Custom, Excise & Service Tax Tribunal
Nsb Bpo Solutions Pvt Ltd vs Bhopal on 26 November, 2024
Page 1 of 56
Appeal No(s).: ST/51392,51389,51393,
51396,51397/2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
~~~~~
PRINCIPAL BENCH - COURT NO. 4
Service Tax Appeal No. 51392 Of 2018
[Arising out of OIO No. 02/COMMR/ST/BPL-I/2018 dated 15.02.2018 passed by the
Commissioner of CGST & Central Excise, Bhopal]
NSB BPO Solutions Private Limited : Appellant (s)
97, Zone-II, M.P. Nagar, Bhopal (M.P.)
Vs
Commissioner of Central Goods And : Respondent (s)
Service Tax, Excise and Customs, Bhopal 35-C, GST Bhawan Administrative Area, Arera Hills, Jail Road, Bhopal with Service Tax Appeal No. 51389 Of 2018 [Arising out of OIO No. 02/COMMR/ST/BPL-I/2018 dated 15.02.2018 passed by the Commissioner of CGST & Central Excise, Bhopal] N S BAPNA : Appellant (s) 97, Zone-II, M.P. Nagar, Bhopal (M.P.) Vs Commissioner of Central Goods And : Respondent (s) Service Tax, Excise and Customs, Bhopal 35-C, GST Bhawan Administrative Area, Arera Hills, Jail Road, Bhopal with Service Tax Appeal No. 51393 Of 2018 [Arising out of OIO No. 02/COMMR/ST/BPL-I/2018 dated 15.02.2018 passed by the Commissioner of CGST & Central Excise, Bhopal] Shri Rajeev Puri : Appellant (s) 97, Zone-II, M.P. Nagar, Bhopal (M.P.) Vs Commissioner of Central Goods And : Respondent (s) Service Tax, Excise and Customs, Bhopal 35-C, GST Bhawan Administrative Area, Arera Hills, Jail Road, Bhopal Page 2 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 with Service Tax Appeal No. 51396 Of 2018 [Arising out of OIO No. 02/COMMR/ST/BPL-I/2018 dated 15.02.2018 passed by the Commissioner of CGST & Central Excise, Bhopal] Shri Pramod Ingle : Appellant (s) 97, Zone-II, M.P. Nagar, Bhopal (M.P.) Vs Commissioner of Central Goods And : Respondent (s) Service Tax, Excise and Customs, Bhopal 35-C, GST Bhawan Administrative Area, Arera Hills, Jail Road, Bhopal AND Service Tax Appeal No. 51397 Of 2018 [Arising out of OIO No. 02/COMMR/ST/BPL-I/2018 dated 15.02.2018 passed by the Commissioner of CGST & Central Excise, Bhopal] Shri Vikrant Singhal : Appellant (s) 97, Zone-II, M.P. Nagar, Bhopal (M.P.) Vs Commissioner of Central Goods And : Respondent (s) Service Tax, Excise and Customs, Bhopal 35-C, GST Bhawan Administrative Area, Arera Hills, Jail Road, Bhopal APPEARANCE:
Shri Anurag Mishra, Ms. Priyanka Goel, Advocates and Ms. Sanya Bhatiya Chartered Accountant for the Appellant Shri Rajeev Kapoor, Authorized Representative for the Respondent CORAM :
HON'BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER No. 59901-59905/2024 Date of Hearing:26.11.2024 Date of Decision:26.11.2024 ASHOK JINDAL All the appeals are arising out of common order, therefore, all are disposed of by a common order.Page 3 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018
2. The facts of the case are that the appellant, namely, NSB BPO Solutions Private limited have registered themselves in June, 2005 as provider of Business Auxiliary Service and thereafter they have applied for central excise registration of March 2009 and the central excise registration was granted on 21.05.2009.
2.1 From their ST-3 returns filed from time to time since registration, the appellant has declared the value of service provided by them and service tax thereon paid by them as per detail below:-
Period Gross Amount Taxable Service Tax Paid Receipts shown value declared towards declared exempted service Challan/cash Cenvat 2005-06 4569175 0 4569175 60000 361598 2006-07 38186020 21634742 16551278 247820 3916452 2007-08 64280978 22495635 41785343 506748 5183625 2008-09(up- 26657918 5645225 21012693 208146 2389023 to Sept.
2008) Total 133694091 49775602 83918489 1022714 11850698 2.2 Acting on intelligence that the appellant has suppressed the taxable value of service provided, therefore, on 25.03.2009, a search was conducted by the officers of Preventive branch at appellant's office. During the course of denovo, certain documents and financial records of the appellant were seized under Panchnama dated 25.03.2009. It has also been alleged in the show cause notice that the printouts were also taken from appellant's computer but as per the Panchnama dated 25.03.2009 there is no whisper of any such printout taken by the department. The premises of the appellant was again searched on 09.09.2009 and on 26.11.2009. On 26.11.2009, six hard disks were recovered and seized by the department. On 30.11.2009, those six hard disks were opened by the department and after opening those Page 4 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 six harddisks, it was found that all those 6 hard disks were empty.
Thereafter, the investigating team directed the appellant for providing the tally account data for the period 2005-06 to 2009-10. The appellant vide their letter dated 02.12.2009 submitted the DVD containing their tally account data for the disputed period. It was also requested to the appellant to furnish, list and addresses of the firms who have supplied manpower to the appellant and the letters were sent to the said manpower suppliers by the department on some different address and not on the addressees which were submitted by the appellant. On the basis of the said letters, it was alleged that the suppliers were not found traceable to the Postal Department and the suppliers were non existence. After investigation, it was concluded that the appellant has suppressed the value of taxable services and availed cenvat credit on Manpower Recruitment Services and the service provider are non- existent. Therefore, a show cause notice was issued on 09.04.2010 for the period 2005-06 to November 2009 to demand service tax amounting to Rs.5,45,12,322/- and to deny cenvat credit to the tune of Rs.1,13,43,159/-. 2.3 During the adjudication, the adjudicating authority after considering the defence reply filed by the appellant concluded that they have short paid service tax amounting to Rs. 5,45,12,322/- and the said amount is liable to be recovered from the appellant under Section 73(1) of the Finance Act, 1994. It was also held that as the said amount has already been collected for the appellant from their clients, it is also recoverable from the appellant under Section 73(A) of the Finance Act, 1994 and also denied the cenvat credit amounting to Rs.1,13,43,159/- alleging that the suppliers are non- existence, consequently, the same is recoverable along with interest and various penalties were imposed on the appellant and penalties are imposed Page 5 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 on co-appellants. Aggrieved from the said order, all the appellants are before us.
3. Learned counsel for the appellant submits that the show cause notice and impugned order passed are contravention of the legal provisions and illegal, therefore, the same is liable to be set-aside. It is his submission that the show cause notice should be very specific and the allegation made in the show cause notice should follow the provisions of the Act. The following contentions on behalf of the appellant which is relied upon the learned counsel for the appellant are as under:-
I. DEMAND CUM SHOW CAUSE NOTICE AND ORDER IS ILLEGAL AND LIABLE TO BE SET ASIDE A. Before going into the facts of the case, it is very important to bring into the knowledge of the Hon'ble Court that the entire Demand cum Show Cause Notice and Order is liable to be set aside on the ground that the Department is not clear while levying allegations in the Show Cause Notice and confirming the demand in the Order. It is well settled principle of law that the Show Cause Notice should be very specific and the allegation made in the Show Cause Notice should align with the provisions of the Act. In the present case, Department on the one hand alleging and confirming the entire demand of Rs.5,45,12,322/- on the ground that the Appellant has made short payment of service tax. Accordingly, demand is made and confirmed under the provisions of Section 73(1) of the Finance Act. Section 73(1) of the Finance Act reads as under-
73. Recovery of service tax not levied or paid or short levied or short paid or erroneously refunded:
(1) Where any service tax has not been levied or or paid or has been s short levied or short paid or erroneously refunded, the central excise officer may, within one year from the relevant date, serve notice on the Page 6 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 person chargeable with the service tax which has not been levied or paid or which has been short levied or short paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
PROVIDED that where any service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of -
a. Fraud; or b. Collusion; or c. Wilful misstatement; or d. Suppression of facts; or e. Contravention of any provision of the provisions of this Chapter or of the Rules made thereunderwith intent to evade payment of tax, B. On the other hand, it is again alleged that either the demand should be confirmed under Section 73(1) and /or under Section 73A of the Finance Act. Section 73A of the Finance Act reads as under- SECTION [73A. Service tax collected from any person to be deposited with Central Government. --
(1) Any person who is liable to pay service tax under the provisions of this Chapter or the rules made thereunder, and has collected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of this Chapter or the rules made thereunder from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government.
(2) Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government.Page 7 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 (3) Where any amount is required to be paid to the credit of the Central Government under sub-section (1) or sub-section (2) and the same has not been so paid, the Central Excise Officer shall serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government.
(4) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (3), determine the amount due from such person, not being in excess of the amount specified in the notice, and thereupon such person shall pay the amount so determined.
(5) The amount paid to the credit of the Central Government under sub- section (1) or sub-section (2) or sub-section (4), shall be adjusted against the service tax payable by the person on finalisation of assessment or any other proceeding for determination of service tax relating to the taxable service referred to in sub-section (1).
(6) Where any surplus amount is left after the adjustment under sub- section (5), such amount shall either be credited to the Consumer Welfare Fund referred to in section 12C of the Central Excise Act, 1944 (1 of 1944) or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B of the said Act and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Central Excise Officer for the refund of such surplus amount.]The plain reading of the above sections clearly shows that they are contrary to each other and they cannot be invoked simultaneously for demand and confirmation of service tax. It is very clear that Section 73(1) can be invoked only in cases where there is short payment of service tax on account of short levy or erroneous refund. Whereas Section 73A can only be invoked in cases where service tax has been collected in excess of the service tax assessed or Page 8 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 determined. There is no allegation in the Show Cause Notice that the Appellant has collected any excess amount of service tax over and above which is required to be collected by the Appellant. There is no evidence on record in the shape of invoice or any other document showing collection of excess service tax.
C. It is a well settled law that any Show Cause Notice without any specific allegation is like a building without foundation that would collapse. In the present case, no specific allegation has been levied by the Department and the Department is itself confused whether to demand and confirm service tax under provisions of Section 73(1) of Finance Act as short payment of service tax or under Section 73A of Finance Act as duty collected not paid. Various legal judgements can be referred to wherein the entire demand has been set aside on the grounds of faulty Show Cause Notice - a. Ultra Services vs. CCE & ST, Trichy 2017 (52) STR 17 (Tr- Chennai) b. UCB India Pvt.Ltd. vs. UOI 2016 (45) STR 39 (Guj) Copy of both the judgments herewith marked and annexed as Annexure - 5 (Collectively).
Therefore, demand has been wrongly demand and confirmed on two provisions which are contrary to each other and cannot be simultaneously invoked for demand and confirmation of duty. As such, the entire amount of demand of Rs.5,45,12,322/- is liable to be set aside on the ground.
II. IMPUGNED ORDER IS VIOLATIVE OF PROVISIONS OF SECTION 36B :
A. It is pertinent to mention herein that in the show cause notice the Department has made printouts taken from computers on 25.03.2009 as part of relied upon documents. However, the Panchnama dated 25.03.2009 depicts a different picture as perusal of the Panchnama will clearly reveal that no printouts were taken from any computer on the said date. Furthermore, if at Page 9 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 all printouts were taken from the computer then there is no mention that from which computer the printouts were taken, who was the person deputed on that particular computer for feeding the data and in whose presence those documents were retrieved. Therefore, the veracity of the documents relied in the show cause notice is under cloud and hence such documents cannot be relied upon as it fail to satisfy the mandate of Section 36B. B. Therefore, the genuineness of the documents based on which demand is created by the Department is under the cloud. Hence, the Impugned Order is liable to be set aside on this ground itself. C. That again on 26.11.2009 a search was conducted in the Appellant's office premises. On that day 20 computers were checked by the Department and out of 20 computers, hard disks of 6 computers were seized by the officers. However, in the Panchnama dated 26.11.2009 the brand name and serial number of the hard disks and procedure of sealing those 6 hard disks has not been mentioned.
D. That on 30.11.2009 another Panchnama was drawn by Department for retrieving the data from hard disk seized on 26.11.2009 and no data was found in said hard disk. It is pertinent to mention that in the Panchnama dated 26.11.2009 the serial number of hard disks were not mentioned, however in the Panchnama dated 30.11.09 serial number of hard disks were mentioned. It is very intriguing that at the time of sealing of hard disks no serial numbers were noted by the Department but while de-sealing those hard disks serial numbers were mentioned. Therefore, the veracity of hard disks resumed on 26.11.2009 and hard disks opened on 30.11.2009 is under cloud and this raises the question of the entire working of the Department. E. It has been alleged that no data was found in the 6 hard disks which were seized on 26.11.2009 and thereafter were opened on 30.11.2009. On non- finding of any data in the resumed hard disks the officers directed the Appellant to provide the tally data. Accordingly, Appellant vide letter dated 02.12.2009 furnished the tally data in an electronic device i.e., DVD. Page 10 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 F. In the instant case heavy reliance has been placed by the Department on the data retrieved from the electronic device i.e., DVD supplied by Appellant on 02.12.2009 which allegedly contained the Tally data for the disputed period. However, this entire data is inadmissible and under challenge since, the mandate under Section 36B for the resumption of data from electronic device has not been followed by the Department.
G. Department has mentioned that from the DVD submitted by the Appellant, they have retrieved tally data of various years. It has been alleged that the printouts taken from the DVD displays the customer wise revenue for 2007-08 as Rs.18.22 crores as against only Rs.6.84 crores declared by the Appellant to the Department, therefore, it confirms the suppression of receipt by the Appellant. In this regard, it is strongly submitted that no Panchnama was drawn/ mentioned for the seizure or submission of DVD as well as no Panchnama was drawn while retrieving the data from the said DVD. Therefore, amounting to violation of Section 36B of Act. Hence, the so called data used as evidence against the Appellant cannot be relied upon under any circumstances.
H. That the following infirmities are existing with respect to the electronic devices and data recovered from those devices -
a. The redemption of the 6 hard disks was improper, sealing, de-sealing of the hard disks devices was incorrectly made which raises serious doubt against the officer concerned. No brand name and serial number of hard disks were mentioned in the Panchnama dated 26.11.2009. However, the serial no. of said 6 hard disks were mentioned in Panchnama dated 30.11.2009 but there was no mention of any brand name of those 6 hard disks even in Panchnama dated 30.11.2009. b. The resumption of the DVD provided by the Appellant is under challenge as no Panchnama was drawn while receiving of DVD on 02.12.2009 and no Panchnama was drawn while taking printouts from the said DVD on 02.12.2009. In fact, the number of pages which were Page 11 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 retrieved from the said DVD were not mentioned anywhere. Further, the printouts taken from the said DVD were not taken as per the provisions of Section 36B.
c. There is no mention as from which computer printouts were taken and who were the panchas present during the time of taking out the printouts from the said DVD on 02.12.2009.
d. No certificate from Officers of the Company alleged to have been owner of the said electronic devices were obtained to show that the said computer printouts were taken in their presence on 02.12.2009. e. No computer expert or forensic expert was present during the extraction of the data which is an essential requirement under Section 36B on 02.12.2009.
f. Absence of any certificate of authorization to support the fact that printouts were produced by the computer during the period over which the computer was used regularly to store or process information. g. Absence of any certificate of authorization to support the fact that printouts were produced by the computer over that period by the person having lawful control over the use of the computer. h. Absence of signature by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities.
i. Further, the Department has failed to make any effort to ascertain from which computer the data was fed originally. Section 36B(4) of the Act mandates that computer printouts taken from the computer must be signed by a person occupying a responsible official position in relation to operation of the relevant device and a certificate is to be issued to that effect. No such procedure as mandated in Section 36B has been followed in the present case.
j. Further, it is unclear from Panchnama dated 25.03.2009, 30.11.2009 and data retrieved on 02.12.2009 as to whether any computer expert Page 12 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 or forensic expert was present during the extraction of the said data, which is essentially required under the provisions of Section 36B. I. Printouts taken from the computer during search on 25.03.2009 and tally data printouts taken from DVD on 02.12.2009 have been relied upon by the Department at following instances -
a. Pg 194 Para 6.2 show calculation of Receipts of 2006-07 wherein the Gross Receipts have been tallied with the printouts taken from Appellant's computers on 25.03.2009.
b. Pg 192 Para 6.3 show calculation of Receipts of 2007-08 wherein the Gross Receipts have been tallied with the printouts taken from Appellant's DVD on 02.12.2009.
c. Pg 192 Para 6.3 show calculation of Receipts of 2007-08 wherein the amount of 'Sales Others' has been calculated on the basis of tally printouts taken from Appellant's DVD on 02.12.2009. d. Pg 192 Para 6.3 show calculation of Receipts of 2007-08 wherein the amount of 'amount earned but adjusted in account of Sales Others' has been calculated on the basis of tally printouts taken from Appellant's DVD on 02.12.2009.
e. Pg 195 Para 6.4 show calculation of Receipts of 2008-09 wherein the Gross Receipts have been tallied with the printouts taken from Appellant's DVD on 02.12.2009.
f. Pg 195 Para 6.5 show calculation of Receipts of 2009-10 wherein the Gross Receipts have been taken by adding the Branch wise Sales from Appellant's DVD taken on 02.12.2009.
J. The reliance in this regard is placed on the judgment of the Hon'ble Apex Court in the case of (352) E.L.T 416 Anvar P.V. v. P.K Basheer (SC) as held in Para-13 of the said ruling, that on interpreting the provisions of Section 65B of Evidence Act, 1872 (which is para materia with Section 36B of Central Excise Act, 1944). The purpose of these provisions is to sanctify secondary evidence in electronic form and that the Section starts with a non obstante clause, which says that notwithstanding anything contained in the Evidence Act, any information contained in an electronic form, shall be deemed to be a document only if the conditions mentioned under sub-sec (2) are satisfied and that the admissibility of such document retrieved from electronic record needs to satisfy four conditions. It is further submitted that on interpretation of Section 65B(4) of Evidence Act, the Hon'ble Supreme Court has held in Para-15 of said ruling that a certificate as specified must accompany the electronic record, like computer printout, Compact Disk, pen Page 13 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 drive etc., pertaining to which a statement is sought to be given in evidence and the same is produced as evidence.
K. Reliance is also placed on the judgment of Hon'ble Tribunal in the case of M/s Trikoot Iron & Steel Casting Ltd. vs. DGGI, Delhi in appeal no. 55779 of 2023 final order no.58546/2024 dated 09.09.24. L. Reliance is also placed on the judgment of Hon'ble Tribunal in the case of M/s Shree Balaji Furnaces Pvt. Ltd. vs. CCE & CGST, Alwar (Excise appeal no. 51448 of 2022) final Order no. 58732-58733/2024 dated 27/09/2024.
M. That the Hard disk/DVD is not substantial evidence in the absence of corroborative evidence. It has been held by the Hon'ble Gujrat High Court in the case of Principal Commissioner of CGST & Central Excise vs. Shah Foils Ltd., 2020 (372) ELT 632 (Guj.), that pen drive data is not substantial evidence in the absence of the aforementioned factors being present.
N. The onus to prove that loose sheets, computer printouts belong to Appellant and contained accounted for and unaccounted for data was squarely on Respondent. Since the evidence on record does not establish that alleged printouts were owned by Appellant no reliance can be placed on any information contained therein.
O. The Impugned Order as well as show cause notice clearly displays the infirmities in the resumption of the electronic data by the investigating authority and as such the electronic device data is not admissible in the instant case.
P. In the case of S.N. Agrotech Vs. CC New Delhi- 2018 (361) LT 0761 at Para-8-9 &11, it has been held as under:
'8. On close reading of Section 138C of the Act, 1962, it is seen that the Legislature had prescribed the detailed procedure to accept the computer printouts and other electronic devices as evidences. It has been stated that any proceedings under the Act, 1962, where it is desired to give a statement in evidence of electronic devices, shall be Page 14 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 evidences of any matter stated in the certificate. In the present case, we find that the provisions of Section 138C of the Act were not complied with to use the computer printouts as evidence. The Ld. Counsel for the appellants submitted that there is a gross illegality committed during the retrieval of the electronic documents. It appears from the Panchnama and record of proceedings that the alleged data recovered from electronic documents, so seized, were copied in a hard disk in presence of one person and, thereafter, it was opened in front of other persons. It is noted that the certificate was not prepared during the seizure of the electronic devices, as required under the law.
9. The investigation is normally started after collecting the intelligence/information from various sources. The investigating officers are procuring the evidences in the nature of documents, statements, etc., to establish the truth. During the evolution of technology, the electronic devices were used as evidence. In this context, the law is framed to follow the procedure, while using the electronic devices as evidence for authenticity of the documents, which would be examined by the adjudicating authority during adjudication proceeding. In the instant case, it is found that the entire case proceeded on the basis of the electronic documents as evidence. But the investigating officers had not taken pain to comply with the provisions of the law to establish the truthfulness of the documents and merely proceeded on the basis of the statements. Hence, the evidence of electronic devices, as relied upon by the adjudicating authority cannot be accepted. 10 ..................................................................
11. Upon perusal of the judgment of the Hon'ble Supreme Court in the case of Anvar P.V. (supra), we note that the Apex Court has categorically laid down the law that unless the requirement of Section 65B of the Evidence Act is satisfied, such evidence cannot be admitted in any proceeding. We note that the Section 138C of the Customs Act is pari aterial to Section 65B of the Evidence Act. Consequently, the evidence in the form of computer printouts, etc., recovered during the course of investigation can be admitted as in the present proceedings only subject to the satisfaction of the sub-section (2) of Section 138C.
This refers to the certificate from a responsible person in relation to the operation of the relevant laptop/computer. After perusing the record of the case, we note that in respect of the electronic documents in the form of computer printouts from the seized laptops and other electronic devices have not been accompanied by a certificate as required by Page 15 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 Section 138C(2) as above. In the absence of such certificate, in view of the unambiguous language in the judgment of the Hon'ble Supreme Court (supra), the said electronic documents cannot be relied upon by the Revenue for confirmation of differential duty on the appellant. In the present case, the main evidence on which, Revenue has sought to establish the case of undervaluation and mis-declaration of the imported goods is in the form of the computer printouts taken out from the laptops and other electronic devices seized from the residential premises of Shri Nikhil Asrani, Director in respect of which the requirement of Section 138C(2) has not been satisfied. On this ground, the impugned order suffers from uncurable error and hence, is liable to be set aside. (Emphasis Supplied)' Q. The allegation of preparation of forged balance sheet is completely wrong, baseless and has no legal backing. It is the contention of the Department that during the time of search two sets of profit & loss account for the period 2007-08 were seized from the premises wherein in one set income was shown as Rs.18,22,71,368/- and in other set Rs.6,84,73,223/- was shown. It is a fact on record that the balance sheet having income Rs.18,22,71,368/- is an audited balance sheet which was duly filed with the income tax department. Hence, the balance sheet capturing the income of Rs.18,22,71,368/- is the correct and same was duly accepted by the Directors of the Appellant company and also by the statutory auditor of the Appellant company. R. It has been wrongly observed in the impugned order in para 15.4.2 that Sh. N.S Bapna in his statement dated 26.11.2009/27.11.2009 had accepted that the balance sheet of amounting Rs.6,84,73,223/- was forged one. The perusal of the statement of Sh. N.S Bapna clears out the that nowhere he has accepted about the preparation of any forged balance sheet. It is very intriguing that the alleged forged balance sheet recovered by the Department on 25.03.2009 as mentioned in the show cause notice as Annexure B to Panchnama dated 25.03.2009 mentioned at Sr. No. 106 was shown as blank. This clears every shadow of doubt that the allegation of two balance sheets is completely Page 16 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 wrong and therefore, the authenticity of printouts relied upon by the Department are highly suspicious.
III. EVEN IF DATA PASSES THE TESTS OF SECTION 36B, THEN DEMAND OF Rs. 5,45,12,322/- HAS BEEN WRONGLY CONFIRMED:
A. The entire demand of Rs. 5,45,12,322/- is based on the documents recovered from the premises of the Appellant and allegedly printouts taken from the computer of the Appellant on 25.03.2009 and printouts taken from the DVD provided by Appellant on 02.12.09.
B. It is also alleged that two sets of balance sheet for the FY 2007-08 showing two different gross receipts were prepared by Appellant. Further, it has been also alleged that appellant have mis-declared their taxable receipts as "exempted receipts" by showing them earned against non-taxable activity of "software development" and "rental income". C. The quantification of demand is also not correct, there are number of calculation error and other mistakes committed by the Department while calculating the taxable value.
D. For each year the Department has calculated the service tax on the basis of documents which were more suitable to them. That in one year the value is calculated from the statement supplied by the customers and in other year the same is calculated from audited balance sheet. Further, in some place the value is calculated on the basis of rough sheet and in other places value is calculated from TDS Certificate provided by the customers. E. The year wise calculations done by the Department on the basis of which the entire demand has been based upon is wrong and faulty due to the reasons mentioned here under -
a. FY 2005-06:
Particulars Amount Issue Involved
(Rs.)
Receipts as 6 party ledgers found Rs. Gross Receipts taken from
in File No. 5 (Annexure W) 46,09,318/- 6 party ledgers without
considering the cum duty
value.
Annexure W is supplied in
Page 17 of 56
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51396,51397/2018
a haphazard way, there is
no means available with
the Appellant to tally
figures with the audited
financials.
Gross Value of services on basis Rs. 2,94,989/- Gross value of services of data provided by ICICI Bank taken on the basis of (Annexure X-1) third-party communication without considering whether payment has actually been received or is outstanding at the end of FY. Accordingly, closing debtors as on 31.03.2006 not considered by Department in its calculation.
Gross Value of services on basis Rs. 1,24,975/- Gross value of services of data provided by Tata Tele taken on the basis of Services (Annexure X-2) third-party communication without considering whether payment has actually been received or is outstanding at the end of FY. Accordingly, closing debtors as on 31.03.2006 not considered by Department in its calculation.
Total Rs. Initial exemption of 4
50,29,282/- lakhs u/Notification No.
6/2005-ST not considered
by the Department
*Excess payment of Rs. 2116/- done by the Appellant in FY 2005-06.
b. FY 2006-07:
Particulars Amount (Rs.) Issue Involved
Gross receipts from SCB Rs. 5,33,10,390/- Gross Receipts taken from SCB
(Annexure Y - File No. without considering the cum
121) duty value.
Gross receipts from SCB
includes 'Rental Income' of Rs.
98,13,884/- (earned jointly
with other party i.e., M/s Star
Enterprises Rs. 4,37,74,455/-)
which is clear from the TDS
certificates. Rental Income was
taxable w.e.f. 01.06.2007.
Therefore, this amount is
wrongly included in the service
tax liability.
Gross receipts from Rs. 4,46,79,847/- Gross Receipts taken from
'Other clients' loose calculation sheet which
(Annexure W & W2 - contained a projected receipts
File No. 5) and not from audited balance
sheet. File No. 5 seized vide
Panchnama dated 25.03.2009
Page 18 of 56
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contained hand-written service
tax workings for FY 06-07.
Annexure W has been made by
the Department according to
their whims on the basis of
these loose sheets which have
neither been provided to us nor
made a part of RUD.
Therefore, these figures taken
by the Department cannot be
relied upon under any
circumstances.
Gross Receipts include 'Sale
from software' amounting to
Rs. 1,37,30,822/- which is to
be excluded while calculation of
Gross Receipts.
Gross receipts from seized files
have been compared with
printouts taken from
Appellant's computers on
25.03.2009. It is submitted
that no process of taking out
printouts has been mentioned
in the Panchnama dated
25.03.2009. Only the print-outs
were relied upon as Annexure
B.
Opening Balance of Rs. 63,05,850/- Some amount of opening
Debtors as on 01.04.2006 debtors is already included in
gross receipts above.
Less - Closing Balance of Rs. Correct closing debtors as on
Debtors as on 31.03.2007 1,04,84,484.59/- 31.03.2007 is Rs.
1,04,94,484/- as per audited
financials.
Total Rs.
9,38,11,602.41/-
c. FY 2007-08:
Particulars Amount (Rs.) Issue Involved
Gross receipts as per PL Rs. 18,22,71,368/- Annexure AB-3 is not received
(Annexure AB-2 - File by the Appellant. It is unclear
No. 18- Annexure AD, from where the Department
Annexure AB-3) has received another Balance
Sheet showing Gross Receipts
of Rs. 6,84,73,223/-.
Directors and the statutory
auditor have denied having
knowledge of any such
Balance Sheet in their
statements.
Said gross receipts have been
compared with the printouts
taken from Appellant's
Page 19 of 56
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premises on 25.03.2009.
Gross receipts from SCB
includes 'Rental Income' of
(earned jointly with other
party i.e., M/s Star
Enterprises Rs. 7,23,47,923/-)
which is clear from the TDS
certificates and not excluded
from gross receipts. Rental
Income was taxable w.e.f.
01.06.2007. Therefore, rental
income for the period
01.04.2006 to 30.05.2006
should be excluded from gross
receipts which has not been
done by the Department.
M/s Star Enterprises has
already paid service tax on its
share. Appellant's payment
will lead to double taxation.
Less - Sales Others Rs. Said calculation has been
4,72,61,211.23/- done on the basis of the print-
outs taken from the tally data
on 02.12.2009 which has not
been done according to
provisions of Section 36B.
Add - Amount earned Rs. 55,02,775.66/- Said calculation has been
but adjusted in account done wrongly by the
of Sales Others Department and on the basis
of the print-outs taken from
the tally data on 02.12.2009
which has not been done
according to provisions of
Section 36B.
This is the amount of service
tax which according to
Department's assumptions
and presumptions have been
collected and not paid by the
Appellant. Once the value of
services has been taken above
which includes value of
service tax, again adding the
amount of service tax will lead
to double taxation.
Add - Opening Balance Rs. 1,04,94,485/-
of Debtors as on
01.04.2007
Less - Closing balance Rs. 1,46,86,730/- Amount not recoverable (Bad of Debtors as on Debts) amounting to Rs.
31.03.2008 1,46,37,722/- not deducted by the Department.
Total Rs. Discount given to clients
13,63,20,687.43/- amounting to Rs.
2,68,12,500/- not deducted
by the Department.
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d. FY 2008-09:
Particulars Amount (Rs.) Issue Involved
Gross receipts as per PL Rs. Gross Receipts has been
(Annexure AG-1) 15,95,34,426.80/- compared with the tally
printouts taken on
02.12.2009 and compared
with the data resumed from
the CA's premises. The said
figure as per these printouts
have been taken rather than
audited financials.
Discount amounting to Rs.
3,10,20,919/- has not been
deducted by the Department.
Software sales is an
exempted sales amounting
to Rs. 56,45,225/- has not
been deducted by the
Department.
Gross receipts from SCB
includes 'Rental Income' of
(earned jointly with other
party i.e., M/s Star
Enterprises Rs.
2,52,87,004/-) which is clear
from the TDS certificates.
M/s Star Enterprises has
already paid TDS on its
share. Appellant's payment
will lead to double taxation.
Add - Opening Balance of Rs. 1,46,86,730/-
Debtors as on 01.04.2008 Less - Closing balance of Rs. 4,59,87,618/- Correct closing debtors as Debtors as on 31.03.2009 per audited financials is Rs.
4,83,65,587/-
Total Rs.12,82,33,538.8/-
e. FY 2009-10 (UPTO NOVEMBER 2009):
Particulars Amount (Rs.) Issue Involved
Gross receipts as per Rs. 14,76,38,188/- Gross Receipts has been
Tally accounts taken by adding Branch wise
(Annexure R) Sales from Tally printouts
taken on 02.12.2009.
Gross Receipts taken from
Branch wise Sales has been
taken without considering
the cum duty value.
Add - Opening Balance of Rs. 4,83,65,587/-
Debtors as on 01.04.2009 (Annexure AG-2) Add - Payments made Rs. 2,43,00,150/- Includes sales on VAT by SCB (Annexure X- invoices amounting to Rs.
3) 97,91,104/- which is not
Page 21 of 56
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deducted by the
Department.
Gross receipts from SCB
includes 'Rental Income' of
(earned jointly with other
party i.e., M/s Star
Enterprises Rs.
30,56,908/-) which is
clear from the TDS
certificates.
M/s Star Enterprises has
already paid TDS on its
share. Appellant's
payment will lead to
double taxation.
Total Rs. Closing debtors as on
22,03,03,925.4/- 30.11.2009 amounting to Rs. 3,85,45,675/- is not deducted by the Department.
S. The demand is also confirmed on the allegation that Appellant had tried to evade tax by showing their receipts from 'rental income' & 'software development & sales' as during the disputed time both the activities were not taxable. In respect of 'rental income' appellant had already submitted that TDS certificate which were not considered by the Department.
T. In respect of income earned on 'software development & sales' it has been alleged by the Department that the sale of software was only made to M/s BP logistics and other nine customers were non-existent as their tally account does not show name of those nine customers. It is very intriguing that on one hand it has been accepted by the department that software sale was made to BP Logistic by the appellant and on the other hand the demand was confirmed by alleging that appellant had diverted their receipts from 'business auxiliary services' to the head 'software sale' that too without any corroborative evidence. U. Further appellant had supplied the names of all ten customers to whom the software was sold but department without conducting any enquiry Page 22 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 from those 9 customers in their own conjecture and surmises had confirmed that those 9 parties were non-existent. Therefore, it is crystal clear that just to confirm the liability against the appellant the Ld. Respondent without an evidentiary proof had confirmed the demand under the head of business auxiliary services. Hence, the demand based on presumption and assumption cannot stand in the eyes of law. V. In instant case appellant under joint agreement with M/s Star Enterprises to have mainly provided the service and some service was provided by the appellant. That it was also agreed between appellant and said party that on the portion of service which was on their account, the service tax will be by paid by such other party. W. That on the portion of service which is on account of M/s Star Enterprises , the said party have already paid the service tax . That appellant have only retained the part amount which is the service charges of the appellant. That whatever gross amount of service with service tax has been received from M/s Standard Chartered Bank , the appellant have retained only service charges and all other amount including service tax has been transferred to said M/s Star Enterprises and on such value the said M/s Star Enterprises have already paid the service tax. That in balance sheet for the year 2006-07 the appellant have only taken the net amount i.e. the service portion retained by the appellant.
X. It is the settled law that once the service tax on same element, on same service is paid by one service provider then another service provider is not required to pay the service tax again on the same value .Therefore, it is strongly submitted that the amount on which M/s Star Enterprises have already paid the service tax and therefore, again Page 23 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 confirming the service tax demand on the same amount from the appellant is completely illegal and without legal backing which needs to be set aside.
IV. APPELLANT WAS PROVIDING RECOVERY AGENT SERVICES AND BUSINESS SUPPORT SERVICES:
A. During disputed period, the Appellant have provided mainly the services of recovery agent and business support services to various telecom companies and others.
B. Services of recovery agent as well as business support services are taxable w.e.f. 01.05.2006, and therefore no service tax can be demand from the appellant for period prior to 01.05.2006. C. That the Tribunal in a case of S.R. KALYANAKRISHNAN V/s CCE., COCHIN 2008 (9) S.T.R. 255 (Tri. - Bang.) held that Business support service - Service tax -(38) Appellant appointed by bank to verify correctness, fairness and authenticity of information furnished by those seeking loan - Services provided by appellant not in relation to promotion of service provided by bank, therefore, not classifiable under 'Business Auxiliary Service' but as 'Business Support. Service' and taxable w.e.f. 1-5-2006 only - Sections 65(19) and 65(104c) of Finance Act, 1994.
D. In case of CCE, GOA Versus MATRIX 2017 (52) S.T.R. 66 (Tri. - Mumbai) wherein it is held that Penalty - Non-payment of Service Tax
- Bona fide belief - 'Recovery Agent Services' taxable from 1st May, 2006 cannot be taxed under "Business Auxiliary Services" for relevant period - If new category of services is introduced, same are taxable from that date and are not covered under any of existing services - Page 24 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 Assessee not acting in a mala fide manner is not discharging Service Tax on amount received from bank for recovery of dues - No mala fide intention to evade - Case for invoking of Section 80 of Finance Act, 1994 - Penalties rightly set aside - Sections 77, 78 and 80 of Finance Act, 1994. [2011 (23) S.T.R. 5 (Kar.) relied on]. [paras 5.1, 5.2]. Copy of judgment is herewith marked and annexed as Annexure -14. E. In case of GUJARAT CHEM. PORT TERMINAL CO. LTD. Versus C.C.E. & C., .VADODARA-II 2008 (9) S.T.R. 386 (Tri. - Ahmd.) wherein it is held that Tax liability - New category - Effect of levy of Service tax on new taxable service - Activity made liable to Service tax from particular date - Such activity not taxable under pre-existing service category when definition of earlier categories not changed. [Per: Ms. Archana Wadhwa, Member (D}. Copy of judgment is herewith marked and annexed as Annexure -15. F. It is submitted that specific category was introduced by the government which is the category of recovery agent service & business support service , the said service cannot classified in difference category of earlier period . Therefore no service tax can be demanded on the services of the appellant under business auxiliary service prior to 01.05.2006.
V. SERVICE TAX WAS WRONGLY DEMANDED FROM HEAD OFFICE I.E BHOPAL OFFICE PRIOR TO 27.03.09:
A. The Appellant have opted for centralized registration w.e.f. 27.03.2009 and upto FY 2008-09 each individual branch was liable for registration and also liable for payment of service tax. Therefore, for demand of service tax upto FY 2008-09, the respective branch of the Appellant is Page 25 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 liable for payment of service tax, if any. Hence, the service tax provided from such branches cannot be demanded from the head office at Bhopal. That it is only after 27.03.2009 i.e. the date on which appellant have opted for centralized registration that the central excise authority Bhopal can demand the service tax. B. Further, centralized registration is applied by the appellant only in respect of 10 branches. Therefore if for the sake of argument assuming that Bhopal office is responsible for service tax even then service tax of only 10 branches can be demanded. However, since centralized registration which was at option of the Appellant was obtained on 27.03.2009, before such date service tax cannot be demanded in respect of services provided from other branches located at different part of the country.
C. Reliance is placed on the decision of Hon'ble Tribunal in case of MAA COMMUNICATIONS BOZELL LTD. V/s CST.2017 (3)GSTL. 89 wherein it is held that Demand - Show cause notice - Consolidated show cause notice covering services rendered in respect of five jurisdictions - Show cause notice and impugned order not justified inasmuch as Commissioner of Service Tax, Bangalore empowered to demand Service Tax, if not paid or short-paid within his jurisdiction - Total demand of Service Tax also covers service rendered within jurisdiction of four branch offices outside Bangalore for which separate registrations taken and Service Tax paid separately - Also, Service Tax amount arising in respect of services rendered within Bangalore jurisdiction already paid in normal course and periodical ST-3 returns also filed - Impugned order failed to deduct impugned Service Tax paid for which demand obviously becoming double taxation - Commissioner Page 26 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 of Service Tax, Bangalore having no jurisdiction to make any demand of Service Tax in respect of consideration received for jurisdictions outside Bangalore and exclusion of demand pertaining to outside jurisdictions necessary - Demands raised pertaining to outside jurisdictions set aside and excluded - Section 73 of Finance Act, 1994. VI. CENVAT CREDIT OF Rs. 1,13,43,159/- HAS BEEN WRONGLY DISALLOWED:
A. The CENVAT credit has been wrongly disallowed by the Department. It has been observed that the major availment of CENVAT Credit was on account of input service namely 'manpower supply services'. B. It is submitted that the sole reason for disallowing the CENVAT credit was that letters written to suppliers were undelivered and returned by the postal Department. It is strongly submitted that during investigation, Department summoned the Appellant and asked the details of manpower suppliers and their address. It is an admitted and recorded fact that the Appellant submitted the details in response of the summon but the Department completely brushed aside the list and addresses of manpower suppliers submitted by Appellant and send the letters to some other incomplete addresses. Therefore, at the fault of Department genuine CENVAT credit has been wrongly denied by the Respondent.
C. It is pertinent to mention that the Appellant had placed the copy of affidavits given by manpower suppliers, which confirms the genuineness of the availment of the CENVAT credit. D. Further, earlier verification of the CENVAT document by the officer of the STTF and the affidavit of the service provider proves that Appellant have availed the credit on strength of proper CENVAT documents. Page 27 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 E. That out of Rs.1,13,43,159/-, CENVAT credit of Rs.75,16,983/- is based on the manpower supply services and CENVAT credit of Rs.51,83,625/- is based on other services. In respect of Rs.51,83,625/- it has been alleged that the tally account of Appellant showed only Rs.4,97,518/- and therefore, the remaining amount of Rs.46,86,107/- was availed fraudulently. It is submitted that the denial of CENVAT credit is based on some tally data which was allegedly recovered by the Department. The CENVAT credit has been availed on telecom services, courier etc. and same has been duly recorded in the audited balance sheet of the Appellant. Therefore, denial of CENVAT credit on other services is completely wrong, illegal and without any basis. VII. DEMAND IS BARRED BY LIMITATION:
A. It is fact on record that the STTF have also conducted the search in the premises of the appellant on 15.11.06. That the officers have verified all the record and documents including CENVAT credit invoices. After detailed scrutiny the officers found some short payment of service tax which was also deposited by the Appellant. That after satisfying the whole issue, the STTF Branch closed the matters and released so many records/documents to the Appellant. Immediately thereafter another search has been conducted by the preventive branch and the present case has been booked. Hence, the allegation of suppression of fact etc. is not sustainable in the present case. B. It is therefore, submitted that the facts were in the knowledge of the Department since 15.11.2006. Therefore, the issuance of show cause notice on 09.04.2010 is time barred.Page 28 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 VIII. EXTENDED PERIOD NOT APPLICABLE IN CASE OF CLASSIFICATION DISPUTE A. It is submitted that the present case also involves classification dispute as Appellant's services are classifiable under recovery agent service and business support service but as per the Department it is classified under business auxiliary service. That it is settled law that in case of classification dispute extended period of limitation cannot be applied. B. Reliance is placed upon the following case laws -
a. Vaspar Concepts (P) Ltd. vs. Commissioner of C.Ex, Banglore 2006 (199) E.L.T. 711 (Tri- Banglore) wherein it is held that Demand - Limitation - willful mis declaration of facts not to be alleged in case of different interpretations in respect of classification of items - Extended period of limitation not invocable - Section 11A of Central Excise Act, 1944. b. Jer Ring Gears Pvt. Ltd. V/s CCE 2005 (70)RLT -362 wherein it is held that limitation - demand -section 11A of CEA,1944- case relates to classification of goods - non intention to evade duty -larger period not invocable -appeal disposed of .
C. It is further submitted that the Appellant filed all its ST-3 returns timely showing the actual receipts earned during the disputed period. The Department however has based its demand on some random documents seized during the search proceedings some of which were made part of RUDs and some were non-RUDs. It is submitted that the said documents were provided to the Appellant in such a manner that it was impossible for the Appellant to tally the Department's workings of the alleged demand. Further, the Department has not provided any Page 29 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 evidences to corroborate its alleged demand based upon the loose documents which has not even passed the test of Section 36B. Accordingly, the extended period of limitation is not invokable in the present issue.
IX. PENALTY HAS BEEN WRONGLY IMPOSED:
A. As per amended provisions if the penalty is imposed u/s 76 then another penalty U/s 78 of the Act is not imposable. Further u/s 76 of the Act (as amended) the maximum penalty is 10% of the Service Tax amount and u/s 78 of the act the maximum penalty is 100% of the Service Tax . However, in present case the penalty U/s 78 is imposed equal to 200% and u/s 76 equal to per day upto the amount of tax. Therefore, imposition of penalty is not sustainable. B. Further, the issue involved in present case is classification also and it is settled position of law that no penalty is imposable in a case of classification issue.
C. The imposition of another penalty U/R 15(4) of the Rules is not at all sustainable. Under Rule 15(4) no any penalty is prescribed. Therefore, imposition of penalty U/R 15(4) is liable to be set aside on this ground alone.
D. In view of the above submissions, the impugned OIO is not sustainable, being arbitrary and perverse and is liable to be set aside. It is prayed that appeals may kindly be allowed with consequential relief. X. IMPUGNED ORDER BEING VIOLATIVE OF PRINCIPLES OF NATURAL JUSTICE A. Without prejudice to above submissions, it is submitted that the impugned order is passed in utter violation of principle of natural justice. It is an admitted fact that the search was conducted in the Page 30 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 premises of the appellant on 25.03.09, 09.09.09 and on 26.11.09. During the course of investigation various documents were seized by the department on the date of searches. Thereafter, summons was issued to the directors/employees of the company in respect of providing details, the appellant vide its various letters requested the department to provide the photocopy of all the documents seized by the department as almost all the documents of the appellant company were seized in the course of investigation making appellant paralyzed to reconcile the data and supplying the proper information to the department. B. That even after making various requests to the department when department turned the blind eye towards the request of appellant in respect of providing copy of seized document, left with no choice appellant filed a Writ Petition via WP no. 3435/2010 dated 12.03.2010 before the Hon'ble Madhya Pradesh High Court at Jabalpur for the direction to provide the photocopy of all the seized document. C. It is important to mention that the appellant was unable to reconcile the data due to which appellant was unable to justify its stand before the department during the course of investigation. D. That immediately after filing of Writ Petition by the appellant department on 09.04.2010 issued the show cause notice without supplying the seized documents wherein seized documents were made part of relied upon documents with the show cause notice. E. Thereafter, vide order dated 05.05.2010 the Hon'ble High Court of Madhya Pradesh directed the Respondent to provide photocopy of all the seized document within 10 days.
F. That even after the direction of the Hon'ble High Court department failed to provide photocopy of all the seized document, again left with Page 31 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 no choice appellant filed a Contempt Petion case no.800/2010 dated 14/07/10. Thereafter, Hon'ble High Court vide order dated 03/03/2014 disposed off the contempt petition granting the liberty to the appellant to agitate the matter afresh in the appropriate proceeding with regard to supply of document.
G. The above submissions leave no shadow of doubt that the photocopy of all the seized documents whether relied upon documents or non-relied upon documents were never supplied to appellant leaving appellant in the middle of nowhere as appellant was not able to properly defend the case before the adjudicating authority. Whereas, the Ld. Respondent without considering the genuine concern of the appellant passed the impugned order confirming the huge demand. Therefore, violating the principle of natural justice.
H. Appellant before the adjudicating authority filed the provisional / interim reply on 13.09.17 and requested the adjudicating authority to fix final hearing after receipt of complete set of relied upon document and non relied upon documents from the department. However, the learned adjudicating authority did not consider the submission of the appellant and passed the order without granting final hearing and without providing remaining documents. Hence, it amounts to gross violation of principle of natural justice.
I. It is well settled law that department has to provide both relied upon documents as well as non-relied documents to the assessee. J. Without granting opportunity of Final hearing to the appellant to defend their case before department, the Order was passed after lapse of 5 months from the previous hearing. There is a violation of principal of Natural Justice.Page 32 of 56
Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 K. That in addition to above, the show cause notice and investigation also suffered from infirmities like:
a. Alleged admission by the director is not evidence in itself to prove suppression as held by Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs M/s Dhingra Metal Works ; in the case of M/s Vikram Cement (P) Ltd. Vs Commissioner of Central Excise reported as 2012 (286) E.L.T. 615 (Tri.- Del.), it was held that evidentiary statement of the director in the absence of any other evidence cannot establish the case of the assessee, the burden to prove is on the Department;
b. Statements were taken in duress and is not admissible as held by this Tribunal in the case of M/s Galaxy Indo Fab Ltd. 2010 (258) E.L.T. 254 (Tri.-Del.);
c. The contents of the "blank" file shown in panchnama dated 25/3/09 and thereafter while recording the statement of Sh.Rajeev Arya on 11.12.09 same "blank" were filed with the name of some documents cannot be believed as the content at the time of recording panchnama and at the time of identifying the contents of the files from Sh. Rajeev Arya were different. d. Printouts allegedly taken from the DVD submitted by the appellant appears to have been sources and planted. e. Similar situation was dealt with by the Hon'ble High Court of Delhi in M/s Flevel International Vs Commissioner of Central Excise 2016 (332) E.L.T. 416 (Del.). Further, the Tribunal in the case of M/s Makers Casting Pvt. Ltd. vide Final Order No.75279- 75281/2022, held that clandestine removal cannot be Page 33 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 alleged only on the basis of the statement but it has to be corroborated with tangible concrete evidence and not on the basis of wild inferences or assumptions and presumptions. L. Penalty has been imposed on the Director's of the Company Sh. N.S Bapna, Sh. Vikrant Singhal, Sh. Pramod Ingle and on Sh. Rajeev Puri employee of the company. It is submitted that vague allegation of non- cooperation did not advance the case of department. In their submissions, the Appellant had categorically stated before the adjudicating authority that proper replies were given to officers. However, the adjudicating authority while passing the impugned order has not taken into consideration the submissions made by them. Therefore, the findings of the adjudicating authority in the impugned order are factually incorrect.
M. In view of the above submissions, the impugned OIO is not sustainable, being arbitrary and perverse and is liable to be set aside. It is prayed that appeals may kindly be allowed with consequential relief.
4. On the other hand, learned AR supported the impugned order and submitted that the adjudicating authority has taken the gross receipts calculated on the basis of ledger account of the appellant for the period 2005- 2006, and gross receipts calculated on the basis of TDS Certificate as well as party wise receipt of the appellant for the year 2006-07. The gross receipts has been calculated on the basis of two sets of profit and loss was on account of the appellant as well as the statement of the Director and Chartered Accountant for the period 2007-08. The gross receipts has been calculated profit and loss account and the tally account of the appellant for the period 2008-09 and gross receipts on the basis of tally accountof the appellant and letter received from the Standard Chartered Bank for the year 2009-10. As Page 34 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 the suppliers of the services were non-existence, therefore, the cenvat credit has rightly denied to the appellant.
5. Heard the parties and considered the submissions.
6. We find that in this case, it is alleged that during the course of investigation on 25.03.2009 certain printouts has been taken from the computer of the appellant and the certain printouts has been taken from the DVD provided by the appellant on 02.12.2009 but the Panchnama drawn on 25.03.2009 reveals that no printouts were taken from the any computer on the said date.
7. Further , in all the printouts were taken from the computers then there is no mention from which computer the printout shall be taken and who was the person who has fidded the data in the said computer and in whose presence, the documents have been retrieved.
8. In that circumstances, the printouts allegedly taken on 25.03.2009 on computer is in violation of provisions of Section 36B of the Central Excise Act, 1944.
9. The said issue has been examined by this Tribunal in the case of M/s Trikoot Iron & Steel Casting Limited vs. Additional Director General (Adjn.) Directorate General of GST Intelligence (Adjudication Cell) in Excise Appeal No. 55779 of 2023 vide Final Order No. 58546 of 2024 this Tribunal held as under:-
15. To examine the issues that have been raised, it would be necessary to first examine section 36B of the Central Excise Act. It is reproduced:
"Section 36B- Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence.
(1) Notwithstanding anything contained in any other law for the time being in force,-Page 35 of 56
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(a) a microfilm of a document or the reproduction of the image or images embodied in such microfilm (whether enlarged or not); or
(b) a facsimile copy of a documents; or
(c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a "computer printout").
(2) The conditions referred to in sub-section (1) in respect of a computer printout shall be the following namely:-
the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer,
(a) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived;
(b) throughout the material part of the said period, the computer was operating properly or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and
(c) the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the said activities. (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether -
(a) by a combination of computers operating over that Page 36 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 period; or
(b) by different computers operating in succession over that period; or
(c) by different combinations of computers operating in succession over that period; or
(c) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combination of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly.
(4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, -
(a) identifying the document containing the statement and describing the manner in which it was produced;
(b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer,
(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to be to the best of the knowledge and belief of the person stating it.
(5) For the purposes of this section, - (a) Information shall be taken to be supplied to a
computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment;
Page 37 of 56
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(b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities;
(c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment.
Explanation - For the purposes of this section,-
(a) "computer" means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and
(b) any reference to information being derived from other information shall be a reference to its being derived therefrom by calculation, comparison or any other process."
16. Section 3 of the Evidence Act defines "document" as follows:
"Document. -- ―Document‖ means any matter expressed or described upon any substance by means of letter, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter."
17. "Evidence" in section 3 of the Evidence Act is defined as follows:
"Evidence." -- "Evidence‖ means and includes -- (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry;
Such statements are called oral evidence;
(2) all documents including electronic records produced for the inspection of the Court; such documents are called documentary evidence."Page 38 of 56
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18. Section 36B of the Central Excise Act deals with cases where any document is required to be produced as an evidence in proceedings under the Central Excise Act and the Rules framed thereunder. Such certificate should be signed by a person occupying a responsible position in relation to the operation of the device in question or the management of the relevant activities. In such a case it shall be evidence of any matter which is stated therein. It specifically mandates production of a certificate:
(i) identifying the document containing the statement and describing the manner in which it was produced;
(ii) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer,
(iii) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate.
19. The Central Excise Act contains a specific provision that describes the manner in which the admissibility of computer print outs will be accepted as evidence in proceedings initiated under the Central Excise Act.
20. In respect of section 65B of the Evidence Act, which is pari materia to the provisions of section 36B of the Central Excise Act, it would be relevant to refer to the observations made by the Supreme Court in Anvar P. V. The Supreme Court, held that evidence relating to electronic record shall not be admitted in evidence unless the requirement of section 65B of the Evidence Act is fulfilled. The relevant paragraphs of the said judgment are reproduced:
"13. Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure prescribed under Section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a Page 39 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65B(2). Following are the specified conditions under Section 65B(2) of the Evidence Act:
(i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer;
(ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity;
(iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and
(iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity.
14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied:
(a) There must be a certificate which identifies the electronic record containing the statement;
(b) The certificate must describe the manner in which the electronic record was produced;Page 40 of 56
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(c) The certificate must furnish the particulars of the device involved in the production of that record;
(d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device.
15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice.
16. Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A - opinion of examiner of electronic evidence.
17. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65B of the Evidence Act are not complied with, as the law now stands in India.
xxxxxxxxxxx
22. xxxxxxxxxxx. Section 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Section 65A and 65B. to that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this court in Navjot Sandhu case (supra), does not laydown the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under Section 65B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65B obtained at the time of taking the document, Page 41 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 without which, the secondary evidence pertaining to that electronic record, is inadmissible.
xxxxxxxxxxxxx
24. The situation would have been different had the appellant adduced primary evidence, by making available in evidence, the CDs used for announcement and songs. Had those CDs used for objectionable songs or announcements been duly got seized through the police or Election Commission and had the same been used as primary evidence, the High Court could have played the same in court to see whether the allegations were true. That is not the situation in this case. The speeches, songs and announcements were recorded using other instruments and by feeding them into a computer, CDs were made therefrom which were produced in court, without due certification. Those CDs cannot be admitted in evidence since the mandatory requirements of Section 65B of the Evidence Act are not satisfied. It is clarified that notwithstanding what we have stated herein in the preceding paragraphs on the secondary evidence on electronic record with reference to Sections 59, 65A and 65B of the Evidence Act, if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act, the same is admissible in evidence, without compliance of the conditions in Section 65B of the Evidence Act."
21. The aforesaid judgment of Supreme Court in Anvar P. V. was followed by the Supreme Court in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & others 5 though with a slight modification. The Supreme Court held that if the original device is not produced, then electronic record can be produced in accordance with section 65B (1) of the Evidence Act together with the requisite certificate under section 65B (4). The relevant portions of the judgment of the Supreme Court are reproduced below:
"18. Sections 65A and 65B occur in Chapter V of the Evidence Act which is entitled ―Of Documentary Evidence‖. Section 61 of the Evidence Act deals with the proof of contents of documents, and states that the contents of documents may be proved either by primary or by secondary evidence. Section 62 of the Evidence Act defines primary evidence as meaning the document itself produced for the inspection of the court. Section 63 of the Evidence Act speaks of the kind or types of secondary evidence by which documents may be proved. Section 64 of the Evidence Act then enacts that documents must be proved by primary evidence except in the circumstances Page 42 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 hereinafter mentioned. Section 65 of the Evidence Act is important, and states that secondary evidence may be given of the existence, condition or contents of a document in the following cases...‖.
19. Section 65 differentiates between existence, condition and contents of a document. Whereas "existence" goes to "admissibility" of a document, "contents" of a document are to be proved after a document becomes admissible in evidence. Section 65A speaks of "contents" of
5. AIR 2020 SC 4908 electronic records being proved in accordance with the provisions of Section 65B. Section 65B speaks of ―admissibility‖ of electronic records which deals with ―existence‖ and ―contents‖ of electronic records being proved once admissible into evidence. With these prefatory observations let us have a closer look at Sections 65A and 65B.
20. It will first be noticed that the subject matter of Sections 65A and 65B of the Evidence Act is proof of information contained in electronic records. The marginal note to Section 65A indicates that ―special provisions‖ as to evidence relating to electronic records are laid down in this provision. The marginal note to Section 65B then refers to "admissibility of electronic records".
21. Section 65B(1) opens with a non-obstante clause, and makes it clear that any information that is contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document, and shall be admissible in any proceedings without further proof of production of the original, as evidence of the contents of the original or of any facts stated therein of which direct evidence would be admissible. The deeming fiction is for the reason that ―document‖ as defined by Section 3 of the Evidence Act does not include electronic records.
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22. Section 65B(2) then refers to the conditions that must be satisfied in respect of a computer output, and states that the test for being included in conditions 65B(2(a)) to 65(2(d)) is that the computer be regularly used to store or process information for purposes of activities regularly carried on in the period in question. The conditions mentioned in sub- sections 2(a) to 2(d) must be satisfied cumulatively.
23. Under Sub-section (4), a certificate is to be produced that identifies the electronic record containing the statement and describes the manner in which it is produced, or gives particulars of the device involved in the production of the electronic record to show that the electronic record was produced by a computer, by either a person occupying a responsible official position in relation to the operation of the relevant device; or a person who is in the management of "relevant activities" - whichever is appropriate. What is also of importance is that it shall be sufficient for such matter to be stated to the ―best of the knowledge and belief of the person stating it‖ . Here, ―doing any of the following things...‖ must be read as doing all of the following things, it being well settled that the expression ―any" can mean "all" given the context. xxxxxxx.
xxxxxxxxxx
30. Coming back to Section 65B of the Indian Evidence Act, subsection (1) needs to be analysed. The sub-section begins with a nonobstante clause, and then goes on to mention information contained in an electronic record produced by a computer, which is, by a deeming fiction, then made a ―document‖. This deeming fiction only takes effect if the further conditions mentioned in the Section are satisfied in relation to both the information and the computer in question; and if such conditions are met, the "document" shall then be admissible in any proceedings. The words "...without further proof or production of the original..." make it clear that once the deeming fiction is given effect by the fulfilment of the conditions mentioned in the Section, the "deemed document" now becomes admissible in evidence without further proof or production Page 44 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 of the original as evidence of any contents of the original, or of any fact stated therein of which direct evidence would be admissible.
31. The non-obstante clause in sub-section (1) makes it clear that when it comes to information contained in an electronic record, admissibility and proof thereof must follow the drill of Section 65B, which is a special provision in this behalf - Sections 62 to 65 being irrelevant for this purpose. However, Section 65B(1) clearly differentiates between the "original" document -
which would be the original "electronic record"
contained in the "computer" in which the original information is first stored - and the computer output containing such information, which then may be treated as evidence of the contents of the "original" document. All this necessarily shows that Section 65B differentiates between the original information contained in the "computer"
itself and copies made therefrom - the former being primary evidence, and the latter being secondary evidence.
32. Quite obviously, the requisite certificate in sub-section (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, a computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where ―the computer‖, as defined, happens to be a part of a ―computer system‖ or ―computer network‖ (as defined in the Information Technology Act, 2000) and it becomes impossible to physically bring such network or system to the Court, then the only means of proving information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). This being the case, it is necessary to clarify what is contained in the last sentence in paragraph 24 of Anvar P.V. (supra) which reads as "...if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act...". This may more appropriately be read without the words "under Section 62 of the Evidence Act,...". With this minor clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to be revisited. xxxxxxxxxxxx Page 45 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018
72. The reference is thus answered by stating that:
(a) Anvar P.V. (supra), as clarified by us hereinabove, is the law declared by this Court on Section 65B of the Evidence Act. The judgment in Tomaso Bruno (supra), being per incuriam, does not lay down the law correctly. Also, the judgment in SLP (Crl.) No. 9431 of 2011 reported as Shafhi Mohammad (supra) and the judgment dated 03.04.2018 reported as (2018) 5 SCC 311, do not lay down the law correctly and are therefore overruled.
(b) The clarification referred to above is that the required certificate under Section 65B (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where the "computer"
happens to be a part of a "computer system" or "computer network" and it becomes impossible to physically bring such system or network to the Court, then the only means of providing information contained in such electronic record can be in accordance with Section 65B(1), together with the requisite certificate under Section 65B(4). The last sentence in Anvar P.V. (supra) which reads as ".. if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act..." is thus clarified; it is to be read without the words "under Section 62 of the Evidence Act,..." With this clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to revisited.
(c) The general directions issued in paragraph 62 (supra) shall hereafter be followed by courts that deal with electronic evidence, to ensure their preservation, and production of certificate at the appropriate stage. These directions shall apply in all proceedings, till rules and directions under Section 67C of the Information Technology Act and data retention conditions are formulated for compliance by telecom and internet service providers.
(d) Appropriate rules and directions should be framed in exercise of the Information Technology Act, by exercising powers such as in Section 67C, and also framing suitable rules for the Page 46 of 56 Appeal No(s).: ST/51392,51389,51393, 51396,51397/2018 retention of data involved in trial of offences, their segregation, rules of chain of custody, stamping and record maintenance, for the entire duration of trials and appeals, and also in regard to preservation of the meta data to avoid corruption. Likewise, appropriate rules for preservation, retrieval and production of electronic record, should be framed as indicated earlier, after considering the report of the Committee constituted by the Chief Justice's Conference in April, 2016."
(emphasis supplied)
22. It transpires from the aforesaid two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar that:
(i) Any documentary evidence by way of an electronic record under the Evidence Act can be proved only in accordance with the procedure prescribed under section 65B of the Evidence Act. The purpose of this provision is to sanctify secondary evidence in electronic form generated by a computer;
(ii) Any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) of section 65 of the Evidence Act are satisfied, without further proof or production of the original;
(iii) In view of the provisions of section 65(4) of the Evidence Act, a certificate must accompany the electronic record like computer printout, compact Appeal No(s).: ST/51392,51389,51393, Page 47 of 56 51396,51397/2018 disc, video compact disc or pen drive, pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence;
(iv) Only if the electronic record is duly produced in terms of section 65B of the Evidence Act, that the question of its genuineness would arise. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if the requirements of section 65B of the Evidence Act is not complied with;
(v) An electronic record by way of secondary evidence shall
not be admitted in evidence unless the the
requirements of section 65B of the Evidence Act has satisfied; and
(vi) This would not apply in a case where the appellant adduces primary evidence by making available in evidence the electronic records.
23. A Bench of the Tribunal in Agarvanshi Aluminium Ltd. vs. Commissioner of Customs (I), Nhava Sheva6 where the issue was with respect to section 36B of the Central Excise Act, also observed:
"12. ...... it is clear that for admissibility of computer printout there are certain conditions have been imposed in the said section. Admittedly condition 4C of the said section has not been complied with and in the case of Premier Instruments & Controls (supra) this Tribunal relied on the case of International Computer Ribbon Corporation
- 2004 (165) E.L.T. 186 (Tri.-Chennai) wherein this Tribunal has held that "computer printout were relied on by the Adjudicating Authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that printouts were neither authenticated nor recovered under Mahazar... The Tribunal Appeal No(s).: ST/51392,51389,51393, Page 48 of 56 51396,51397/2018 rejected the printouts... Nothing contained in the printout generated by the PC can be admitted as evidence." In this case also, we find that the parallel situation as to the decision of Premier Instruments & Controls (supra).
13. Therefore, the printout generated from the PC seized cannot be admitted into evidence for non- fulfillment of statutory condition of Section 36B of the Central Excise Act, 1944."
(emphasis supplied) ____________________________
6. 2014 (299) ELT 83 (Tri.-Mum)
24. In Popular Paints and Chemicals vs. Commissioner of Central Excise and Customs, Raipur7, the Tribunal observed:
"15.2. Thus, it has been clearly laid down by the Supreme Court that the computer printout can be admitted in evidence only if the same are produced in accordance with the provisions of Section 65B (2) of the Evidence Act. A certificate is also required to accompany the said of computer printouts as prescribed under section 65B(4) of Evidence Act. It has been clearly laid down in para 15 of this judgment that all the safeguards as prescribed in Section 65B (2) & (4), to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. We may add here that the provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act are pari materia.
15.3 It is evident from the appeal that the investigation officers while seizing has failed to take safeguards as mandated under section 36B of Central Excise Act.
Further the cloning process of the hard-disks and retrieval of the data is admissible for want of cross examination of, Sh. Vipul Saxena, who has done cloning of the data from the computer system. We, therefore, hold that the computer printouts cannot held to Appeal No(s).: ST/51392,51389,51393, Page 49 of 56 51396,51397/2018 admissible evidence in terms of Section 36B (2) & (4) of the Central Excise Act in the case at hand."
(emphasis supplied) ______________________
7. Excise Appeals No. 52738 of 2016 decided on 06.08.2018
25. In Global Extrusion Private Limited and Ors. vs. Commissioner of Central Excise & ST, Rajkot 8 , the Tribunal observed:
"19. Ongoing through the aforesaid provisions, we find that Section 36B(2) provides the conditions in respect of computer printouts. In the present matter the computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the appellants. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the appellant to the computer in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. In the present case, the data was not stored in the computer but the officers had taken the printout from the Hard Disk drive by connecting to the computer. The officers had not obtained any certificate as required under Section36B of the said Act. It is also noted that none of the conditions under Section 36B (2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the allegations of the revenue. It is noted that the requirement of certificate under Section 36B (4) is also to substantiate the veracity of truth in the operation of electronic media. We also agree with the ______________________________________
8. Excise Appeal No. 11963 of 2016 decided on 15.01.2024 contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as Appeal No(s).: ST/51392,51389,51393, Page 50 of 56 51396,51397/2018 the time of obtaining printouts therefrom, a certificate should have been obtained as per the provision of Section36B of the Act.
No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellants was obtained by the department, the credibility of the computer printout gets vitiated."
(emphasis supplied)
26. The aforesaid decisions of the Tribunal, which are in the context of the provisions of section 36B of the Central Excise Act, hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory.
27. The contentions advanced by learned counsel for the appellant and the learned authorized representative appearing for the department have to be examined in the light of the aforesaid observations.
28. What transpires from the two Panchnamas dated 04.07.2013 and 15.07.2013 is:-
(i) The officers found that Vaibhav Goel "removed a hard disc from his kitchen and tried to throw it away";
(ii) During the search, the officers found "three computer monitors installed in a room on the first floor of rear side of the house above the dog house in which some documents and seven pen-drives were also found";
(iii) However, no CPU was found in the said room. On being asked, Mohit Vaish, Accountant informed that there is "one desktop computer connected with the CPU, which is installed in the kitchen of the said premises and these monitors are working as extension of the computer in Appeal No(s).: ST/51392,51389,51393, Page 51 of 56 51396,51397/2018 the kitchen and connected through cable";
(iv) On searching the kitchen, the officers recovered "Computer (CPU, Monitor, Keyboard and Mouse) which was switched on and CPU was found without cover and without having any hard disc";
(v) The officers conducted a thorough search of the entire residential premises and found "one of the hard disc hidden in a corner lying near the dog house";
(vi) The officers also found two hard discs from the cupboard of the kitchen;
(vii) The officers asked Vaibhav Goel to connect the hard disc found in the corner near dog house with the CPU installed in the kitchen;
(viii) On the direction of Vaibhav Goel, Mohit Vaish started the CPU after connecting the said hard disc;
(ix) On being asked by the officers to take the printouts of data captured in the software, Vaibhav Goel informed that being a MS Dos based software, "printout cannot be taken without configuring printer Canon LBP 2900B (available in the residence) with site key and license key".
(x) On being asked how these keys can be taken, Vaibhav Goel stated that he would have to talk to an expert and on direction of Vaibhav Goel, Mohit Vaish spoke to one Dua, who on mobile informed after some time that site key is 'EIGIDADEJTBO' and license key is 'HJHTVOGSVQ'.
(xi) Mohit Vaish configured the printer and started taking printouts of sale, purchase and cash data, which is stated to contain both accounted and unaccounted Appeal No(s).: ST/51392,51389,51393, Page 52 of 56 51396,51397/2018 transaction;
(xii) Some printouts from one of the pen drive Toshiba 4GB that was recovered were also taken after connecting the same with the CPU;
(xiii) Since the whole process of taking of printouts of the data in the CPU and the pen-drive was taking time and printing stated mal-functioning, the officers discontinued the process of taking printout and seized the three Hard disks and seven pen drives properly.
Details of the seized hard discs and pen drives were mentioned in Annexure-A to the Panchanama;
(xiv) Subsequently, on 15.07.2013 another Panchnama was drawn. The Panchnama records that the hard drive mentioned at serial no. 1 was attached with the CPU and printers resumed from the residence of Vaibhav Goel on 04.07.2013 and printouts of the data stored in the hard drive and Toshiba 4GB pen drive were taken;
(xv) The other hard drives and pen drives did not contain any relevant data and so printouts were not taken.
29. It is not in dispute that the hard disk from which the printouts were subsequently taken was not found installed in the CPU. The Panchnama drawn on 04.07.2013 records that the officers found that Vaibhav Goel had removed a hard disc from his kitchen and had tried to throw it away. The panchnama does not mention that any officer had seen Vaibhav Goel actually remove the hard disc from the CPU. It only records that Vaibhav Goel had removed a hard disc from the kitchen and had tried to throw it away. At a different place, the panchnama records that the officers conducted a thorough search of the entire residential premises and found one hard disc hidden in a corner lying near the dog house. What needs to be noticed is that if Vaibhav Goel had thrown the hard disk, it would Appeal No(s).: ST/51392,51389,51393, Page 53 of 56 51396,51397/2018 not have been found hidden in a corner of a room near the dog house. The seven pen drives were also recovered from a room on the first floor of the rear side of the house. In the said room three computer monitor were also installed without a CPU. The officers were informed that one desktop computer connected with the CPU is installed in the kitchen and these monitors are working as extension of the computer in the kitchen and were connected through a cable. Ultimately the officers recovered CPU, Monitor, Keyboard and Mouse in the room, but the CPU was found without cover and hard disk. The Panchnama does not record that Vaibhav Goel was seen removing the hard disk from the CPU and indeed it would not have been possible for Vaibhav Goel to remove this hard disk from the CPU in the presence of all the officers and throw it away. There is nothing on the record to link the hard disk to the CPU, nor is there anything to link that the hard disc and the pen drive stored information contained in the computer.
30. A hard disk is a rigid magnetic disk that stores data. A pen drive is a data storage device that includes flash memory with an integrated USB interface.
31. The printouts, which are the sole basis for holding that the appellant had indulged in clandestine removal, were taken both on 04.07.2013 and on 15.07.2013 by placing the recovered hard disc and pen drive in the CPU.
32.It is, therefore, clear that the CPU did not contain the hard disk. The hard disk was in fact picked up from the corner of the room. No attempt was made by the department to admit the hard disk and the pen drive in evidence. The required certificate under section 36B (4) of the Central Excise Act was also not produced. Thus, no reliance can be placed on the printouts, in view of the two judgments of the Supreme Court in Anvar P. V. and Arjun Panditrao Khotkar and the three decisions of the Tribunal in Agarvanshi Aluminium, Popular Paints and Chemicals and Global Extrusion.
33. The adjudicating authority, on its own, examined the oral evidence on the points required to be stated in the certificate. This is not permissible in law. The confirmation of demand is based only on Appeal No(s).: ST/51392,51389,51393, Page 54 of 56 51396,51397/2018 the printouts taken after connecting the hard disk and the pen drive to the computer.
34. It is, therefore, not possible to accept the contention advanced by the learned authorized representative appearing for the department that panchnama itself should be treated as a certificate or that the adjudicating authority was justified in itself examining whether the conditions set out in section 36B (4) of the Central Excise Act had been satisfied.
35. The impugned order dated 30.06.2021 passed by the adjudicating authority, therefore, cannot be sustained. It is, accordingly, set aside in so far as the appellant is concerned and the appeal is allowed."
Admittedly, in this case while drawing the panchnama on 25.03.2009, no printouts were taken in compliance of provisions of Section 36B of Central Excise Act, 1944 and further documents recovered from DVD which was provided by the appellant on 02.12.2009. The printouts were taken thereof in violation of provisions of Section 36B of the Central Excise Act,1944 in that circumstances, we are of the considered opinion that the printouts were taken by the investigating team and the relied upon documents taken by the learned adjudicating authority in the impugned order, are not admissible evidence to allege that the appellant has suppressed the value of taxable service provided by them.
10. We further take a note of the facts that while calculating the higher figure of receipts has been shown either in ledger account or TDS Certificate or prifit and loss account, no such procedure has been followed to implicate the charge of suppression of taxable value of services, in that circumstances, as no procedure has been followed to take out the printouts in terms of Section 36Bof the Act, we hold that the demand against the appellant is on account of suppression of Appeal No(s).: ST/51392,51389,51393, Page 55 of 56 51396,51397/2018 taxable value is not sustainable. Therefore, the demand of Rs.5,45,12,322/- is set-aside alleging short payment of service tax. The Adjudicating Authority also held that the appellant has collected the service tax and the same is recoverable under Section 73 (A) of the Finance Act, 1994 but the Revenue has failed to prove that the appellant has collected any service tax over and above the declared service tax, therefore, the said recovery of service tax sought under Section 73 (A) of the Act is only on assumption and presumption only. Accordingly, no recovery of the service tax under Section 73 (A) of the Act is not sustainable.
11. We further take a note of the fact that the cenvat credit of Rs.1,13,43,159/- sought to be denied to the appellant on the ground that the manpower suppliers are non-existent.
12. We find that all those services has been availed by the appellant as claimed prior to investigation and the all service provider were registered with the department and no physical verification has been conducted by the investigating team with suppliers of services only sent postal letter to the manpower suppliers which were returned undelivered and it was presumed that the supplier of manpower service are non-existence. To counter that allegation, the appellant has filed affidavits from all the manpower suppliers which confirms the genuineness of availment of cenvat credit and the said affidavits also not examined or verified. In that circumstances, a statement made by a person on an affidavit is inadmissible evidence. Therefore, the suppliers which were alleged that are non-existent is only assumption and presumption and no proper enquiry has been done, in that Appeal No(s).: ST/51392,51389,51393, Page 56 of 56 51396,51397/2018 circumstances, cenvat credit of Rs.1,13,43,159/- cannot be denied to the appellant.
13. In these circumstances, whole of the demand confirmed against the appellant is set-aside. As there is no demand sustainable against the appellants, consequently, no penalty can be imposed against the appellants and no demand of interest can be confirmed against the appellants.
14. In view of above, we set-aside the impugned order and allow the appeals filed by the appellants with consequential relief, if any.
(Order dictated and pronounced in the open Court ) (ASHOK JINDAL) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) G.Y.