Custom, Excise & Service Tax Tribunal
Origin Advertising Pvt Ltd vs Ce & Cgst Lucknow on 29 November, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Miscellaneous Application No.70274 of 2018
(On behalf of the appellant)
IN
Service Tax Appeal No.404 of 2010
(Arising out of Order-in-Original No.73/Commissioner/LKO/ST/2009 dated
30/11/2009 passed by Commissioner of Customs, Central Excise & Service
Tax, Lucknow)
M/s Origin Advertising Pvt. Ltd., .....Appellant
(2nd Floor, 382-383, Akarshan Complex,
Vibhuti Khand, Gomti Nagar, Lucknow)
VERSUS
Commissioner of Central Excise &
Service Tax, Lucknow ....Respondent
(7-A Ashok Marg, Lucknow)
APPEARANCE:
Shri Nishant Mishra, Advocate &
Ms Vedika Nath, Advocate for the Appellant
Shri Manish Raj, Authorised Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70227/2023
DATE OF HEARING : 06 October, 2023
DATE OF PRONOUNCEMENT : 29 November, 2023
SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Original
No.73/Commissioner/LKO/ST/2009 dated 30/11/2009 passed by
Commissioner of Customs, Central Excise & Service Tax,
Lucknow. By the impugned order following has been held:-
ORDER
In view of the facts and circumstances of the case and discussions and findings supra, I pass the following order-
Service Tax Appeal No.404 of 2010 2
1. I confirm the demand of service tax amounting to Rs.30,33,510.00 (Rupees Thirty Lacs Thirty Three Thousand Five Hundred Ten only) on M/s Origin Advertising Pvt. Ltd., IInd Floor, 382-383, Akarshan Complex, Vibhuti Khand, Gomti Nagar, Lucknow under Section 73(1) of the Finance Act, 1994 and direct them to pay the same forthwith alongwith interest as applicable as per Section 75 of the Finance Act, 1994.
2. I also confirm the amount of Rs. 10,46,676.00 (Rupees Ten Lacs Forty Six Thousand Six Hundred Seventy Six only) upon M/s Origin Advertising Pvt. Ltd., IInd Floor, 382-383, Akarshan Complex, Vibhuti Khand, Gomti Nagar, Lucknow for wrong availment of cenvat credit under Rule 14 of Cenvat Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994 and direct them to pay the same forthwith along with interest as applicable as per Section 75 of the Finance Act, 1994.
3. I drop the demand amounting to Rs.5,96,383.00 relating to short payment of Service Tax and Rs.8,17,382.00 relating to wrong availment of cenvat credit as the same was rot found sustainable under law.
4. I impose a penalty of Rs.40,80,186.00 (Rupees Forty Lacs Eighty Thousand One Hundred Eighty Six only) under Rule 15(4) of the Cenvat Credit Rules, read with Section 78 of the Finance Act, 1994. However, I give them the option to pay the amount alongwith interest within 30 days of the communication of this order in terms of first proviso to Section 78 read with Section 11AC and on doing so the amount of penalty payable would be 25% of the amount which would also be payable within the said 30 days referred above." 2.1 Appellants are engaged in providing "Advertising Agency Services" to the clients which falls under the taxable category as defined under Section 65(105)(e) read with Section 65(3) of the Finance Act, 1994.
Service Tax Appeal No.404 of 2010 3 2.2 As per Instruction letter No.341/43/96-TRU dated 31.10.1996 advertisement agency is legally obliged to collect and pay service tax. However, in case where the advertisement agency fails to collect the service tax, the liability for payment of service tax so remaining undischarged has to be borne by the Advertisement Agency itself. Therefore, appellant could not have claim any exemption from payment and could not be collected by them on account of pay service tax. Appellant continued to make payment of service tax beyond the prescribed time limit and filed ST-3 returns after the due dates. The returns were filed by the appellant on 11.02.2004 for ST-3 returns pertaining to the period from April, 2002 to September, 2002, October2002 to March2003 and April 2003 to September 2003. The returns were cleared for the period from April, 2002 to September, 2002 were submitted by the appellant on 11.02.2004 against the due date on 25.10.2002. Thus, extended period has been invoked for making the demand in respect of the period from April, 2002 towards the date of filing of return.
2.3 Revenue was of the view that appellant has short paid the service tax under the provisions of Section 66, 67, 68 & 70 of the Act read with Rule 6 and 7 during the period April, 2002 to March, 2008. They have short paid service tax amounting to Rs.35,19,222.00 + Cess. Rs.80,534.00 + Higher Ed. Cess Rs.30,136.00 amounting in aggregate to Rs.36,29,893.00. This amount though short paid was to be recovered from them by making the demand in terms of Section 73 (1) of the Finance Act, 1994 alongwith applicable interest as per Section 75 of the Act and appellant was also liable for penalty under Section 77 of the Act.
2.4 Further, scrutiny of ST-3 returns for the period from 2002- 03 to 2007-08 it was revealed that appellant have taken the credit on the strength of certain invoices which do not contain the requisite details as prescribed under Rule 4 (A) of the Rules and no conformity with Rule 5 of Service Tax Credit Rules, 2002 read with Rule 9 of Cenvat Credit Rules, 2004 as amended from time to time. Cenvat credit on these invoices is not admissible.
Service Tax Appeal No.404 of 2010 4 In respect of these invoices Cenvat credit amounting to Rs.18,64,058.00 was not admissible to them. 2.5 Show cause notice dated 05.02.2009 was issued to the appellant asking them to show cause as to why- a. (i) The Service Tax amounting to Rs 36,29,893/- (Thirty six lakhs twenty nine thousand eight hundred and ninety three rupees only) should not be demanded and recovered from them under proviso to Section 73(1) of the Act.
(ii) The interest at appropriate rate should not be recovered from them under Section 75 of the Act.
(iii) The penalty under section 76 and 78 of the Act should not be imposed upon them.
b. (i) The Cenvat Credit along with Education cess amounting to Rs. 18,64,058/- (Eighteen Lakhs Sixty Four Thousand and Fifty Eight only) should not be recovered from them along with applicable interest under Rule 6 of Service Tax Credit Rule 2002 and Rule 14 of Cenvat Credit Rules, 2004.
(ii) The penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 78 off the Act should not be imposed upon them."
2.6 This show cause notice has been adjudicated as per the impugned order referred in para-1 above. Aggrieved appellant has filed this appeal.
2.7 When the appeal was fist listed on 06.09.2010 following order was made:-
"Let the Appellant appear before the Adjudicating authority on 20.09.2010 and reconcile the discrepancy. Let revenue get reconciliation by 10.10.2010. Call on 18.10.2010."
2.8 In terms of this order a verification was conducted by the Departmental officers and a discrepancy report dated 10.01.2011 was prepared and given to the concern Additional Commissioner Adjudication. Thereafter, the stay application dated 06.06.2010 filed by the appellant was decided by Stay Order No.ST/197/2011 dated 28.03.2011 directing the appellant Service Tax Appeal No.404 of 2010 5 to deposit an amount of Rs.13 lakhs within 8 weeks. Compliance to the said order has been noted by Miscellaneous Order No.ST/134/11 dated 10.08.2011.
3.1 We have heard Shri Nishant Mishra and Ms Vedika Nath advocate for the appellant and Shri Manish Raj learned Authorised Representative appearing for the respondent. 3.2 Arguing for the appellant learned Counsel submits that- Extended period of limitation cannot be invoked for making this demand and relies upon the decision in the case of Commissioner of Central Excise and Customs, Surat Vs Sun Pharmaceuticals Industries Ltd. and Others 2020 (10) SCC 583. On merit also the demand is not sustainable. Breakup of the demand is made as indicated bellow:-
A Full benefit of abatement to the extent of Rs 4,38,694.92/-
85%, in terms of Circular No. 341/43/96- TRU dated 31.10.1996 not provided in Order-in-Original B Demand of service tax on services provided Rs 5,04,247.52/-
by appellant as sub-contractor prior to Sep 2004, on which service tax liability has been discharged by the contractor C Non-consideration of payment of service tax Rs 3,52,356/-
through CENVAT while calculating amount of service tax paid D Application of rate of tax on the date of Rs 2,66,019/-
provision of services E Grossing up of taxable amount due to Rs.14,65,840.40/-
inadvertent mentioning of service tax with taxable value of services in some returns Rs 30,27,159/-
In the report submitted by the officers for resolving discrepancies following observations are made about the demands in dispute:
o The appellant is entitled to abatement on print media to the extent of 85% as per Circular No 341/43/96- TRU dated 31.10.1996 and the same was allowed in OIO to the extent of sample invoices produced before the adjudicating authority. On scrutiny of all the invoices in dispute it is evident that appellant is entitled for further reduction of demand on this Service Tax Appeal No.404 of 2010 6 account by an amount o Rs 4,38,694.92/- against Rs 4,40,087.72 as claimed by the appellant. o Deduction of Rs 5,04,247.52/- from the demand at S No 2 claimed by the appellant is not admissible in terms of Master circular No 96/7/2007 dated 23.08.2007.
o The fact of payment of service tax of Rs 87,606 + Rs 2,64,750/- = 3,52,356/- has not been taken into account in the OIO and the said amount has been included in the total demand confirmed.
o Deduction from the demand to the extent of Rs 2,66,019/- needs to be applied because the rate of service tax for calculating the tax liability is to be on the date of provision of service.
o Deduction of Rs 14,65,840/- on account of amounts received inclusive of service tax resulting in excess demand of Rs 14,65,840/- being a new issue needs to be considered by the CESTAT.
o Thus as per this reconciliation report prepared by the revenue officers, demands at "A", "C" and "D" in the table above cannot be upheld In respect of demand at "B", the issue is covered by the decision of Larger Bench of this Tribunal in the case of Commissioner of Service Tax Vs Melange Developers (P) Ltd. 2019 (106) Taxmann.com 52 (LB).Further, as the issue is completely interpretational one and conflicting views were taken by the different Benches of the Tribunal, there cannot be any allegation for willful suppression or invocation of extended period, as has been held by this Tribunal in the case of Vinoth Shipping Services Vs Commissioner of Central Excise & Service Tax 2021 (132) Taxmann.com 275 (Tri.-Chennai).
Demand at "E" is in respect of certain clerical errors, as the amount mentioned in the column of value of taxable services regarding represented the gross amount realized by the appellant i.e. included the service tax amount Service Tax Appeal No.404 of 2010 7 though on verification team of officers found this contention of the appellant to be correct but did not express any opinion in this regard, and the Order-in- Original is also silent on this issue.
In respect of recovery of Cenvat credit, the credit has been sought to be denied on the ground that the invoices against which the credit has been taken does not contain minimum information as required under Rule 4(A) or 9 (2) of the Rules. Appellant has submitted a detailed chart containing all the details with registration details of supplier of the supplier of input services that being so this demand cannot be sustained.
As the demand itself is not sustainable the demand for interest also fails and penalty imposed cannot be sustained.
3.3 Arguing for the revenue learned Authorized Representative reiterates the findings recorded in the impugned order and the Order-in-Original.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For confirming the demand against the appellant, Adjudicating Authority has recorded the following findings:-
The Revenue's contention in light of Department's instruction letter No. 341/43/96-TRU dt. 31.10.96 that the liability for payment of service tax has to be borne by the advertising agency on the amount not received is not relevant after amendment to Rule 6 of Service Tax Rules, w.e.f. 16.10.98 which reads as under:
Rule 6: Payment of Service Tax "The service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of taxable service..........."
Hence the liability to pay service tax accrues only on the amount which has been received during the month.
Service Tax Appeal No.404 of 2010 8 The Noticee have repeatedly contested that the Department has demanded service tax on the amounts which were never collected by them and no evidence was placed by the Department that the amounts as stated to be realized in the show cause notice has been in fact realized by them. They have also not given any lead to establish that the figures quoted in the SCN are not correct. They have, however, furnished the details of the amount realized by them in the Annexure 1 of their submission dated 28.02.09 and the amount shown as collected by them therein are almost matching the amount quoted in the Annexure A-1 of the notice in respect of several half yearly periods. There are only minor variations in figures relating to certain other half yearly periods as tabulated hereinfra-
Period Amt shown as realized Amt collected as per
(as per SCN) Annexure 1 of the Noticee
April 02 to Sept 02 5526082 5526082
Oct 02 to Mar 03 11784942 11784942
April 03 to Sept 03 3157761 3157761
Oct 03 to Mar 04 10309589 10309589
April 04 to Sept 04 17717770 17717770
Oct 04 to Mar 05 22666564 22292796
April 05 to Sept 05 23585537 21845675
Oct 05 to Mar 06 30534804 27869624
April 06 to Sept 06 26387422 30634830
Oct 06 to Mar 07 34027892 36401541
April 07 to Sept 07 37435126 34562519
Oct 07 to Mar 08 40572816 36957673
Total 263706305 259060802
The assessee is required to indicate the amount realized in their ST-3 returns which is statutory document and the figures quoted therein are supposed to be the correct one. But, the comparative details of amount realized and service atx paid in the notice and the amount reflected in the noticee's ST-3 return as received are varying substantially in respect of first three half yearly periods i.e April 02 to Sept 02, Oct 02 to Mach 03 and Apr 03 to Sept 03 as reflected hereinfra:-
Service Tax Appeal No.404 of 2010 9 Amount as per SCN Amount as per ST-3 return Period Amt shown S Tax Amt S Tax Deduction as realized paid realized paid of Value April 02 to 5526082 134994 134994* 134994 Sept 02 Oct 02 to 11784942 222267 222266* 222266 Mar 03 April 03 to 3157761 203475 203474* 203474 Sept 03 Oct 03 to 10309589 706072 10309589 706072 Mar 04 April 04 to 17717770 1381197 17717770 1293591 Sept 04 Oct 04 to 22666564 2022442 22666564 1757692 Mar 05 April 05 to 23585537 2098166 23585537 2098166 Sept 05 Oct 05 to 30534804 2665234 30534804 2665245 Mar 06 April 06 to 26387422 2295020 30634827 2934213 4257405 Sept 06 Oct 06 to 34027892 3967445 36401545 4125742 2373653 Mar 07 April 07 to 37435126 4175441 38038791 4175435 603825 Sept 07 Oct 07 to 40572816 4447282 41404955 4447282 857222 Mar 08 Total 263706305 24319035 251294382 24764172 8092105 Looking in to the table above, it is clear that since the amount shown as realized and the amount of service tax paid as shown in the ST - 3 for half yearly periods from April 02 to Sept. 03 are one and the same, it is abundantly clear that the realized amount has not been shown correctly by the Noticee in their ST - 3 returns as the amount of service tax paid in any case cannot be equal to the amount realized for the respective half yearly period. The rate of service tax during the relevant period is 5% and later 8% w.e.f. 14.05.2003. Hence, in respect of the said half yearly periods, the value for calculation of taxable liability is being taken as the amount shown in the notice. The Noticee have also admitted the same (the amount Service Tax Appeal No.404 of 2010 10 shown as realized in the notice) as amount collected during the respective half yearly periods in their Annexure 1 enclosed with their submission dated 28.02.09 and therefore the correct amount realized for the respective half yearly periods can be taken for calculation of service tax liability, as under-
Period Amt. shown as realized
April 02 to Sept.02 5526082
Oct. 02 to March 03 11784942
April 03 to Sept. 03 3157761
Hence, the Noticee's assertion that the service tax liability was calculated on hypothetical figures is not correct and the real issue which emerges here in view of the above is whether the benefit of deduction in taxable value while calculating the service tax liability would be available to them especially in respect of the services rendered to the print media and services where service tax liability has been discharged by the principal contractor.
The Noticee have not explained as how the certain collection received by them as shown in the Annexure A-I are exempted. As regards their contention that contractors / sub-contractors are not required to discharge the service tax liability as the main contractor have discharged the same. This issue has been clarified by the Master Circular No. 96/7/2007 dated 23.08.07 under reference code no 999.03 -
"A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by sub-contractor.
Service provided by sub-contractors are in the nature of input services. Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his Service Tax Appeal No.404 of 2010 11 capacity as a sub-contractor and whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided."
The assessee is therefore not entitled to deduction on this score and relief sought by them cannot be accorded. Sub-contractors are also liable for payment of service tax which can be taken as input service credit by the principal contractor. The other ground for seeking relief is deduction claimed on print media which are liable for exemption as per reference code 004.01/23.08.07 of Circular No. 96/7/2007-ST dt. 28.08.07. According to them the amount payable to print media shall not be included in the value of taxable services and only the commission received by advertising shall be liable to tax. This has also been clarified by the Board under Circular No. 341/43/96- TRU dated 31.10.96 and letter No. 332/4/2008 dt. 05.05.08. Hence they would be entitled for deduction in value on this account, and therefore they would be entitled for the benefit to the extent of the evidences furnished by them in this regard. In this connection a report was called from the jurisdictional Assistant Commissioner, Central Excise Division-I, Lucknow vide his letter C.No. 5-STC/EA- 2000/Lko-1/06. According to him the facts on record as submitted by the Noticee, reveal the following:
(i) The amount where service tax : Rs.8,42,740.00 liability has been discharged by the principal contractor
(ii) The amount where services have : Rs 23,69,654,00 been Rendered to the print media As regards (i), the issue has already been discussed above and in view of the clear guidelines of the Master Circular, no relief can be granted to the Noticee. But the Department under instruction letter F.No.341/43/96-TRU Service Tax Appeal No.404 of 2010 12 dated 31.10.1999 has clarified regarding the deduction about print media as under-
"the amount paid, excluding the own commission, by the advertising agency for space and time in getting the advertisement published in the print media (i.e., newspapers, periodicals, etc) or the electronic media (Doordarshan, private TV channels, AIR, etc.) will not be includible in the value of taxable service for the purpose of levy of service tax. The commission received by the advertising agency would, however, be includible in the value of taxable service".
As regards the amount at SI.No-(ii), the same would not be available to them in toto. They would be entitled for deduction in the value on the amounts charged from the print media for publishing news items and the Service Tax would be payable on the commission in respect of the relevant invoices. Out of the total invoices produced by the Noticee, the following invoices which pertain to the period April 03 to March 06 in respect of which the Noticee have not claimed any deduction in value, were found eligible for deduction in value-
DETAILS OF INVOICES ISSUED TO THE PRINT MEDIA INVOICE NO Gross Amt. Commission Deduction Allowed PB03043622 DT. 18.08.03 15066 2260 12806 PB03043646 DT 28.10.03 94259 14139 80120 PB040533001 DT. 10.05.04 201370 30206 171165 PB040533008 DT 26.06.04 45726 6859 38867 PB040533028 DT. 03.01.05 48300 7245 41055 PB050633027 DT 07.11.05 55000 82500 467500 954721 143208 811513 However, the Noticee have already claimed the deduction in value in their ST-3 returns for the period April 06 to March 08, and therefore the invoices produced by them pertaining to this period are not relevant for computation of value of deduction as it is also not in dispute under the Show Cause Notice. It is further observed that they have not discharged their Service Tax liability correctly throughout the period right from April 2002 to March 2008 and their correct service tax liability after permitting deduction in respect of the above invoices and Service Tax Appeal No.404 of 2010 13 deduction claimed by them for the period April 06 to March 08 is tabulated as under:
Period Amt realized Deduction Taxable Service S Tax paid Short as per S tax permissible Value tax Payment return on bills/ payable invoices raised for print media/ principal contractor April 02 to 5526082 0 5526082 276304 134994 141310 Sept 02 Oct 02 to Mar 11784942 0 11784942 589247 222266 367021 03 April 03 to 3157761 12806 3144955 251596 203474 48122 Sept 03 Oct 03 to Mar 10309589 80120 10229469 818358 706072 112286 04 April 04 to 17717770 210032 17507738 1400619 1293591 107028 Sept 04 Oct 04 to Mar 22666564 41055 22625509 2307802 1757692 550110 05 April 05 to 23585537 0 23585537 2405725 2098166 307559 Sept 05 Oct 05 to Mar 30534804 467500 30067304 3066865 2665245 401620 06 April 06 to 30634827 4247405 26387422 2933335 2934213 -878 Sept 06 Oct 06 to Mar 36401545 2373653 34027892 4125790 4125762 28 07 April 07 to 38038791 603825 37434966 4618182 4175435 442747 Sept 07 Oct 07 to Mar 41404955 857222 40547733 5003839 4447282 556557 08 Total 271763167 8893618 262869549 26839130 24764192 3033510 As regards the noticee's objection that they have not been provided the basis of computation of service tax, the same is not acceptable as Annexure A-I to the notice is self explanatory, in which short payment has been calculated. This contain complete details such as respective period, amount of taxable value, rate applicable, service tax payable, service tax paid through GAR and paid through cenvat credit. Similarly the objection relating to rate of service tax is also ethereal as different rates applicable at the different period of time have been given in the chart and tax liability has been calculated accordingly and the Noticee have not furnished any evidence to substantiate Service Tax Appeal No.404 of 2010 14 their contention regarding the services during some prior period of time and therefore their objection that the rate applicable at the time of providing service has been ignored is not acceptable."
4.3 When the matter was earlier listed, as noted above on
06.09.2010, the Bench had directed for reconciliation of discrepancy and the same was got reconciled through the concerned Adjudicating Authority. The report dated 10.01.2011 was prepared by officers on the issue, relevant paras are reproduced bellow:-
1. In this regard it is found that the appellants-have agitated that total amount of abatement admissible to them during the period April 2002 to March 2008 should have been Rs.1,40,20,935.22 instead of Rs.88,93,618/- as accepted by the Hon'ble Commissioner in o-in-o dt. 30.11.2009. The party had relied on following letters which they had already submitted to the department before issue of o-in-o either to the Superintendent I/C Service Tax Group -III, Central Excise, Division-l, Lucknow or to the Commissioner, Central Excise, Lucknow.
(i) Point No. 1 & 5 Letter No. NIL Dated
29.11.2008
(ii) Point No. 3 letter No. NIL daled 29.01.2008
(iii) Point No. 1-3 letter No. NIL dated. 25.08.2008
(iv) Point No.A-5 letter Nc. OA/228/0950 dated
28:02.2009
(v) Point No.1 letter No.NIL dated 30.11.2009
(vi) Point No. 2 letter No. OA/0809/228 dated
13.03.2010
All the above letters relied by the appellants have been examined and it is found that the party has quantified the value of abatement half yearly ST-3 return wise vide their letter dated 28.02.2009 only wherein the value of abatement shown by the party is as under:-
Service Tax Appeal No.404 of 2010 15 Period Abatement Abatement Abatemen Difference Difference shown by the found by t allowed in tax in tax party in their officers in OIO claimed by examined letter Dt the party by the 28.02.2009 officers April 02 to 778537.95 778537.95 0 38926.90 38926.90 Sept 02 Oct 02 to Mar 337588.55 337588.55 0 16879.43 16879.43 03 April 03 to 216180.50 216180.50 12806 16269.96 16269.96 Sept 03 Oct 03 to Mar 909307.90 891598.00 80120 66335.03 64942.03 04 April 04 to 280754.15 280754.15 210032 5657.77 5657.77 Sept 04 Oct 04 to Mar 486060.60 486060.60 41055 45390.57 45390.57 05 April 05 to 1221990.06 1221990.06 0 124642.99 124642.99 Sept 05 Oct 05 to Mar 1739749.40 1739749.40 467500 129769.44 129769.44 06 April 06 to 4240615.15 4240615.15 4247405 -755.03 -755.03 Sept 06 Oct 06 to Mar 2373674.55 2373674.55 2373653 -0.66 -0.66 07 April 07 to 594798.55 594798.55 603825 -1113.86 -1113.86 Sept 07 Oct 07 to Mar 841704.85 841704.85 857222 -1914.82 -1914.82 08 Total 14020962.21 14003252.31 8893618 440087.72 438694.72 In this regard it shall be important to point cut that abatement on print media is admissible to the extent of 85% as per circular No.341/43/96-TRU dt. 31.10.1996 in the instant case the Hon'ble Commissioner has allowed abatement for the period April 2003 to September 2005 in respect of those invoices which were submitted by the appellants as sample invoice of print media vide their letter dt. 30.11.2009 addressed to Superintendent Service Tax Group-III, in connection with instant show cause notice. It is found that they have shown their abatement value with their ST-3 returns w.e.f. half year ending Sept 04 on a separate, calculation sheet which they had enclosed with all ST-3 returns. Invoices on print media have been scrutinized with the calculation chart of the party and figures of ST-3s and the discrepancies noticed is shown in the chart as shown above.
Service Tax Appeal No.404 of 2010 16
2. The party's contention that the total amount of Rs.5,04,247.52 is on account of excess tax demand confirmed in respect of exempted services / sales is not correct as this pertains to the issue of taxability of services of sub-contractors and this issue has been fully discussed and decided in detail in o-in-o, wherein, there is difference of Master Circular No.96/7/2007 dt. 23.08.2007 whereby it is stated that- 'a sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by sub-contractor. Service provided-by-sub-contractors are in the nature of input service. Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his capacity as a sub- contractor and whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided."
Hence, it is correct to say that they are not entitled to deduction on this score and relief sought by them cannot be accorded. Sub-contractors are also liable for service tax which can be taken as Input service credit by the main contractor. However, the amount of suo moto exemption availed in the guise of services of sub- contractors for the different period is as under:-
Period Difference in Tax due to exempt services Apr 02 to Sept'02 102381.8 Oct'02 to Mar'03 350016.2 Apr 03 to Sept'03 0 Oct '03 to Mar04 45950.64 April 04 to Sept'04 5898.88 Oct 04 to Mar 05 0 Apr 05 to Sept'05 0 Oct'05 to Mar'06 0 Service Tax Appeal No.404 of 2010 17 Apr 06 to Sept.'06 0 Oct '06 to Mar'07 0 Apr 07 to Sept.07 0 Oct '07 to Mar'08 0 Total 504247.52
3. Party's contention that in some cases the amount of collection includes the amount of service tax collected and by this way the tax has been calculated twice due to grossing up of amount which has resulted into an excess tax demand of Rs. 14,65,040. The party's contention that the details of these calculation mistake due to clubbing of service tax with value of taxable service realized was already communicated by them to the various authorities vide their letter dt. 25.08.2008, 29.11.2008 and 20.12.2009 is not fully correct as vide letter dt. 02.12.2009 they have merely pointed out that the amount of Service Tax as shown in service tax returns is correctly mentioned and all the amount realized as service tax was correctly paid by them. However, the mistake in mentioning of taxable value of Service Tax is due to clerical error- and without any intention to evade tax thereon, which is non-intentional and due to ignorance as necessary explanations were filed with the department as soon as the mistake was traced by them. However; the party had not quantified the value of twice valuation due to clubbing of service tax with the taxable value in their representation dt. 02.12.2009. There is no reference of this issue in their any other letter/representation including letter dt 25.08.2008 and 29.11.2008 this issue has cropped up after passing of this OIO by the Commissioner. The half-yearly return wise excess value so accounted for against which the party has contested that the total amount of Rs.14,65,840/- is included in the confirmed demand of Rs.30,33,510/- is as under-
Period Amount of taxable Amount of tax
value demanded in o-in-o.
Service Tax Appeal No.404 of 2010
18
October 2004 to Rs. 3,73,768/- Rs 38,125.25
March 2004
April 2005 to Rs. 17,45,823/- Rs. 1,78,073.95
September 2005
October 2005 to Rs. 26,66,247/- Rs 2,71,854.89
March 2006
April 2007 to Rs. 34,75,962/- Rs 4,28,991.71
September 2007
October 2007 to Rs. 44.47,282/- Rs: 5,48,794.60
March 2008
Total Rs. 1,27,09,082/- Rs. 14,65,840.40
It shall be important to point out that this is a fresh issue and can only be taken up by CESTAT as this issue was not included in concerned show cause notice issued by the Hon'ble Commissioner.
4. Regarding point no.4 it is found that the party has rightly contested that the rate of tax as applicable at the time of rendering of services should be applied. Accordingly, half yearly return wise excess demand raised and confirmed or account of difference in service lax rate is as under-
Period Difference in Tax due rate of tax April'02 to Sept'02 0 Oct'02 to Mar'03 0 April'03 to Sept'03 31851.00 Oct'03 to Mar'04 0 April'04 to Sept'04 28.00 October 2004 to March 2005 201844.00 April 2005 to September 2005 5155.00 October 2005 to March 2006 20.00 April 2006 to September 2006 0 October 2006 to March 2007 0 April'07 to Sept'07 21142.00 Oct'07 to Mar'08 5979.00 Total 266019.00
The party had pointed out in their representation dt. 28 02.2009 against show cause notice dt. 05.02.2009.
Service Tax Appeal No.404 of 2010 19
5. Regarding point No.5 the party's contention regarding ignoring the payment of service tax of Rs. 87,606/- and Rs.2,64,750/- for the period April 2004 to Geptember 2004 and October 2004 to March 2005 respectively, appears quite correct as in Annexure - A-I of the show cause notice this amount of service lax has been shown to have been paid from cenvat credit in Annexure - A-1. However, Ih o-in-o this amount of Service Tax has not been taken into account rather treated it as non-payment and included this amount in the tolai confirmed demand of Rs, 30,33,510/-. This plea of the party can out rightly be considered for reducing the confirmed demand. So far as party's contention that no reason has been recorded in the original demand cum order for not allowing payment of cenvat credit is crystal clear.
6. Regarding disallowing of cenvat credit in o-in-o the party's contention that no evidence has been placed by the department, a list of such credits actually utilized monthwise by the party is enclosed as Annexure -A. This fulfills the requirement of the appellants as given in para 6 of their letter dt. 08.12.2010."
4.4 From the above, it is evident that the revenue authorities have acknowledge that revenue agrees that the abatement as claimed by the party i.e. Rs.14,02,0962.21 is correct. However, in the Order-in-Original abatement has been allowed to the extent of Rs.88,93,618/- resulting in confirmation of the demand of Rs.4,38,694.72. However, if the abatement claim as claimed by the party and verified by the officers is allowed. The net demand which is made on this account cannot survive and the same needs to be set aside, we do so.
4.5 On the issue with regards to the payment of service tax by the sub-contractor, when the main contractor has paid the entire tax liability the demand of Rs.5,04,247.52 has been confirmed. Officers have found that this amount is recoverable and appellants have contested the demand relying upon the decision of Larger Bench of this Tribunal in the M/s Melange Developers Service Tax Appeal No.404 of 2010 20 Pvt. Ltd. (supra) wherein the Larger Bench of this Tribunal has held that in the absence of any exemption granted sub- contractor is required to discharge the tax liability, the service recipient i.e. the main contractor can avail the benefit of Cenvat credit. Accordingly, it is the view that has been canvassed by the department in the matter. The relevant paras of the decision are reproduced bellow:-
15. It is not in dispute that a sub-contractor renders a taxable service to a main contractor. Section 68 of the Act provides that every person, which would include a sub-contractor, providing taxable service to any person shall pay Service Tax at the rate specified. Therefore, in the absence of any exemption granted, a sub-contractor has to discharge the tax liability. The service recipient i.e. the main contractor can, however, avail the benefit of the provisions of the Cenvat Rules. When such a mechanism has been provided under the Act and the Rules framed thereunder, there is no reason as to why a sub-contractor should not pay Service Tax merely because the main contractor has discharged the tax liability. As noticed above, there can be no possibility of double taxation because the Cenvat Rules allow a provider of output service to take credit of the Service Tax paid at the preceding stage.
16. It is in this light that the main contention of Learned Counsel for the Respondent that if a sub-contractor is required to pay Service Tax when the main contractor has actually discharged Service Tax liability, it would amount to 'Double Taxation', has to be examined. For this contention, reliance has been placed by the Learned Counsel for the Respondent on the following decisions of this Tribunal :
(i) Urvi Construction v. Commissioner of Service Tax, Ahmedabad, reported in 2010 (17) STR 302 (Tri. - Ahmd.);
(ii) BCC Developers and Promoters Pvt. Ltd. v. Commissioner of Central Excise, Jaipur, reported in 2017 (52) S.T.R. 22 (Tri. - Del.);
(iii) M/s. Dhaneshra Engineering Works v. Commissioner of Central Excise, Allahabad, reported in 2018 (2) TMI 788 - CESTAT - Allahabad;
(iv) Power Mech Projects Ltd. v. Commissioner of Customs, Guntur, reported in 2017 (48) S.T.R. 165 (Tri.- Hyd.); and Service Tax Appeal No.404 of 2010 21
(v) M/s. Edac Engg. Ltd. v. CST, Chennai, reported in 2017 (6) TMI 685 CESTAT Chennai.
17. In Urvi Construction a Learned Member of the Tribunal observed :
"2. ................... Further the learned advocate also submits that in the Master Circular issued by the Board vide Circular No. 96/7/2007-S.T., dated 23-8-2007, a stand has been taken that there is no exemption to a sub-contractor from payment of service tax merely because the contractor pays the tax. However, he submits that for the period circular issued late by the Board in 1997 was applicable and according to this Circular where the services have been provided by the sub-contractors such sub-contractors are not liable to pay service tax and service tax liability is on the main contractor. Taking note of the fact of the contention that main contractor has paid the service tax and charging service tax on the sub-contractor again would amount to taxing the same service twice and also taking note of the circular cited by the learned advocate and the decisions of the Tribunal cited, I find that if the appellant is required to pay the service tax it would amount to taxing the same service twice and the circular and the Tribunal's decision are squarely applicable to the facts of this case and accordingly appeal is allowed with consequential relief to the appellant."
18. In BCC Developers and Promoters Pvt. Ltd. it was observed :
"6.1 We agree with the submission of the Ld. Counsel that no double taxation is permissible under the law. The Constitution (Article 265) provides to take the exact amount of tax i.e. neither more nor less. In the instant case, if the principal has already paid the Service Tax, then the same cannot be demanded from the appellant. As per the clarification of the Board's Circular dated 23-8-2007 as well as dated 7-10-1998, if the principal had not paid the Service Tax then the same can be charged. If the Service Tax has already been paid by the principal, then the same cannot be demanded again."
19. M/s. Dhaneshra Engineering Works followed the aforesaid decision in BCC Developers and Promoters Pvt. Ltd.
Service Tax Appeal No.404 of 2010 22
20. In M/s. Edac Engg. Ltd., the Division Bench, after placing reliance upon the decision of the Tribunal in Urvi Construction, observed :
"6.2 We are therefore of the considered opinion that these case laws are distinguishable from the decision taken by this very Bench in the case of the present appellants Edac Engineering Ltd. in Final order dated 19-12-2016. We also find that the very same Board's Circular No. 97/8/2007-S.T., dated 23-8-2007, relied upon by the Ld. AR has been taken note of by the Tribunal in Urvi Construction (supra). This being so, we have no hesitation in ruling that when Service Tax has been paid by the main contractor, charging the sub¬contractor again will amount to taxing the same service twice. In the circumstances, the issue at hand also requires to be remanded to the adjudicating authority to verify whether the service rendered by the appellant has suffered tax in the hands of the principal contracts. If that aspect is able to be proved by the appellants, no tax liability will accrue to them. Towards this end, the adjudicating authority will give suitable opportunity to the appellants to present their case. Appellants are also produce all evidence and documents to establish their claim that the tax liability required to be discharged by them has already been paid up by the main contractor. If that is provided, their will obviously be no demand for interest unless such demands have been made belatedly. Once this aspect is also able to be proved by the appellant, imposition of penalty will also not arise."
21. The aforesaid decisions do not take into consideration the impact of the Cenvat Rules. It would, therefore, not be correct to conclude that double taxation would result if a sub-contractor is required to discharge the Service Tax liability even if the main contractor has discharged the tax liability.
22. The decisions of the Tribunal holding that double taxation will not result if a sub-contractor discharges the tax liability because of the Cenvat Rules, now need to be referred to.
23. In Max Tech Oil & Gas Services Pvt. Ltd. v. Commissioner of Service Tax, Delhi, reported in 2017 (52) S.T.R. 508 (Tri. - Del.), the Division Bench has held :
"6. Regarding the contention of the appellant that they have acted only as a sub-contractor and demanding service tax from Service Tax Appeal No.404 of 2010 23 them will amount to double taxation as the main contractor also is rendering similar service to ONGC, we find no legal basis for the contention of the appellant. The service tax leviable at the hands of each service provider is decided by nature of activities undertaken by them. If the same is covered by scope of the taxable entry under Finance Act, 1994 tax liability arises. The said service becomes part of final service rendered by main contractor is of no consequence to determine the tax liability of each and every service provider. If at all, the service tax paid by a sub-contractor which becomes part of service further provided by the main contractor, the scheme of credit as envisaged by the Cenvat Credit Rules, 2004 will come into play subject to fulfilment of conditions therein. It is nobody's case that the sub- contractors per se are not liable to service tax even if they rendered taxable service............"
[emphasis supplied]
24. The same view was taken by the Division Bench of the Tribunal in CCE & S.T., Raipur v. M/s. J.K. Transport, reported in 2017 (9) TMI 993 - CESTAT New Delhi. The relevant paragraph is reproduced below :
"5. We find that the CBEC vide Circular dated 23-8-2007 has clarified that the services provided by the sub-contractor is a taxable service, even if the same is used for completion of the work by the main service provider. Thus, for providing the taxable service, the sub-contractor is liable for payment of service tax on provision of such service.........."
25. Similar views were taken by the Tribunal in (i) Max Logistics Ltd. v. Commissioner of Central Excise, Raipur, reported in 2017 (47) S.T.R. 41 (Tri. - Del.); (ii) Hargovind Electric Decorators v. Commissioner of Central Excise, Jaipur-I, reported in 2016 (43) S.T.R. 619 (Tri. - Del.); and (iii) Sew Construction Ltd. v. Commissioner of Central Excise, Raipur, reported in 2011 (22) S.T.R. 666 (Tri. - Del.).
26. At this stage, it would also be useful to refer to a Larger Bench decision of the Tribunal in Vijay Sharma & Company v. CCE, Chandigarh, reported in 2010 (20) S.T.R. 309 (Tri. - LB). The issue that arose before the Larger Bench was as to whether service provided by a sub-broker are covered under the ambit of Service Tax and taxable or not. After noticing that a sub-
Service Tax Appeal No.404 of 2010 24 contractor is liable to pay Service Tax, the Larger Bench examined as to whether this would result in double taxation if the main contractor has also paid Service Tax and observed that if service tax is paid by a sub-broker in respect of same taxable service provided by the stock broker, the stock broker is entitled to the credit of the tax so paid in view of the provisions of the Cenvat Credit Rules. The relevant paragraph 9 is reproduced below :
"9. It is true that there is no provision under Finance Act, 1994 for double taxation. The scheme of service tax law suggest that it is a single point tax law without being a multiple taxation legislation. In absence of any statutory provision to the contrary, providing of service being event of levy, self same service provided shall not be doubly taxable. If Service tax is paid by a sub-broker in respect of same taxable service provided by the stock-broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub-broker and stock broker is established and transactions are provided to be one and the same. In other words, if the main stock broker is subjected to levy of service tax on the self same taxable service provided by sub-broker to the stock broker and the sub-broker has paid service tax on such service, the stock broker shall be entitled to the credit of service tax. Such a proposition finds support from the basic rule of Cenvat credit and service of a sub-broker may be input service provided for a stock-broker if there is integrity between the services. Therefore, tax paid by a sub-broker may not be denied to be set off against ultimate service tax liability of the stock broker if the stock broker is made liable to service tax for the self same transaction. Such set off depends on the facts and circumstances of each case and subject to verification of evidence as well as rules made under the law w.e.f. 10-9-2004. No set off is permissible prior to this date when sub-broker was not within the fold of law during that period."
27. The Commissioner did express in the impugned order that under the Cenvat Scheme every stage of provision of service is required to be taxed and if a sub-contractor discharges the Service Tax liability, it will not result in double taxable even if the main contractor discharges the Service Tax liability because Service Tax Appeal No.404 of 2010 25 the credit of the earlier tax paid is available at a subsequent stage, but it is because of the decision of the Tribunal in Urvi Construction, that the Commissioner held that double taxation would result if a sub-contractor is also required to discharge Service Tax liability when the main contractor has discharged the entire liability.
28. Learned Counsel for the Respondent has, however, relied upon the decision of the Supreme Court in Larsen and Toubro Ltd. v. Additional Deputy Commissioner of Commercial Taxes and Anr., reported in 2016-TIOL-155-SC-VAT. In this case, the contracts which were secured by the Appellant therein were works contract and a part thereof was assigned to the sub- contractor who had submitted returns and paid taxes for the execution of the works contract. During the course of the assessment, the Appellant submitted that the sub-contractors had already been taxed and, therefore, the Appellant cannot be taxed again under Section 6B of the Karnataka Sales Tax Act. The submission, therefore, was that the value of the work entrusted to the sub-contractors could not be taken into account while computing the total turnover of the Appellant for the purpose of taxation under the Karnataka Sales Tax Act. It is in view of the provisions of the Karnataka Sales Tax Act that the Supreme Court observed that the value of the work entrusted to the sub-contractors or payments made to them shall not be taken into consideration while computing total turnover for the purposes of Section 6B of the Karnataka Sales Tax Act. This decision of the Supreme Court will not come to the aid of the Respondent in this case in view of the specific provisions of Section 66 and 68 of the Act as also the Cenvat Rules discussed in the foregoing paragraphs of this order. It also needs to be noted that there is no provision for input tax credit on deemed sales in levy of VAT.
29. The submission of the Learned Counsel for the Respondent regarding 'revenue neutrality' cannot also be accepted in view of the specific provisions of Section 66 and 68 of the Act. A sub- contractor has to discharge the Service Tax liability when he renders taxable service. The contractor can, as noticed above, take credit in the manner provided for in the Cenvat Credit Rules of 2004.
Service Tax Appeal No.404 of 2010 26
30. Thus, for all the reasons stated above, it is not possible to accept the contention of the Learned Counsel for the Respondent that a sub-contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub- contractor. All decisions, including those referred to in this order, taking a contrary view stand overruled." 4.6 The submissions made by the appellant relying on this decision cannot be upheld as he argues contrary to what have been stated in the said decision. Appellant had relied upon the decision in the case of Vinodh Shipping Services (supra) to argue that the issue was of interpretational and there were conflicting views taken by the different fora. We are not in a position to agree with the said submission of the appellant, as he has not shown a single decision which was taken during the period in dispute. In the verification report officers have referred to Master Circular No.96/7/2007 dated 23.08.2007 wherein similar views has been taken. Hence, in absence of any contrary verification/decision at the relevant time, this argument for setting aside the demand is rejected and the order of this account needs to be confirmed.
4.7 In respect of demand of Rs.3,52,356/-, officers have agreed that this demand has been made without considering the payments made from the Cenvat Account. This resulting in confirmation of the demand which was already paid by the appellant. In view of the categorical recommendation made by the officers, we do not find any merits in this demand and set aside the same.
4.8 In view of the demand of Rs.2,66,019/- has been confirmed on account of application of rate of tax which was different from the tax on the provision of service. Officers in para 4 have concluded that the rate as applicable at the time of rendering of the service should have been applied. Accordingly, this demand is based on application of erroneous rate of taxation is a basic foundation for his correct application on rate of tax this demand made by application, incorrect rate of taxes needs to be set aside, we do so.
Service Tax Appeal No.404 of 2010 27 4.9 On the issue of grossing up this demand has been made by taking the taxable value as indicated in the claim for taxable value in the ST-3 returns. However, appellant has contested this demand stating that the amount of taxable value indicated in ST-3 returns advertently included the service tax also. Officers verifying the same agree to the contention raised by the appellant. However, they refuse to comment on admissibility of the same as this issue was not raised at the time of adjudication. We find merits in the contention raised and the benefit for computing the taxable values the service tax paid has to be detected from the gross value as per Section 67 (2) of the Finance Act, 1994. Thus the amount of Rs.14,65,840/- as determined by the officers in their report in respect of such clerical error needs to be deleted from the total demand as confirmed by Order-in-Original.
4.10 Thus we summarize our findings in respect of the demand of service tax made as per OIO and indicated in para 3.2 above in table below:
Demand on account of Demand as per OIO Demand Upheld A Full benefit of abatement to the Rs 4,38,694.92/- 0 extent of 85%, in terms of Circular No. 341/43/96-TRU dated 31.10.1996 not provided in Order-in-Original B Demand of service tax on Rs 5,04,247.52/- Rs 5,04,247.52/-
services provided by appellant as sub-contractor prior to Sep 2004, on which service tax liability has been discharged by the contractor C Non-consideration of payment of Rs 3,52,356/- 0 service tax through CENVAT while calculating amount of service tax paid D Application of rate of tax on the Rs 2,66,019/- 0 date of provision of services E Grossing up of taxable amount Rs.14,65,840.40/- 0 due to inadvertent mentioning of service tax with taxable value of services in some returns Rs 30,27,159/- Rs 5,04,247.52/-
Service Tax Appeal No.404 of 2010 28 4.11 In respect of wrong availment of Cenvat credit Commissioner has observed as follows:-
2. Wrong availment of Cenvat Credit It has been alleged that the Noticee have taken credit on the strength of certain invoices which do not contain the requisite details as prescribed under Rule 4(A) of the Rules and therefore these invoices are not in conformity with Rule 5 of Service Tax Credit Rules, 2002 and Rule 9 of the Cenvat Credit Rules, 2004, and therefore cenvat credit on such invoices would be inadmissible.
The Noticee have denied the allegation and have stated that the cenvat credit has been utilized by them on the strength of documents conforming to the conditions of Rule 4(A), Rule 5 and Rule 9 of Cenvat Credit Rules, 2004. They have also submitted the copies of documents containing the requisite details as prescribed under Rule 4(A) of the Cenvat Credit Rules. They have also submitted that they have complied with provisions of Rule 9(2) requiring prescribed details on documents for taking credit and Rule 9(9) requiring submission of half yearly return.
The Rule 4A of the Service Tax Rules, 1994 reads as under "Taxable service to be provided or credit to be distributed on invoice, bill or challan- Every person providing taxable service shall issue, not later than fourteen days from the date of completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him in respect of such taxable service provided or to be provided and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely:-
(i) the name, address and the registration no. of such person Service Tax Appeal No.404 of 2010 29
(ii) the name and address of the person receiving taxable service.
(iii) Description, classification and value of taxable service provided or to be provided, and
(iv) The service tax payable thereon."
The relevant sub-rule (1) and (4) of Rule 5 of the Service Tax Credit Rules, 2002 reads as under:
(1) The service tax credit shall be availed on the basis of an invoice or bill or challan issued by the service provider of input service on or after 16th day of August 2002, indicating clearly the serial number of document, date of issue, description and value of the input service, the service tax paid/payable, service tax registration No. and address of input service provider. (2)....................................... (3)........................................ (4) The output service provider availing service tax credit shall submit to the Superintendent of Central Excise, a return in the form annexed to these rules along with the Form ST -3 as specified in rule 7 of the Service Tax Rules, 1994 The relevant sub-rule 9(2) and 9(9) of the Cenvat Credit Rules, 2004 read as under:
Rule 9(2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document.
Provided that if the aid document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, [assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be], name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Service Tax Appeal No.404 of 2010 30 Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit.
Rule 9(9) The provider of out put service availing cenvat credit shall submit a half yearly return in the form, specified by Notification, by the Board the Superintendent of Central Excise by the end of the month following the particular quarter or half year. In this connection detailed enquiry and verification of invoices were carried out and the Assistant Commissioner, Central Excise Division-I, vide his letter C.No. 5-STC/EA- 2000/Lko-I/06/3039 dt. 19.11.09 has submitted detailed report which is summed up as under:
1. Out of 417 invoices / bills, disputed in the show cause notice, 114 invoices /bills involving service tax amounting to Rs. 5,32,156.00 and 15 invoices/bills involving Central Excise Duty amounting to Rs. 2,99,226.00 contain details relating to registration etc. and the credit can be allowed.
2. 94 invoices / bills involving service tax amounting to Rs. 6,36,682.00 do not contain details of registration and 194 invoices involving service tax amounting to Rs. 3,95,994.00 could not identified for want of details of invoice no. and dated thereon.
3. Credit amounting to Rs. 79,619.00 relating to invoices nos, 204,202,210, 222 and 232 have been taken repeatedly more than once.
4. Excess credit of Rs. 14,000.00 was taken by the noticee against invoice no 5212 & 3010 dated 07.02.07 of M/s BSNL.
Service Tax Appeal No.404 of 2010 31 Thus, as per the AC's report, 114 Invoices involving Service Tax amounting to Rs.5,32,656/- and 15 Invoices pertaining to Central Excise duty amounting to Rs.2,99,226/- contained details relating to Registration etc. and therefore Cenvat Credit amounting to Rs.8,31,382.00 (532156+ 299266) in respect of the 114 and 15 invoices referred supra which contain the details of Service Tax and Central Excise Registration etc. would be available to the noticee as they conform to the requirement as laid down under the Rule 5(1) of Service Tax Credit Rules, 2002 and Rule 4(A) of Cenvat Credit Rules, 2004 read with Rule 9(2) ibid.
The report also indicates that 94 Invoices involving Service Tax Registration amounting to Rs.6,36,682/- do not contain details of Registration and 194 Invoices involving Service Tax amounting to Rs.3,95,994/- are not identifiable and therefore credit would not be available in respect of the same, as the concerning invoice / bills do not contain certain minimum information, as required under Rule 4(A) or 9(2) supra, as alleged in the notice and confirmed by the Assistant Commissioner, Central Excise Division-I in his report dated 19.11.09 referred supra. The noticee themselves vide their letter dated 29.10.09 to the Superintendent, Service Tax, Gr.Ill, Central Excise Division-1, Lucknow have shown their inability to identify the documents for verification, whereas they are required to maintain proper records for receipt and consumption of the input service under Rule 9(6) of the Cenvat Credit Rules, 2004. It is imperative that the invoices must indicate the service tax registration no. alongwith Sl. No. of the invoice. This credit therefore is inadmissible.
The excess credit of Rs 14,000/- taken by the noticee against the Invoice No.5212 and 3010 dated 07.07.2007 of M/s B.S.NL. would not be also available to Service Tax Appeal No.404 of 2010 32 them and the correct position regarding availability of the credit would be as under-
Eligible credit Ineligible credit
Rs.8,31,382/- Rs.10,32,676/-
- 14,000/- + 14,000/-
Rs.8.17,382/- Rs 10,46,676/-
The details of the credit to be allowed and to be disallowed are tabulated here as under:-
No. of Amount alleged to Amount found Amount liable to be disputed be disallowed in the eligible for the credit disallowed invoices notice after verification 417 18,64,058.00 Rs.8,17,382/- Rs.10,46,676/-
Further out of the inadmissible amount, the assessee has also taken credit on certain invoices repeatedly which apart from inadmissibility shows gross negligence and casual attitude of the Noticee, which is not acceptable and makes them liable for penalties under law.
The allegation against the Noticee for not filing ST-3 returns as required under provisions of Ruie 7(2) of the Service Tax Rules, is contradictory to the fact mentioned in the notice as the notice itself mentions the dates of receipt of ST-3 returns submitted by the noticee from time to time. The Noticee were liable for delayed submission of ST-3 returns and they have deposited the late fee for the same, therefore no penalty under Section 77 was proposed against them.
3. Delayed payment of service tax and delayed submission of ST-3 return It has been alleged that from April 2002 to March 2008, the Noticee has continued to make payment of service tax beyond the period of prescribed limit and also filed the ST-3 returns after the specified dates. As detailed in the notice there has been continued and consistent delay in submission of ST-3 returns beyond the specified date. The notice also mentions that although penalty under Section 77 of the Act is imposable on the noticee for late filing of ST-3 returns, the noticee have already deposited Service Tax Appeal No.404 of 2010 33 due penalty with reference to late filing of each ST-3 and therefore no penalty under Section 77 is being proposed.
Hence the allegation on this count needs no further discussion.
As regards delayed payment of service tax which attracts interest under Section 75 of the Act, the noticee vide their submission no. OA/228/0959 dt. 28.08.09 have stated that all the taxes due for the period has been deposited by them to the Government account alongwith the due interest. Hence liability to pay interest has been squared up by the noticee."
4.12 Out of total demand made in the show cause notice Rs.18,64,058/- demand of Rs.10,46,676/- has been confirmed. Appellant has relied upon the decision of this Tribunal in the case of M/s Laxmi Organic Industries Ltd. and others Vs Commissioner of Central Excise 2017-VIL-1116-CESTAT-MUM- ST, to contest this demand. It is seen from the order that credit of Rs.6,36,682/- has been disallowed only for the reason that the invoices did not contain the details of registration otherwise all other details were available on the invoice. Proviso to Rule 9(2) of the Cenvat Credit Rules has been reproduced by Commissioner in the Order-in-Original, this proviso provides that if same details are missing also the credit should not have been disallowed subject to the satisfaction of the concern original officers. Tribunal in the case of Laxmi Organic Industries Ltd. (supra) has held that denial of credit in similar situation cannot be upheld. Going by the above decision and specifically the proviso to Rule 9(2), we do not find any merits in disallowance of the credit for the remaining amount of Rs.3,95,994/- wherein some other details also were missing and after causing due verification said details were not verifiable has been recorded in the impugned order. We do not find any merits in the contention raised by the appellant that they had submitted a detailed chart along with the miscellaneous application of 2010. It is not open to the appellant to bring in additional documents charts contrary Service Tax Appeal No.404 of 2010 34 to the verification that was made at the time of adjudication and these charts, on verification, has not been confirmed by the officers verifying the same. We do not find any merits in these submissions of the appellant. Accordingly, credit of Rs.3,95,994/- as disallowed is upheld.
4.13 For invoking the extended period Commissioner has recorded as follows:-
Invocation of Extended Period - The notice mentions that the returns for the period from April 2002 to Sept. 2002 were submitted by the Noticee as late as on 11.02.04 instead of by 25.10.02, which has resulted into a situation wherein the period of five years would be invokable from 11.02.04 in terms of Section 73(1). The Noticee have also been alleged to have failed to explain the short payment despite being given ample opportunities and therefore, they have not discharged their service tax liability consciously with an intent to evade payment of the same.
The Noticee have submitted that they are registered with service tax department w.e.f. 31.03.2000 and have been continuously filing Service Tax Returns and the Department has been also continuously undertaking Excise Audit of their books of accounts. The Department is fully aware about all the assessee and its business, no evidence has been placed by the Department that there has been any fraud, collusion, willful misstatement, suppression of facts, contravention of any provision or Rules made there under with intent to evade payment of service tax on their part and no such allegation is substantiated by the Department. In their subsequent submission dated 28.08.09 they have also made reference to the following cases in support of their defence:
(1) M/s K.K. Nag Ltd., Vs. CCE dated 01.08.03 (2) M/s Elite Detectives Pvt. Ltd. Vs. Commr. of Service Tax dt. 13.9.06 Service Tax Appeal No.404 of 2010 35 (3) Margdarshi Marketing (P) Ltd. Vs. CCE dt.
09.02.07 In all the above cases the Tribunals have inter-alia held that invocation of the longer period is not justified if there is no evidence of suppression of facts or willful misstatement etc. The noticees's assertion that they have been continuously filing their ST-3 returns is culpably incorrect as they have submitted their ST-3 returns en-bloc from time to time after a gap of more than one year from the due date. The first submission of three ST-3 returns pertaining to the period for April to Sept. 02, Oct '02 to March 03, April to Sept. 03 was made on 11.02.04 and subsequently the returns for the period for Oct. 03 to March 04, April 04 to Sept. 04 and Oct 04 to Sept. 05 were submitted on 08.02.06. They have never submitted their ST-3 returns on due dates. The noticee in their letter dated 09.02.04 while submitting 3 ST-3 returns have requested for condonation of delay which is a clear admission on their part that they have not disclosed the facts of their business and discharge of their tax liability to the Department. Non submission of ST-3 returns will tantamount to suppression of material facts from the Department. Further, as discussed supra the information supplied in the returns was found contrary to the facts and figures submitted by the assessee themselves in course of these proceedings. Important figures like amount realized etc. are found mis-reported in the ST - 3 returns alongwith inadmissible credit availed without exercising due precautions. I, therefore, hold that the Noticee has contravened the various provisions with the intention of evading the service tax due and invocation of extended period is rightly invoked in the show cause notice.
Service Tax Appeal No.404 of 2010 36 In the following cases the Tribunals have held the conduct of non-filing of return can be termed as suppression -
1. Shri Ram overseas Finance Ltd. Vs. Commissioner 357(Tri. Chennai) 2007(6)STR-
2. Suprasesh GIS & Brokers Pvt. Ltd. Vs. Commissioner - 2009(13)STR- 641(Tri. Chennai) Hence the contention of the noticee is not maintainable and I hold that the extended period is invokable keeping in view the facts and circumstances of this case."
The findings recorded by the Commissioner as observed is based upon various decisions of the Tribunal, wherein it has been held that delay in not filling of ST-3 returns amounts to suppression of facts for invoking the extended period. We agree with the said findings as it was the statutory obligation imposed on the appellant to have filed ST-3 returns in time. In absence of the same the charge of suppression during the material period has to be upheld that being so invocation of extended period in the present case is justified and upheld. In the case of Union Of India Versus Rajasthan Spinning & Weaving Mills 2009 (238) ELT 3 (SC) wherein Hon'ble Supreme Court have held that the demand invoking the extended period of time is upheld, penalty under Section 78 is also upheld. As we have upheld the demand only to the extent of Rs.5,04,247.52 + Rs.3,95,994/- = Rs 9,00,241.52/- the penalty imposed under Rule 15 of CENVAT Credit Rules,2004 read with Section 78 of the Finance Act,1994 is reduced to that extent. We are modifying the demand and if the appellant pay the modified demand along with interest, penalties imposed under Section 78 will have to be reduced to 25% of the penalty that is imposed.
4.14 In respect of the amounts confirmed the demand for interest under Section 75 is upheld.
4.15 With the modifications indicated in para 4.10, 4.12, 4.13 & 4.14 impugned order is upheld.
Service Tax Appeal No.404 of 2010 37 5.1 Appeal is partially allowed as indicated above. Miscellaneous Application also stands disposed of.
(Pronounced in open court on-29/11/2023) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp