigore; it was not a concession requiring to be claimed. D.3 The impugned Order itself acknowledges, at paragraph 5.8(vi), that "the said Man power supply enjoys the Reverse Charge Mechanism on and from 01.07.2012", but declines relief on the sole ground that the Appellant "did not submit any supporting documents, like Work Orders, Bills/Invoice etc. in support of their claim pertaining to the period from 01.07.2012 to 31.03.2013". That ground is factually incorrect and, in any event, legally unsustainable: • M/s. UltraTech Cement Ltd. (West Bengal Cement Works), by its letter dated 29.04.2016, has certified that its Purchase Order No. 7724000736 dated 27.07.2012 was awarded to the Appellant "for manpower supply purpose", that "the scope of service tax liability was covered under Reserve Charge Mechanism" and that "as a Service Receiver we have discharged our service tax liability i.e. 75% to the Govt. Exchequer and balance service tax i.e. 25% paid to the Service Provider i.e. M/s. MNF Engineering". The said letter is on record as Annexure-G to the appeal. • The GAR-7 challans of M/s.....
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....evidencing the proof of such payment made on this score by the clients" and that the claim "cannot be entertained in the complete absence of any prudent evidence" is contrary to the record. It is also self-contradictory: in the very same Order, at paragraph 5.8(iv), the Ld. Commissioner accepted precisely such a claim in relation to Rs. 7,31,234/- deposited by M/s. Essar Projects Ltd. against the Appellant's registration number. There is no rational basis for accepting evidence of this very character in one instance and rejecting it in others. The further observation at paragraph 5.8(i) that the service provider is required to discharge its own liability, which "is not expected to be deposited by their clients", overlooks that where the tax upon the very same value has in fact reached the exchequer, its recovery a second time is a recovery without authority of law. (c) M/s. Offshore Infrastructures Ltd. - tax subsequently deposited D.8 As set out in Ground G (i) of the appeal, upon the said client releasing the amount the Appellant has deposited Service tax of Rs. 1,88,197/- in respect of the work order issued by M/s. Offshore Infrastructures Ltd. dated 07.05.2010....
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....ue of Rs. 7,03,670/- (Annexure-H), and the work executed for M/s. Super Smelters Ltd. under Work Order Ref. No. SSL/(III)Mech/201011/029 dated 02.07.2010 (Annexure-I), consisted of structural fabrication - joining and welding - carried out upon iron and steel articles supplied by the client, within the client's own premises. D.12 Such activity amounts to manufacture and is not a taxable service; and being below the threshold prescribed by Notification No. 8/2003-CE dated 01.03.2003, it attracted no Central Excise duty either. Neither the Show Cause Notice nor the impugned Order examines a single work order to determine the nature of the activity, an omission which is itself fatal, and which is the direct consequence of the failure to classify the service at all. (g) Denial of abatement under Notification No. 1/2006-ST - a finding contrary to the Department's own record D.13 At paragraph 5.8(iii) of the impugned Order the abatement of 67% claimed under Notification No. 1/2006-ST dated 01.03.2006 has been denied upon the finding that the Appellant "neither registered under service tax in respect of the said Construction Service, nor have undertaken any such....
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....ontract" and "Machine hire Charges" appearing in the Balance Sheet, deducts the value declared in the ST-3 Returns and taxes the difference. The demand was computed in AnnexureA to the Show Cause Notice as under: Period Gross receipts taken (Rs.) Value declared in ST-3 (Rs.) Differential value (Rs.) Service tax with Cess (Rs.) 2008-09 (Oct-08 to Mar-09) 26,63,836 2,76,000 23,87,836 2,95,136 2009-10 1,24,56,846 42,43,786 82,13,060 8,45,945 2010-11 1,30,06,896 96,17,297 33,89,599 3,49,129 2011-12 1,98,27,804 36,93,522 1,61,34,282 16,61,831 2012-13 1,99,02,266 33,98,089 1,65,04,177 20,39,916 TOTAL 6,78,57,648 2,12,28,694 4,66,28,954 51,91,957 9.2. A perusal of Annexure A to the Notice quantifying the service tax demand indicates that the Notice has not classified the service if any, rendered by the Appellant under a particular sub clause of Section 65. We observe that demand notice raised without specific categorization of service is legally not sustainable. 9.3. We find that the issue is no longer res integra. In support of the above view, we rely on the following d....
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....6 (3) TMI 1531 - CESTAT Kolkata [Final Order No. 75439/2026 dated 25.03.2026] - directly on the point. This Hon'ble Tribunal held that for the period after 30.06.2012 liability had to be tested under the negative list framework and the charging provision applicable thereto; that where the notice and the impugned order proceeded upon the erstwhile pre2012 category instead of invoking the relevant post30.06.2012 charging provision, the demand could not be sustained upon repealed or inapplicable pre2012 provisions; and the demand for the post30.06.2012 period was accordingly set aside, interest and penalties falling with the principal demand. (ii) M/s. Trade Line v. Commissioner of GST & Central Excise, Chennai, 2026 (3) TMI 980 - CESTAT Chennai [Final Order Nos. 4037340376/2026 dated 17.03.2026] - it was held, inter alia, that the Show Cause Notices did not put the appellant on notice of the applicable provisions for the post-01.07.2012 period, and that findings traversing beyond the scope of the Show Cause Notice are unsustainable. 9.6. Thus, by relying on the ratio of the decisions cited supra, we hold that the demands confirmed in the impugned order for the period afte....