Custom, Excise & Service Tax Tribunal
Riddhi Siddhi Enterprises vs Surat-I on 20 March, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH - COURT NO. 3
SERVICE TAX Appeal No. 11013 of 2015-DB
[Arising out of Order-in-Original/Appeal No CCESA-VAD-APP-II-SSP-058-2014-15 dated
29.01.2015 passed by Commissioner of Central Excise, Customs and Service Tax-SURAT-I]
Riddhi Siddhi Enterprises .... Appellant
Navagam, Fort : Sonagadh, SURAT,
GUJARAT-394670
VERSUS
Commissioner of Central Excise & ST, Surat-I .... Respondent
New Building, Opp. Gandhi Baug, Chowk Bazar, Surat, Gujarat -395001 APPEARANCE :
Shri Sunil Vatvani, Chartered Accountant for the Appellant Shri Rajesh K Agarwal, Superintendent (AR), (AR) for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) DATE OF HEARING : 06.03.2024 DATE OF DECISION: 20.03.2024 FINAL ORDER NO. 10635/2024 C.L. MAHAR :
The brief facts of the matter are that the appellant is a proprietorship concern holding service tax registration for providing taxable service under th category of Manpower Recruitment or Supply Agency Service and Goods Transport Agency service. During the financial year 2008-09 to 201-11, the appellant had provided service under the category of Manpower Recruitment or Supply Agency Service and Goods Transport Agency services to M/s. J K Paper Limited. The appellant have regularly been filing ST-3 returns and following all the procedure laid-down under the service tax law. It is a matter of record that the appellant were awarded two separate contracts/ work orders on different dates for providing manpower and for goods transport purpose by M/s. JK Paper Limited. The appellant were issuing separate invoices for providing services i.e. Manpower Recruitment or Supply 2 Appeal No. ST/11013/2015-DB Agency Service and Goods Transport Agency service as per work order. The service tax has been paid on both the invoices, in case of Manpower Recruitment or Supply Agency Service by the appellant himself and for Goods Transport Agency services by recipient of services i.e. M/s. JK Paper Limited being a listed Company.
2. The department has undertaken an audit of financial statements of the appellant and was of the opinion that the appellant was providing a composite service and for evading service tax, the composite work was bifurcated between two agreements i.e. one for Manpower Recruitment and Supply Agency Service and second for Goods Transport Agency services. On the basis of this presumption, a show cause notice has been issued to the appellant demanding service tax of Rs. 8,10,088/- under the provisions of Section 73(1) of Finance Act, 1994 by invoking extended time proviso, penal provisions under Section 76 and 78 as well as the provisions for charging interest as provided under section 75 of the Finance Act, 1994 has also been invoked. The matter got adjudicated by the impugned order-in- original dated 21.07.2014 whereunder all the charges as invoked in the show cause notice were confirmed. The appellant approached Commissioner (Appeals) against the above impugned order-in-original however, the Commissioner (Appeals) vide his order-in-appeal dated 29.01.2015 did not give any relief. Appellant are before us against the above mentioned impugned order-in-appeal.
3. It has been contended by the appellant that clubbing of two agreements which have been entered into on different dates, one for Manpower Recruitment or Supply Agency Service and second for Goods Transport Agency service is legally incorrect.. It has been the contention of 3 Appeal No. ST/11013/2015-DB learned advocate that services have been provided by the appellant to M/s. JK Paper Limited under two separate and independent contracts/ work orders and the appellant has discharged service tax liability on the service provided under the category of Manpower Recruitment or Supply Agency Service on the gross value as per provisions of Section 67 of the Finance Act, 1994. So far as service under the category of Goods Transport Agency service is concerned, the service recipient has complied with the provisions of Rule 2(1)(d) of Service Tax Rules, 1994, where the said rule provides that whenever the consignor or consignee of goods is „Specified Person‟, the person liable for paying service tax shall be „any person who pays or is liable to pay freight either himself or through his agent for transportation of such goods by road in a goods carriage‟. The list of Specified Persons inter-alia covers any Company which is formed and registered under the Companies Act. Since the appellant is a proprietorship concern and the service recipient being a Limited Company and operated under Companies Act, they have discharged service tax liability on the gross amount paid for transportation of goods as per the provisions of Notification No. 13/2008-ST dated 01.03.2008 as amended by Notification No. 43/2010-ST dated 30.06.2010. The learned Advocate has thus tried to emphasize that both the service recipient and the appellant have complied with the provisions of service tax law and therefore, there is no evasion of service tax with regard to the activity undertaken by the appellant.
3.1 The learned advocate vehemently assailed the department‟s stand that appellant has bifurcated the bills/ invoices of the services provided by them, for the sake of their own convenience with an intention to evade tax. This stand of the Department is factually incorrect as the appellant was awarded two separate work orders/ contracts on different dates by the service 4 Appeal No. ST/11013/2015-DB recipient for providing two separate categories of the services and therefore, it is wrong on the part of the department to allege that the separate invoice has been issued by the appellant arbitrarily but same were as per requirement of the contracts which have been entered by the appellant with the service recipient.
3.2 The learned advocate has relied upon the decision of this Tribunal in the case of E.V. Mathai & Company vs. CCE, Cochin - 2006 (3) STR 116 (Tri. Bang.) wherein this Tribunal has held that "there is separate agreement for the services rendered by the party with reference to transportation and administration charges and which are liable to service tax and separate bills have also been issued then there is no question levying service tax on transportation charges which is being executed under separate agreement." 3.3 Learned Advocate has also assailed the impugned order-in-appeal on the ground that without proving any fraud, collusion, willful misstatement and suppression of facts with an intention to evade payment of service tax, the learned Commissioner (Appeals) has confirmed service tax under extended time proviso of Section 73 of Finance Act, 1994. It has further been mentioned by the learned advocate that each and every transaction has been entered by the appellant in his books of accounts and periodical returns were also submitted by the appellant as well as by the service recipient. Therefore, it is wrong to allege that the appellant has suppressed the facts from the department to evade payment of service tax. It has further been emphasized that the show cause notice has been issued purely on the basis of record maintained by the appellant and therefore the demand is also barred by period of limitation and deserve to be dropped. Learned advocate has relied upon following case laws in this regard:- 5
Appeal No. ST/11013/2015-DB
(a) Rainbow Industries vs. CCE - 1994 (74) ELT 3 (SC)
(b) ONGC vs. CCE - 1995 (79) ELT 117 (CEGAT)
(c) Tamil Nadu Housing Board vs. CCE - 1994 (74) ELT 9 (SC)
(d) J K Cotton Spn. & Wvg. Mills Company Limited vs. CCE - 1998 (99) ELT 8 (SC) It has been mentioned by the learned Advocate that in the above mentioned judgments the Hon‟ble Supreme Court has observed that for invoking extended period, the department need to prove two ingredients, firstly the presence of willful misstatement and suppression of facts etc and secondly intention to evade payment of duty. The learned advocate has mentioned that appellant has rightly discharged the service tax liability on supply of Manpower Recruitment or Supply Agency Service while being a Limited Company JK Paper Mills has discharged the service tax liability on supply of Goods Transport Agency service.
4. We have also heard the learned Departmental Representative who reiterates the findings as given in the order-in-appeal.
5. Having heard both the sides, we find that there is no denying of the fact that appellant has entered into two separate work contracts/ agreements for providing two different services namely Manpower Recruitment or Supply Agency Service and Goods Transport Agency services. It is matter of record that the appellant has been filing their ST-3 returns regularly and have discharged service tax liability on providing Manpower Recruitment or Supply Agency Service as per provisions of law. The second work contract was for providing Goods Transport Agency services on which the service recipient M/s. JK Paper Limited being a "Specified" person has 6 Appeal No. ST/11013/2015-DB discharged service tax liability as per the provisions of Rule 2(1)(d) of the Service Tax Rules, 1994. The service recipient has discharged their service tax liability under reverse charge mechanism basis. Thus, we find that service tax has been paid on the provisions of both the services. Now the only question which needs to be answered is that whether the appellant have arbitrarily bifurcated the receipt of payments from M/s. JK Paper Limited under two separate service category i.e. Manpower Recruitment or Supply Agency Service and GTA service. We find that it is matter of record that appellant has entered into two separate agreements with M/s. JK Paper Limited on two different dates. This fact has been admitted by the department also. In such a situation, we are of the view that it cannot be alleged by the department that the appellant have arbitrarily bifurcated the value of services rendered by him under two types of invoices/ bills. The invoices which have been raised by the appellant are as per the legally valid work contracts/ agreements and it is accepted legal principle that for the purpose of levy of service tax, the individual contract need to be taken into account. Therefore, merely on the assumption that the appellant have entered into separate contracts intentionally to evade service tax is prima- facie, not acceptable. In this regard we also rely upon the decision of this Tribunal in the case of E.V. Mathai & Company vs. CCE, Cochin (supra).
6. We find that the impugned order-in-appeal has also deserved to be set-aside on the ground that levy of service tax has been confirmed by invoking extended time proviso under Section 73(1) of Finance Act, 1994. We find that the appellant has regularly been filing their ST-3 returns wherein all the details of services provided by them have been mentioned. The service recipient has also been filing ST-3 returns and therefore, it cannot be alleged that there is any element of fraud, collusion, mis- 7
Appeal No. ST/11013/2015-DB declaration or suppression of facts with intent to evade service tax. We also take note of the fact that demand itself has been made from the financial record of the appellants which is mentioned in the audit report No. FAR/241/ST/2011-12 dated 08.02.2012. Therefore, we are of the opinion that there is no suppression of facts, fraud or misstatement with intent to evade payment of service tax and therefore, it was wrong on the part of the department to confirm demand of service tax under extended time period of Section 73(1) of the Finance Act, 1994.
7. In view of above, we hold that impugned order-in-appeal is without any merits. We set-aside the same and appeal is allowed.
(Pronounced in the open court on 20.03.2024) (Ramesh Nair) Member (Judicial) (C L Mahar) Member (Technical) KL