Custom, Excise & Service Tax Tribunal
Telenor Consult A S vs Delhi - I on 5 February, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT - IV
Service Tax Appeal No. ST/50288/2016 [DB]
[Arising out of Order-in-Original No. DLI-SVTAX-001-COM-007-
15-16 dated 30/11/2015 passed by the Commissioner of
Service Tax, Delhi-I]
Telenor Consult AS ...Appellant
Vs.
Delhi-I ... Respondent
Present for the Appellant : Mr. J.K. Mittal & Ms. Vandna Mittal, Advocates Present for the Respondent: Mr. G.R. Singh, DR Coram: HON'BLE MR. BIJAY KUMAR, MEMBER (TECHNICAL) HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing : 14.12.2018 Pronounced on : 05.02.2019 FINAL ORDER NO. 50171/2019 PER: RACHNA GUPTA Matter was listed for Miscellaneous Application praying for out of turn hearing of the Appeal. Since the appellant was relying upon the decision of Hon‟ble Apex Court and the Counsel was ready to submit final arguments that the Miscellaneous Application is allowed. Arguments on main Appeal head. The relevant factual matrix for the purpose is:
M/s Telenor Consult AS, Unit No. 902, 9th Floor, Le Meridian, Windsor Place, Commercial Tower, New Delhi are registered with 2 ST/50288/2016 [DB] Service Tax Commissionerate Delhi, for Manpower Recruitment or Supply Agency Services and Business Support Services (under reverse charge) and have been issued STC No. AADCT2257JSD002.
The appellant entered into three Expatriate Agreements with following subsidiaries:-
(a) M/s Unitech Wireless (Tamil Nadu) Pvt. Ltd. dated 23.07.2009.
&
(b) Unitech Wireless (Tamil Nadu) Pvt. Ltd. dated 03.02.2010.
&
(c) Telenor India Pvt. Ltd. dated 29.06.2009
(three of the subsidiaries are hereinafter called as Company).
All the three Agreements are identical except for the agreeing parties and have been executed for Supply of Manpower for Personnel to be provided from time to time by Telenor Consult AS. Such Personnel would take up various positions in the Company in the supervision and control of Company itself, however they continue to the employees of the appellant. As per the said agreements, sub clauses 6.2 and 6.3 thereof a certain sum is invoiced and received by the appellant from the company whereas certain benefits are paid directly by the Company to the personnel provided by the appellant.
Department formed an opinion that the plain reading of sub- clauses 6.2 & 6.3 of Expatriate Secondment Agreements, clarifies that the extra advantages/ benefits availed by the Personnel as per the sub clause 6.3 of the agreement is also a „consideration‟ which ought to have been included in the value of taxable services as the gross amount shall include the sums charged by the service provider and the sums spent by the service recipient. Department formed the opinion that the case seems to be covered by clause (b) of Service Tax (Determination of Value) Rules, 2006. Resultantly, a 3 ST/50288/2016 [DB] Show Cause Notice (SCN) No. 624 dated 24.04.2015 was served upon the appellant calling upon them to explain:
(i) As to why the benefits (in terms of clause 6.3 of the agreements) extended/ paid to the personnel provided by the appellant to the company(ies) shall not be includible in the assessable value.
(ii) As to why the value of taxable service has been bifurcated into two parts where the appellant has raised the bill/invoice only for the amount received by him from the companies and paid service tax on these sums only by not properly assessing the Service Tax correctly as applicable on such value of services and not filing prescribed ST-3 returns accordingly.
Accordingly, vide the aforesaid SCN, service tax amounting to Rs. 15,51,74,713/- for the period Dec. 2009 to March 2014 was alleged as short paid/ not paid by the appellant on Manpower Recruitment or Supply Agency Service received by them and thus was proposed to be recovered alongwith interest at appropriate rate and proportionate penalty under Section 76 and 78 of the Finance Act. Violation of Section 68(2) of Chapter I of the Act and of Section 66A read with 2(1)(d)(iv) and Rule 6A of the Service Tax Rules, 1994 was also alleged. The said demand was confirmed vide Order- in-Original No. 71516 dated 30.11.2015. Being aggrieved, the appellant is before this Tribunal.
2. We have heard Mr. J.K. Mittal and Ms. Vandana Mittal, Ld. Advocates for the appellant and Mr. G.R. Singh, Ld. DR for the Department.
3. It is submitted on behalf of appellant that show cause notice is based upon agreements of the appellant with three separate companies. Since three of those agreements were similarly worded, only one has been discussed in the SCN. However, it is still an undisputed fact that the appellant is a foreign company and supply manpower to the Indian company(ies). It is impressed upon that 4 ST/50288/2016 [DB] the tax demand vide the impugned SCN and the confirmation thereof under Section 66A of the Finance Act, 1994 (hereinafter referred to as the Act) read with Rule 2(1)(d)(iv) of Service Tax Rules is absolutely not sustainable. Both the provisions speak about the liability of service tax under reverse charge mechanism. Whereas, the appellant is admittedly a service provider. Further, SCN is challenged on following grounds as well:
(i) SCN has wrongly alleged about appellant to not to have filed any ST-3 returns and to not to have paid the due service tax. It is impressed upon that the adjudicating authority themselves have acknowledged that the appellant has been paying service tax and has been filing service tax returns regularly. SCN has wrong allegations and this also is a reason for the same to be set aside.
(ii) SCN has also been objected as being passed without jurisdiction as Commissioner (Audit) was not the competent authority to pass the impugned Order.
(iii) SCN is the calculation about the proposed demand where even the amount on which service tax has been paid has also been included. Adjudication based upon such a SCN is not sustainable in this score itself.
3.1 Further, it is submitted that the adjudicating authority below has committed an error while invoking Rule 5 of Service Tax (Determination of Value) Rules, 2006 for confirming the impugned demand. It is submitted that the Rule has already been held ultravires by Hon‟ble Supreme Court while deciding the case tilted as Union of India and others Vs. Inter Continental Consultants and Technocrats Pvt. Ltd. 2018 (4) S.C.C. 669. Decision of Hon‟ble Apex Court in the case of Commissioner of Service Tax Vs. M/s Bhayana Builders Pvt. Ltd. 2018 (3) S.C.C. 782 has also been relied upon. It is emphasized that in this case, the scope of the word "gross" and "charge" has been clarified by the Hon‟ble Apex Court in following words:
5
ST/50288/2016 [DB] "The word "gross" is only meant to indicate that it is the total amount charged without deduction of any expenses. Merely by use of the word "gross" the Department does not get any jurisdiction to go beyond the contract value to arrive at the value of taxable services;
Further, by the use of the word "charged" it is clear that the same refers to the "amount billed by the service provider" to the service receiver. Therefore, in terms of Section 67 of the Act, unless an amount is charged by the service provider to the service recipient, it does not enter into the equation for determining the value on which service tax is payable;"
3.2 The impugned order has also been challenged as Section 65(105k) has been invoked by the adjudicating authorities below while confirming the impugned demand despite the fact that this provision stands omitted from the statute w.e.f. 01.07.2012. Finally, it is submitted that in view of Department‟s own admission about appellant discharging their liability and in view of the position of law as settled by Hon‟ble Supreme Court (as submitted above), there is no apparent mensrea on the part of the appellant to evade service tax nor there is any apparent suppression or mis-representation of facts. Hence, the extended period of limitation could not have been invoked by the Department. The period of demand here is 2009-10 to 2013-14 whereas the impugned SCN is dated 24.04.2015. The Order under challenge is prayed to be set aside for the above submitted lacunas. Appeal is prayed to be allowed.
4. While rebutting these arguments it is submitted that the appellant was registered with Service Tax Department during the relevant period for providing manpower recruitment. As such the arguments that appellant is a foreign company is absolutely mis-
conceived. The appellant admittedly is providing a taxable service.
The payment thereof has been enumerated in Clause 6.1, 6.2 and 6.3 of the Expatriate Secondment Agreements entered into by the appellant with three companies in India. The amount received by 6 ST/50288/2016 [DB] virtue of three of these Clauses has to be the gross amount for the impugned taxable service but the appellant has artificially divided the said value into parts by raising bills/ invoices only for the amount received by them from the companies as per Clause 6.2 of the said Agreement whereupon the service tax has been paid but no service tax has been paid on the amount paid by the companies to the respective personnel directly. It is impressed upon that the Agreement itself clarifies that the extra benefits/ advantages availed of by the personnel under Clause 6.3 of the Agreement were liable to be included in the value of taxable service for the reason that the word used in Clause 6.1 is "all costs" in relation to personnel services provided by the appellant and the costs have been bifurcated in the value as mentioned in Clause 6.2 as well as in Clause 6.3.
4.1 It is further submitted that disbursement of amount extending of benefits directly to the personnel does not appear to be of the nature of reimbursement which is excluded from Rule 5 of Service Tax Determination of Value Rules, 2006 which otherwise permits inclusion of all expenditures incurred by the service recipient during the provision of receiving the taxable service. Thus there is no error committed in the Order under challenge while relying upon the said provision. He has also submitted that valuation has to be done in accordance of Section 67 of the Act by virtue whereof service tax has to be charged on full amount of consideration for supply of manpower. Further, Rule 3B of Valuation Rules speaks about cost of taxable service irrespective of the fact as to who is paying the said cost.
7
ST/50288/2016 [DB] 4.2 Finally, coming to the plea of invocation of extended period of limitation it is submitted that the appellant have not assessed the service tax correctly. They suo moto have bifurcated the value of taxable service in two parts for one whereof neither service tax has been paid nor the return has ever been filed. There could be no other reason for the said violation of the provision of the Act than the intention to evade payment of tax. The Department, therefore, has rightly invoked the extended period of limitation. There is no infirmity in the Order under challenge to this aspect as well. Appeal is accordingly prayed to be dismissed.
5. After hearing both the parties and going through the entire record as well as the relevant case law as referred during arguments, we are of the opinion as follows:
As far as the arguments about appellant being a foreign company is concerned, it is observed that the Agreements whereupon is based the impugned SCN are three Expatriate Secondment Agreement as executed between the appellant i.e. M/s Telenor Consult AS, a Company limited by shares organized and existing under the laws of Norway and
(i) Telenor India Pvt. Ltd., a company incorporated in India with its office at Pegus, Level 4, Rectangle I, Saket District, New Delhi (agreement dated 27.06.2009),
(ii) Unitech Wireless (Tamil Nadu) Pvt Ltd, a company incorporated in India with its registered office at Basement 6, Community Centre, Saket, New Delhi (agreement dated 03.02.2010) and
(iii) Unitech Wireless (Tamil Nadu) Pvt. Ltd., a company incorporated in India with its office at "The Masterpiece" Plot #10, Golf Course Road, Sector 54, DLF Ph-V, Gurgaon (agreement dated 23.07.2009).
5.1 M/s Telenor Consult AS irrespective is a company under laws of Norway, but is registered with service tax Commissionerate, Delhi 8 ST/50288/2016 [DB] for manpower recruitment or supply agency services and business support services having STC No. AADCT2257JSD002 as is mentioned in the SCN. It has nowhere been disputed by the appellant. Rather the subsequent admission is that Telenor Consult AS has its office at 9th Floor, Hotel Le Meridien, Windsor Place, Commercial Tower, New Delhi and that the appellant is regularly filing the ST-3 Return qua the amount Telenor has received from the said Companies in India for providing personnels to them vide respective agreements.
6. In view of these apparent facts, we are of the opinion that the argument about appellant, undisputedly, being a foreign company is apparently false. The fact rather is that a company irrespective incorporated under laws of a foreign country, is supplying manpower to Indian companies through its India office which is duly registered in the territory of India. However, the another apparently admitted fact is the appellant is the service provider and three of the companies in India (as mentioned above) are the service recipients. The SCN has been issued invoking Section 66A of the Act read with Rule 2(1)(d)(iv) of the Service Tax Value Determination Rules is therefore apparently wrong. Both these provisions are not applicable to the given set of circumstances Section 66A is applicable for charge of service on services received from outside India. In the present case, as discussed above, services of manpower though have been provided by Telenor AS, a Company incorporated under laws of Norway but through its India office registered with India Service Tax Commissionerate. Appellant admittedly being the provider of service, Rule 2(1)(d)(iv) is not applicable to the given circumstances as under this rule, the person liable to pay service tax is recipient of service. We therefore opine that SCN has been issued 9 ST/50288/2016 [DB] invoking the wrong provisions of the Act and thus is nonest. Even the order under challenge has confirmed demand under these wrongly invoked provisions. Thus, irrespective that the service provider generally is liable to discharge the service tax liability the demand against him cannot be invoked/ confirmed under the provisions making the recipient thereof as liable to pay service tax. Hon‟ble Apex Court in the case of Babu Vighese Vs. Bar Council Kerala AIR 1999 SC 1281 has held:
"It is the basic principle of law long settled that if the manner of doing a particular Act is prescribed under any statute, the act must be done in that manner or not at all."
Thus, we hold that findings under challenge are liable to be set aside on this score itself.
7. Not only this, there is a noticed contradiction in the SCN and the Order of adjudicating authority below. The SCN in Para 12 thereof is alleging that appellant has not been filing ST-3 Returns whereas in the Order-in-Original in para 19 thereof there is an apparent admission about appellant been paying service tax and being regular in filing the ST-3 Returns. Once the allegation in SCN is held otherwise by the adjudicating authority demand cannot be confirmed. Thus, SCN is opined to have not only invoked the wrong provisions but is also held to be based on wrong presumptions of fact. Also, the demand in order under challenge has been confirmed under the provisions of Rule 3 and Rule 5 of Service Tax (Value of Determination) Rules, 2006 which have not been invoked in the SCN. Thus, it is held that Commissioner has gone beyond the scope of SCN. Law has been settled by Hon‟ble Apex Court in the case Precision Rubber Industries P. Ltd. Vs. C.C.E., Mumbai 2016 334 E.L.T. 577 (S.C.) wherein it was held that SCN is foundation of 10 ST/50288/2016 [DB] any proceedings. A new classification at a subsequent stage is not sustainable. The Hon‟ble Apex Court has further clarified that it won‟t even be advisable/ permissible for Revenue to re-open the case at the last stage by issuing a fresh SCN. In an early decision of Hon‟ble Apex Court titled as C.C.E., Nagpur Vs. Ballarpur Industries Ltd. 2007(215) E.L.T. 489 (S.C.), it was held that SCN is the foundation in the matter of levy of recovery of duty, penalty and interest. No new case could have been set up or decided contrary to the SCNs. The view was reiterated by the Apex Court in the case of C.C.E. Vs. Gas Authority of India Ltd. 2008 (232) E.L.T. 7 (S.C.). Thus we are of the opinion that the Order under challenge is liable to be set aside on this score also.
8. Coming to another line of argument that the Order has wrongly invoked Rule 5 of Service Tax (Determination Value) Rules, 2006 for confirming the impugned demand:
For the purpose since this Rule is with respect to inclusion or exclusion from value of certain expenditure or cost as are incurred by the service provider in course of providing taxable services, it is foremost important to know the intention of the legislature as far as the valuation and the taxability thereof is concerned. Section 67 of Finance Act, 1994 gives valuation of taxable service for charging service tax under Section 66 (which is a charging Section), as the gross amount charged by the service provider for such services provided or to be provided by him in a case where consideration for service is money. Section 67 w.e.f. 01.05.2006 (as is relevant from impugned period) reads as follows:
"67. Valuation of taxable services for charging service tax -11
ST/50288/2016 [DB] (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall -
(i) In a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;
(ii) In a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as with the addition of service tax charged, is equivalent to the consideration;
(iii) In a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner.
(2) Where the gross amount charged by a service provider for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.
(3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before during or after the provision of such service. (4) Subject to the provisions of sub sections (1), (2) and (3) the value shall be determined in such manner as may be prescribed.
Explanation - For the purposes of this Section -
(a) "consideration" includes any amount i.e. payable for the taxable services provided or to be provided;
(b) "money" includes any currency, cheque, promissory note, letter of credit, draft, pay order, travelers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value;
(c) "gross amount charged" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment and nay amount credited or debited, as the case may be, to any account, whether called "suspense account" or by any other name, in the books of accounts of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise."
The bare perusal makes it clear that the charge of service tax has to be on the value of the taxable service i.e. the value of service rendered by the appellant. In the present case taxable service is that of providing manpower supply which only can be brought to charge and nothing more. The quantification of the value of service can therefore never exceed the gross amount charged by the service provider for the service provided by him. The above provision makes it clear that the expenditure or cost incurred by the service recipient in the course of providing taxable service can never be considered as 12 ST/50288/2016 [DB] the gross amount charged by the service provider for such service provided by him.
9. Rule 5 of Service Tax (Determination Value) Rules, 2006 which talks about the expenses to be included in the cost is therefore absolutely contrary to the intention of legislature as under the charging provisions of Section 66 and 67 of the Finance Act. Hon‟ble Apex Court in the case of Union of India Vs. Inter Continental Consultants (supra) while confirming the view of High Court of Delhi has declared the said Rule 5 as ultra vires as being beyond the mandate of Section 67 of the act of 1994. The Apex Court has also clarified therein that Rules cannot override or overrule the provisions of the main enactment. The Queen‟s Bench of England decision in the case of Commissioner of Customs and Excise Vs Cure and Deelay Limited 1962(1) QB 340 was also relied upon. The Hon‟ble Apex Court, in Intercontinental (supra) case while holding Rule 5 of Service Tax Determination of Value Rules as ultra vires has relied upon its own decision of Constitution Bench in the case of Mathuram Agarwal Vs. State of Madhya Pradesh 1999 (8) S.C.C. 667 wherein it was held:
"12. The statute should clearly and unambiguously convey the three components fo the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the needful in the matter."
Above all, whenever there is a conflict between the Rules and the Act as such it is the Rules which have to pave the way for the Act as was held by Hon‟ble High Court Bombay in the case of Standard Drums & Manufacturing Co. Ltd. reported as 2006 (199) E.L.T. 590. The reliance of the Commissioner for confirming 13 ST/50288/2016 [DB] the impugned demand on a Rule which has already been held ultra vires is not only erroneous but is held to be an act of judicial indiscipline. Hon‟ble High Court Karnataka, Bengaluru in their decision dated 22.10.2018 in Writ Petition No. 37514/2017 has held that public servants committing such kind of act are actually threat to society. This kind of lack of Judicial discipline will lead to more litigation and chaos. In view thereof, Commissioner(Appeals) is required to be careful about getting acquainted with the latest laws especially the overruled decisions.
10. Though the Parliament again amended Section 67 of the Act by Finance Act, 2015 w.e.f. 14.05.2015 adding an explanation which lays down that consideration includes the reimbursement of expenditure or cost incurred by the service provider but the period in question for the present Appeal is prior 14.05.2015 hence the said amendment cannot be given a retrospective effect. The principle of law known for the purpose is, "lex prospicit non respicit" which means that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his balance have been retrospectively upset. The obvious basis of the principle against retrospectivity is the principle of fairness as it was observed in the case of L's Office Cherifien Des Phosphates Vs. Yamashita-Shinnihon Steam Ship Company Ltd. 1994 (1) AC
466. It was clarified in this case that the legislatures which modified accrued rights or which imposed obligations or imposed new duties or attached a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect unless the legislation is for the purpose of supplying an obvious omission in a former legislation or to explain a former 14 ST/50288/2016 [DB] legislation. Since the amendment in Section 67 in the year 2015 do not fall in any of the later categories as discussed, it cannot be applied retrospectively. As a result of entire above discussion it stands clear that according to legislative intent of the Finance Act for the impugned period the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax for the service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service.
11. Now applying the above discussion to the facts and circumstances of the present case, we observe that the consideration as received by the appellant as quid pro quo for providing manpower supply to the Companies in India was the amount as is mentioned in para 6.2 of the impugned agreements. Admittedly, the appellant have been discharging their tax liability qua the said amount regularly and have also been regularly filing their ST-3 Returns. The amount as paid by the Indian companies directly as benefits been given to the personnels provided by the appellant as mentioned in Clause 6.3 of these agreements are nothing but the expenditure or cost incurred by the service recipient irrespective it being reimbursed or not. The same cannot be considered as the part of the gross value subject to taxability in view of entire above discussion. Thus we hold that Commissioner has wrongly included the expenses as incurred by the service recipient in furtherance of Clause 6.3 of the impugned Agreements while confirming the demand thereof from the appellants, the service provider who is admittedly not receiving any other amount than the one as mentioned in Clause 6.2 of the said Agreement. The findings confirming the demand are held liable to be set aside for this reason as well.
15
ST/50288/2016 [DB]
12. Ld. Counsel for appellant has also placed reliance upon the decision of Hon‟ble Apex Court in the case of Commissioner of Service Tax Vs. M/s Bhayana Builders Pvt. Ltd. 2018 (3) S.C.C. 782. To our opinion the said decision is not squarely applicable to the facts and circumstances of the present case because the question which has fallen for consideration in that case was as to whether the value of goods or materials supplied or provided free of cost by service recipient and used for providing the taxable service is to be included in computation of the gross amount. However, the Hon‟ble Apex Court in that case has appreciated the scope of words "gross" and "charge" and clarified that the value of such goods/ materials used or for providing the taxable service cannot be added/ included in the gross amount to be charged by the service provider. Seeing from this angle also the findings of adjudicating authority below are not sustainable.
13. The order under challenge has also been objected for want to the jurisdiction. We observe that the impugned SCN has been issued by Superintendent Service Tax, Audit -1 and the Order under challenge has been announced by Commissioner Service Tax Audit -
1. As per the Department‟s own Circular No. 985/9/2014-CX dated 22.09.2014 which discusses about organization structure of Audit Commissionerates as well as the functions thereof has clarified as :
"Audit Commissionerate shall issue the SCN whenever necessary after the audit objections are confirmed in the Monetary Committee Meetings (MCM). The SCN shall be answerable to and adjudicated by the Executive Commissioner or by Supporting Officers of the Executive Commissionerate as per the adjudication limits prescribed by the Board. Audit function will end with the issuance of SCN and further action including adjudication and follow up shall be the responsibility of Executive Commissioner."16
ST/50288/2016 [DB] It becomes clear that once the SCN was issued by audit and was confirmed by MCM it should have been adjudicated only and only by Executive Commissioner. The Audit Commissioner has no competent jurisdiction to adjudicate rather as per above circular, he is held to have become functus officio after issuing the SCN and the audit objections if any are confirmed. Thus, the order as passed by the Commissioner(Audit) is otherwise not sustainable as being beyond jurisdiction.
14. Finally, coming to the plea of invocation of extended period of limitation and the imposition of penalties, we observe that it is an admitted case of the Department that appellant was regularly filing the ST-3 Returns qua the consideration it has received in furtherance of Clause 6.2 of The Agreement. The discussion above has clarified that appellant is not liable to discharge any tax liability qua the benefits being received directly by the personnels (provided by the appellant) from the service recipients in terms of Clause 6.3 of the Agreement. As such no question of tax evasion is apparent on part of the appellant. Once it is not the case of tax evasion question of any malafide intent/mensrea has no sustainability. In absence thereof, the Department was not liable to invoke proviso to Section 73(3) of the Finance Act. In the given circumstances no question even of imposition of penalty at all arises. Hon‟ble Apex Court in the case Uniworth Textiles Ltd. Vs. C.C.E., Raipur 2013 (288) E.L.T. 161 (S.C.) has held that burden to prove malafide is on the Department, the alligator. It was clarified that mere non-payment of duties also is not equivalent to conclude willful mis-representation or suppression of facts but extended period of limitation is not invocable. Present is held to not to be a case of non-payment. 17
ST/50288/2016 [DB] Drawing our support from the case law Commissioner of Sales Tax UP Vs. Sanjiv Fabrics 2010 (258) E.L.T. 465 (S.C.) (para 17) and Union of India Vs. Rajasthan Spinning and Weaving Mills 2009 (238) E.L.T. 3 (S.C.) (para 18) that once there is no mensrea nor any ingredient existing as mentioned in Section 78 of the Act question of imposition of penalty does not at all arises.
15. Seeing from the entire discussion as above and that the Commissioner has committed an error as that of double taxation while demanding the tax on the entire value of Clause 6.2 as well as 6.3 of the Agreements despite his own observation that as far as the value of Clause 6.2 of the Agreements, the appellant are discharging their service tax liability, the Order under challenge is held absolutely unsustainable for not only being erroneous but being beyond jurisdiction and also for the reason that Commissioner has failed to observe the judicial discipline. The Order accordingly is hereby set aside. Appeal stands allowed.
[Pronounced in the open Court on 05.02.2019 ]
(BIJAY KUMAR) (RACHNA GUPTA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
D.J.