Custom, Excise & Service Tax Tribunal
M/S.Sky Channel Network vs Cce, Jaipur-I on 5 December, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/Decision:05.12.2016
Service Tax Appeal No.134/2011 (DB)
[Arising out of Order-in-Appeal No.361(DKV)ST/JPR-I/2010 dated 18.10.2010 passed by the Commissioner of Central Excise & Customs (Appeals), Jaipur]
M/s.Sky Channel Network Appellants
Vs.
CCE, Jaipur-I Respondent
Appearance:
Rep. by Shri Jatin Mahajan, Advocate for the appellant.
Rep. by Shri Ranjan Khanna, AR for the respondent.
Coram: Honble Shri S.K. Mohanty, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Final Order No.56074/2016 Per V. Padmanabhan:
The present appeal is directed against order dated 18.10.2010 passed by the Commissioner (Appeals), Jaipur. The appellant is engaged in the activity of cable operator services. They hold registration under the above category and paid service tax from time to time. Consequent upon search option at the office premises of the appellant, Revenue issued show cause notices dated 21.04.2008 demanding service tax to the tune of Rs.16,45,940/- along with interest and penalties under various sections. The Original Authority vide his order dated 7.12.2009 confirmed the demand of service tax to the tune of Rs.11,86,946/- along with interest and penalties. When the issue reached Commissioner (Appeals), the demand was further reduced to Rs.8,03,178/-. The present appeal challenges the impugned order both on merits as well as on limitation.
2. We have heard Shri Jatin Mahajan, ld. Advocate as well as Shri Ranjan Khanna, ld. DR for the Revenue.
3. A small part of the demand confirmed in the impugned order is on disallowance of cenvat credit to the extent of Rs.84,870/-, which is not challenged in the present appeal and hence the same is upheld.
4. However, the main grounds on which the appeal is filed are as follows:-
(1) Nothing incriminating has been recovered during the search conduct on 23.02.2006. The differential service tax demanded has been worked out solely on the basis of the statement given by Shri Rajendra Singh, Proprietor. He admitted in his statement that the taxable value must be higher than what has been declared to the Department, by inasmuch as 125% to 140% of the amount paid to the pay channels such as Star India, Set Discovery, etc. The adjudicating authority reckoned the taxable value to be double of the amount paid to pay channels. However, the Appellate Authority fixed the demand on the basis of 125% of the amount paid to the pay channels. The submission of the appellant is that there is no basis for such arbitrary determination of tax demand.
(2) The entire demand is hit by time limit. The revenue has not disclosed any serious ground for invoking the larger period of limitation.
Accordingly, they have submitted that both on merits as well as on limitation, the appeal may be allowed.
5. Ld. DR, on the other hand, reiterates the views taken by the lower authorities. His submission is that the proprietor of the appellant has admitted in his statement that the value of the taxable service may be taken as 120% - 140% of the amount paid to pay channels. He emphasized the fact that this has been admitted by the proprietor and hence, need not be proved by Revenue. He further submitted that the appellant has claimed that the amount paid to the pay channels was the aggregate amount pertaining to the appellant as well as several such operators, who agreed to pool the amount and pay to the pay channels through the appellant. His submission is that this fact is not evidenced by submission of any agreement between the pay channels as well as the appellant and others.
6. The appellant is registered for payment of service tax in the category of cable operator services. Service tax is payable on the consideration received by the cable operator from its subscribers. Revenue undertook investigations against the appellant on the allegation that they were not declaring the full value of the consideration received for providing the services. The proprietor of the appellant has admitted that they have not paid service tax in full on the consideration received. He also has stated that the value of such suppressed taxable services may be ascertained as 125-140% of the amount paid by them to the pay channel operators. Accordingly, the demand of service tax has been arrived at both by the Original Authority as well as by the Appellate Authority by using different percentages for estimating the value of the taxable services suppressed by the appellant. The issue for decision in the present appeal is whether to uphold the service tax demand made on the basis of such a measure.
7. The service tax is required to be paid by the service providers on the basis of the documents maintained by themselves. They are required to self-assess the amount of service tax and pay the same and follow it up by filing the periodical ST-3 returns. In this case, the Revenue has undertaken such proceedings against the appellant on the basis of the intelligence that they are evading service tax. However, no incriminatory documents were recovered during such search proceedings to evidence any suppression of taxable service and consequently, evasion of service tax. The entire demand has been based solely on the statement given by the proprietor in which he has indicated a rough estimate of the quantum of service tax evaded by them. Revenue has not undertaken any investigation further for recording of such statements. The appellant has submitted in the appeal that the demand cannot be upheld on the basis of such arbitrary quantification. They have further submitted that only on the basis of such statement, malafide intention and suppression of facts also cannot be alleged against them to invoke the extended period of limitation.
8. On careful consideration of the circumstances of the case, we are of the view that the statement of the proprietor relied upon by the Revenue, can at best raise suspicion to suggest that the taxable value declared by the appellant is not correct or suppressed. However, before fastening the service tax demand and the connected penalties under various sections, it was incumbent on the revenue to come up with tangible evidence to prove the suppression of facts and to quantify the demand on the basis of documentary evidence. On the other hand, what we notice is rather arbitrary quantification on the basis of a ball park figure indicated by the proprietor. Accordingly, we find it difficult to uphold the demands imposed upon the appellant.
9. In view of the above, the impugned order is set aside and the appeal is allowed.
[Operative portion of the order already pronounced in open court] ( S.K. Mohanty ) Member (Judicial) ( V. Padmanabhan ) Member (Technical) Ckp.
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