Custom, Excise & Service Tax Tribunal
Pushpanjali Buildcon India (P) Ltd vs Cgst & Ce Agra on 18 October, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70115 of 2015
(Arising out of Order-in-Original No.AGA-EXCUS-000-COM-007-15-16 dated
20/08/2015 passed by Commissioner of Customs, Central Excise & Service
Tax, Agra)
M/s Pushpanjali Buildcon India (P) Ltd., .....Appellant
(Pushpanjali Palace, Delhi Gate, Agra)
VERSUS
Commissioner of Customs, Central Excise &
Service Tax, Agra ....Respondent
(113/4, Sanjay Place, Agra-282002)
WITH
Service Tax Appeal No.70110 of 2015
(Arising out of Order-in-Original No.AGA-EXCUS-000-COM-006-15-16 dated
20/08/2015 passed by Commissioner of Customs, Central Excise & Service
Tax, Agra)
M/s P P Buildcon Pvt. Ltd., .....Appellant
(Pushpanjali Palace, Delhi Gate, Agra)
VERSUS
Commissioner of Customs, Central Excise &
Service Tax, Agra ....Respondent
(113/4, Sanjay Place, Agra-282002)
AND
Service Tax Appeal No.70109 of 2015
(Arising out of Order-in-Original No.AGA-EXCUS-000-COM-005-15-16 dated
20/08/2015 passed by Commissioner of Customs, Central Excise & Service
Tax, Agra)
M/s Krishna Kanha Shelters Pvt. Ltd., .....Appellant
(Pushpanjali Palace, Delhi Gate, Agra)
VERSUS
Commissioner of Customs, Central Excise &
Service Tax, Agra ....Respondent
(113/4, Sanjay Place, Agra-282002)
APPEARANCE:
Shri Dharmendra Srivastava, Chartered Accountant for the Appellants
Shri Sarweshwar T. Khairnar, Authorised Representative for the
Respondents
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
Service Tax Appeal Nos.70115, 70110 &
2 70109 of 2015
FINAL ORDER NOs.70130-70132/2023
DATE OF HEARING : 25 August, 2023
DATE OF PRONOUNCEMENT : 18 October, 2023
SANJIV SRIVASTAVA:
These appeals are directed against three orders in original as
detailed in the table below of the Commissioner Central Excise
and Service Tax, Agra.
Appeal No Appellant Order in Original No & Date
ST/70109/2015 Krishna Kanha Shelter Pvt Ltd. AGA-EXCUS-000-COM-005-15-16/ 20.08.2015
ST/70110/2015 P P Buildcon Pvt Ltd. AGA-EXCUS-000-COM-006-15-16/ 20.08.2015
ST/70115/2015 Pushpanjali Buildcon (I) P Ltd AGA-EXCUS-000-COM-007-15-16/ 20.08.2015
1.2 The above three orders are against the three group
companies and are in respect of three show cause notices,
issued separately to each, on culmination of common of
investigations made on the basis of single search of the premises
from where the said three companies were operating along with
another group company namely Pushpanjali Construction Pvt.
Ltd.
1.3 By the impugned orders following has been held:
A. Order in Original No AGA-EXCUS-000-COM-005-15-
16
(1) I confirm the demand of Rs 1,33,63,037.00 (Rupees one
crores, thirty three lakh, sixty three thousand and thirty
seven only) of service tax in lieu of providing the services
under the category of "Construction of Complex" and
Transport of Goods by Road" against the party M/s Krishna
Kanha Shelters Pvt. Ltd., Pushpanjali Palace, Delhi Gate,
Agra under Section 73 (1) of the Chapter V of the Finance
Act, 1994 read with section 68 of Chapter V of the Act ibid
and rule 6 of the Service tax Rules, 1994.
Service Tax Appeal Nos.70115, 70110 &
3 70109 of 2015
(2) I also confirm the demand of Rs 21,29,197.00 (Rupees
twenty one lakh, twenty nine thousand, one hundred and
ninety seven only) of service tax in lieu of providing the
services under the category of "Construction of Complex"
against the above said party under Section 73 (1) of
Chapter V of the Finance Act, 1994 read with section 68 of
Chapter V of the Act ibid and Rule 6 of the Service tax
Rules, 1994.
(3) I also confirm demand of interest at applicable rates for
the relevant period till the payment of tax under Section
75 of Chapter V of the Finance Act, 1994 against the party
M/s Krishna Kanha Shelters Pvt. Ltd., Pushpanjali Palace,
Delhi Gate, Agra.
(4) I do not impose penalty under Section 76 and 77 (2) of
Chapter V of the Finance Act, 1994 upon M/s Krishna
Kanha Shelters Pvt. Ltd., Pushpanjali Palace, Delhi Gate,
Agra as the penalty under Section 78 is being imposed.
(5) I also impose a penalty of Rs 10,000.00 (Rupees ten
thousand only) under Section 77 (1) (a), 77 (1)(b) and
77(1)(e) of Chapter V of the Act ibid for violation of the
provisions of Section 68, 69 & 70 of the Finance Act, 1994
and Rule 4,6 & 7 of the Service tax Rules, 1994 upon M/s
Krishna Kanha Shelters Pvt. Ltd., Pushpanjali Palace, Delhi
Gate, Agra.
(6) I also impose a penalty of Rs 1,54,92,234.00 (Rupees one
crore, fifty four lakh ninety two thousand two hundred and
thirty four only) under Section 78 of Chapter V of the Act
ibid for failure to pay service tax and for suppression of
facts and value of taxable service with intent to evade
payment of service tax contravening the provisions of
Section 68, 73 of the Act ibid read with Rule 6 of the rules
ibid upon M/s Krishna Kanha Shelters Pvt. Ltd., Pushpanjali
Palace, Delhi Gate, Agra.
(7) I also impose a late fee of Rs 20,000.00 (Rupees twenty
thousand only) upon M/s Krishna Kanha Shelters Pvt. Ltd.,
Service Tax Appeal Nos.70115, 70110 &
4 70109 of 2015
Pushpanjali Palace, Delhi Gate, Agra under Section 70 (1)
read with Rule 7(c) of the Service tax Rules, 1994
B. Order in Original No AGA-EXCUS-000-COM-006-15-
16
(1) I confirm the demand of Rs 5,44,07,544.00 (Rupees five
crore, forty four lakh seven thousand, five hundred and
forty four only) of service tax in lieu of providing the
services under the category of "Construction of Complex"
and Transport of Goods by Road" against the party M/s P.
P. Buildcon Pvt. Ltd., Pushpanjali Palace, Delhi Gate, Agra
under Section 73 (1) of the Chapter V of the Finance Act,
1994 read with section 68 of Chapter V of the Act ibid and
rule 6 of the Service tax Rules, 1994.
(2) I also confirm the demand of Rs 18,82,764.00 (Rupees
eighteen lakh, eighty two thousand, seven hundred and
sixty four only) of service tax in lieu of providing the
services under the category of "Construction of Complex"
against the above said party under Section 73 (1) of
Chapter V of the Finance Act, 1994 read with section 68 of
Chapter V of the Act ibid and rule 6 of the Service tax
Rules, 1994.
(3) I also confirm demand of interest at applicable rates for
the relevant period till the payment of tax under Section
75 of Chapter V of the Finance Act, 1994 against the party
M/s P. P. Buildcon Pvt. Ltd., Pushpanjali Palace, Delhi Gate,
Agra.
(4) I do not impose penalty under Section 76 and 77 (2) of
Chapter V of the Finance Act, 1994 upon M/s P. P. Buildcon
Pvt. Ltd., Pushpanjali Palace, Delhi Gate, Agra as the
penalty under Section 78 is being imposed.
(5) I also impose a penalty of Rs 10,000.00 (Rupees ten
thousand only) under Section 77 (1) (a), 77 (1)(b) and
77(1)(e) of Chapter V of the Act ibid for violation of the
provisions of Section 68, 69 & 70 of the Finance Act, 1994
and Rule 4,6 & 7 of the Service tax Rules, 1994 upon M/s
Service Tax Appeal Nos.70115, 70110 &
5 70109 of 2015
P. P. Buildcon Pvt. Ltd., Pushpanjali Palace, Delhi Gate,
Agra.
(6) I also impose a penalty of Rs 5,62,90,308.00 (Rupees five
crore, sixty two lakh, ninety thousand three hundred and
eight only) under Section 78 of Chapter V of the Act ibid
for failure to pay service tax and for suppression of facts
and value of taxable service with intent to evade payment
of service tax contravening the provisions of Section 68
and 73 of the Act ibid read with Rule 6 of the rules ibid
upon M/s P. P. Buildcon Pvt. Ltd., Pushpanjali Palace,
Delhi Gate, Agra.
(7) I also impose a late fee of Rs 20,000.00 (Rupees twenty
thousand only) upon M/s P. P. Buildcon Pvt. Ltd.,
Pushpanjali Palace, Delhi Gate, Agra under Section 70 (1)
read with Rule 7(c) of the Service tax Rules, 1994.
C. Order in Original No AGA-EXCUS-000-COM-007-15-
16
(1) I confirm the demand of Rs 2,20,32,215.00 (Rupees two
crores, twenty lakh, thirty two thousand, two hundred and
fifteen only) of service tax in lieu of providing the services
under the category of "Construction of Complex" and
Transport of Goods by Road" against the party M/s
Pushpanjali Buildcon India Pvt. Ltd., Pushpanjali Palace,
Delhi Gate, Agra under Section 73 (1) of the Chapter V of
the Finance Act, 1994 read with section 68 of Chapter V of
the Act ibid and rule 6 of the Service tax Rules, 1994.
(2) I also confirm the demand of Rs 11,97,166.00 (Rupees
eleven lakh, ninety seven thousand, one hundred and sixty
six only) of service tax in lieu of providing the services
under the category of "Construction of Complex" against
the above said party under Section 73 (1) of Chapter V of
the Finance Act, 1994 read with section 68 of Chapter V of
the Act ibid and rule 6 of the Service tax Rules, 1994.
(3) I also confirm demand of interest at applicable rates for
the relevant period till the payment of tax under Section
Service Tax Appeal Nos.70115, 70110 &
6 70109 of 2015
75 of Chapter V of the Finance Act, 1994 against the party
M/s Pushpanjali Buildcon India Pvt. Ltd., Pushpanjali
Palace, Delhi Gate, Agra.
(4) I do no impose penalty under Section 76 and 77 (2) of
Chapter V of the Finance Act, 1994 upon M/s Pushpanjali
Buildcon India Pvt. Ltd., Pushpanjali Palace, Delhi Gate,
Agra as the penalty under Section 78 is being imposed.
(5) I also impose a penalty of Rs 10,000.00 (Rupees ten
thousand only) under Section 77 (1) (a), 77 (1)(b) and
77(1)(e) of Chapter V of the Act ibid for violation of the
provisions of Section 68, 69 & 70 of the Finance Act, 1994
and Rule 4,6 & 7 of the Service tax Rules, 1994 upon M/s
Pushpanjali Buildcon India Pvt. Ltd., Pushpanjali Palace,
Delhi Gate, Agra.
(6) I also impose a penalty of Rs 2,32,29,381.00 (Rupees two
crore, thirty two lakh, twenty nine thousand, three
hundred and eighty one only) under Section 78 of Chapter
V of the Act ibid for failure to pay service tax and for
suppression of facts and value of taxable service with
intent to evade payment of service tax contravening the
provisions of Section 68 and 73 of the Act ibid read with
Rule 6 of the rules ibid upon M/s Pushpanjali Buildcon
India Pvt. Ltd., Pushpanjali Palace, Delhi Gate, Agra.
(7) I also impose a late fee of Rs 20,000.00 (Rupees twenty
thousand only) upon M/s Pushpanjali Buildcon India Pvt.
Ltd., Pushpanjali Palace, Delhi Gate, Agra under Section 70
(1) read with Rule 7(c) of the Service tax Rules, 1994.
2.1 Acting on the intelligence searches were conducted at the
office and residential premises of Shri Mayank Agarwal, Director
was conducted on 22.03.2011. In his statement recorded on
same day, Shri Mayank Agarwal stated:
Four firms namely M/s Pushpanjali Construction Pvt. Ltd.,
M/s Krishna Kanha Shelter Pvt. Ltd., M/s P P Buildcon Pvt
Ltd., M/s Pushpanjali Buildcon (I) P Ltd. Were operating
from the common premises. Each of the firm is engaged in
Service Tax Appeal Nos.70115, 70110 &
7 70109 of 2015
providing construction services and selling and purchasing
land.
He is managing the affairs of all the four firms.
They receive the payments for the services provided by
them to their customers both in cash and by cheques.
Payments in some cases is received in advance and are
based on negotiations and terms agreed with their
customers.
Details of the advances received is being submitted and
they have already paid Service Tax to tune of Rs
22,26,824.00 along with interest on the advances received
by them after 01.07.2010.
Due to lack of funds they have short paid the service tax of
Rs 50,03,231.00 and they will deposit the same.
2.2 After completing the scrutiny of records both physical and
electronic recovered during the search further statements of the
Directors in the four firms were recorded during the course of
investigations. On completion of investigations four show cause
notices identically worded were issued to the firms in which Shri
Mayank Agarwal is Director.
2.3 These show cause notices asked the appellants to show
cause as to why:
Service tax short paid or not paid by them during the
period from 2007-11 should not be demanded and
recovered from them;
Interest at appropriate should not be recovered from
them as per Section 75 of the Finance Act, 1994;
Penalty should not be imposed upon them under
Section 76, 77(1)(a), 77(1) (b), 77 (1) (e), 77 (2) and
78 of the Finance Act, 1994;
Late fees should not be imposed upon them as per
section 70 (1) read with Rule 7 (c) of the Service tax
Rules, 1994.
Service Tax Appeal Nos.70115, 70110 &
8 70109 of 2015
2.4 These show cause notices were adjudicated against the
three appellants before us as per the orders referred in para 1
above.
2.5 Show cause notice issued to M/s Pushpanjali Constructions
(P) Ltd. Was adjudicated vide Order in Original No AGA-EXCUS-
000-COM-004-15-16 dtd 20.08.2015.
2.6 Aggrieved all four party's filed appeal to CESTAT.
2.7 Appeal No ST/70108/2015 was decided by the tribunal
vide Final Order No 70028/2019 dated 08.01.2019 holding as
follows:
"6. The Revenue's entire case is based upon the entries
picked up from the balance sheet without further
corroboration of fact of services by other evidences. The
appellant's plea that the figures reflected in the balance
sheets were the loans availed by them from their sister
concern is required to be examined and verified seriously.
Further the fact that the appellant has returned a part of
the said loans is also required to be examined. For the said
purpose we deem it fit to set aside the impugned order
and remand the matter to the adjudicating authority for
fresh adjudication. Needless to say that the appellant
would be given an opportunity to establish their case and
are at liberty to contest the demand on any issue by
referring to and relying upon the precedent decisions.
7. Appeal is thus allowed by way of remand."
2.8 We are thus concerned with the appeals of the remaining
three appellants.
3.1 We have heard Shri Dharmendra Srivastava, Chartered
Accountant, for the appellants and Shri Sarweshwar T Khairnar,
Authorized Representative for the revenue.
3.2 Arguing for the appellants learned counsel submits -
Appellants are engaged in providing the taxable service
under the category of "Construction of Complex Services".
Service Tax Appeal Nos.70115, 70110 &
9 70109 of 2015
These services were made taxable with effect from
01.07.2010.
Search were made of their premises on 22.03.2011 and
the Show Cause Notice have been issued to them on
23.10.2012.
The matter in case of M/s Pushpanjali Construction Pvt.
Ltd. Was remanded back by the tribunal to the original
authority. Principal Commissioner has in de-novo
proceedings held as follows:
(1) "I hereby confirm the demand of Service Tax
amounting to Rs 45,66,486.00 (Rupees Forty Five
lakh Sixty Six Thousand Four Hundred and Eighty Six
only) [Rs 40,92,597/- + Rs 4,51,854/- + Rs 22,035/-
under the category of 'Construction of Complex',
'Renting of Immovable Property' and 'Transport of
Goods by Road' respectively] against Noticee under
Section 73 (1) of the Act and rest of the demand of
Service Tax made in the impugned SCN is hereby
dropped. As the Service Tax amounting to Rs
45,44,451/- has already been deposited by the
Noticee through various Challans as discussed above,
the same is appropriated against the confirmed
amount of Service Tax;
(2) I also confirm demand of interest against the Noticee
at applicable rates for the relevant period till actual
payment of tax under Section 75 of Act. The amount
of Rs 2,67,516/- (Rs 55,049/- + Rs 42,117/- + Rs
1,70,350/-) deposited by the notice is appropriated
against the interest liability, as discussed above.
(3) I also impose a penalty of Rs 11,80,626.00 (Rupees
Eleven Lakh Eighty Thousand Six Hundred and Twenty
Six only) upon the Noticee under Section 78 of the Act
as discussed above.
(4) I also impose a penalty of Rs 30,000.00 (Rupees
Thirty Thousand only) upon the Noticee under Section
77 (1) (a), 77 (1)(b) and 77(1)(e) of the Act;
Service Tax Appeal Nos.70115, 70110 &
10 70109 of 2015
(5) I also impose a late fee of Rs 10,000.00 (Rupees Ten
Thousand only) upon Noticee under Section 77 (2)
read with Section 70 of the Act and Rule 7(c) of the
Rules;
(6) I do not impose penalty under Section 76 of the Act
upon Noticee, as discussed above;"
Demands made in the show cause notice and confirmed by
the impugned order are summarized in table below:
Party Construction of Complex
Service GTA Total
Paid
before
filing of
return Advance
and s Inter unit Admitt Against
issuance against Transacti ed and supply
of SCN Land ons Paid of Gitti
2010-11 2010-11 2007-11 2007-11
1 2 3 4 5 6 7
PP 125861 5429446 5629030
Buildcon 624145 9 0 11804 101280 8
Krishna 208331 1315141 1549223
Kanha 0 45887 2 45909 165716 4
Pushpanj
ali 2189170 2322938
Buildcon 280799 916367 1 3914 136600 1
From the table above it is evident that the appellants do
not dispute the demands admitted by them and already
paid by them (Column 2 and 5). However in the cases
were they have admitted and paid up these demands,
before the due date of filing the service tax returns for the
relevant period and much before the issuance of show
cause notice. When the amounts had been paid much
before the date of filing the returns and all the transactions
were duly reflected in book of account, the charge of
suppression made in respect of these cannot be sustained.
In respect of demand indicated in column 3, appellants
have from the day one of investigation have stated that
the amounts shown as advance under this category, are
towards the sale of land. These transactions are reflected
in their books of accounts as "Other Current Liabilities -
Service Tax Appeal Nos.70115, 70110 &
11 70109 of 2015
Advance from Customers". The sale deeds against which
these advances were recovered clearly show that these
advances were against sale of land, and are not towards
the "Complex of Complex Services" provided by them.
Hence the demands made under this head are without any
merits.
The demands have been made on the intercompany
transaction - intercompany advances given by the
appellants to their group company without specifying as to
how these advances were in respect of the "Construction
of Complex Services" provided by them. The demand has
been confirmed against such intercompany transactions
from 2007 onwards. Treating these transactions to be for
the construction of complex services which became taxable
from 01.07.2010. Appellant has produced before the
Commissioner, specific Board Resolution authorizing the
company to receive inter-corporate loan. It is also evident
from the audited balance sheets of the company that
during the period 2010-11 there is no outstanding balance
of inter-corporate loan. Hence the demand made as
indicated in column (4) needs to be set aside.
From the documentary evidence which has been produced
by them along with appeals filed it is evident that amount
on which service tax as indicated in column (6) is
demanded is in respect of transportation of Gitti and
hence is not leviable to service tax. The adjudicating
authority has confirmed this demand stating that
appellants did not produced the purchase order.
In case referred earlier in de novo proceedings taking note
of the submissions made, Commissioner has dropped the
similar demands as in column (4) and (6).
Appeal be allowed to the extent of setting aside the
demand of Service Tax as indicated in column (3), (4) and
(6)
3.3 Learned authorized representative reiterates the findings
as recorded in the impugned order.
Service Tax Appeal Nos.70115, 70110 &
12 70109 of 2015
4.1 We have considered the impugned orders along with the
submissions made in appeal and during the course of argument:
4.2 There is no dispute in respect of the demands made by the
impugned order as indicated in Column (2) and (5) of the table
in para 3.2 above. Appellants have admitted the tax liability and
have already paid the same. We are now only left with the three
demands as follows made against the appellants:
I. Demand against the amount received as advances towards
the sale of land which department claims were the
advances received towards the Construction of Complex
Services;
II. Demand against the amounts which are inter-corporate
loans and advances amongst the sister concerns;
III. Demand against amount received towards transport of
good services, which appellant claim to have been
payment made towards purchase of gitty and stone dust.
4.3 Since all the show cause notices and the impugned orders
are identically worded we refer to the Order in Original No AGA-
EXCUS-000-COM-006-15-16 in our discussions of the issues. In
respect of the disputed demands Show Cause Notice record as
follows:
"24. And whereas as discussed earlier, with effect from
01.07.2010, the activity of construction provided by
builder/ promoter/ developer to the prospective buyer has
been deemed to be taxable service and any advance/
consideration received from the buyer/ purchaser of flat of
the complex shall be chargeable to service tax. As the
party had constructed flats for their customers and
charged payments/ advance from them, the entire amount
received from the buyers is chargeable to tax on the value
after allowing abatement of 75%, where the cost of land is
included.
The party has also been engaged as contractor in
providing the construction services to their customers and
for that they have received the amount on which they
Service Tax Appeal Nos.70115, 70110 &
13 70109 of 2015
were liable for payment of Service Tax. The taxable value
for the tax liability has been calculated on the value after
allowing abatement of 67% as provided in the Notification
No 01/2006-ST dated 01.03.2006.
....
25. And whereas, another detail as Chart III has been prepared on the basis of amounts received by the party as per Bill Books/ Receipt Books resumed from their premises. The chart (Annexure E-2) prepared by the officers on the basis of the resumed Bill Books/ receipt books was shown to the party on 24.05.2012. the party clarified that the entries shown in the chart pertain to advances taken against the land but, they could not produce documentary evidence in support of their submission. Therefore, in absence of any evidence it appears that the advance taken for the sale of land is nothing but the advance taken for construction of flat/ houses on which service tax is applicable. A detailed chart showing the receipt of advances against sale of land, where party could neither produce the copy of registry nor could produce any other documentary evidence is detailed below:
Chart - III S Receipt Date Amount Value for ST ES HSC Total No No in (Rs) ST @ Service 33% Tax .... .... .... .... .... .... .... .... ....
Total 37029100 12219603 1221960 24439 12220 1258619 Thus, from the aforesaid chart-I, II, III, it appears that the party had not paid Service Tax to the tune of Rs 18,82,764/- (Service Tax Rs 18,27,927/-, Education Cess Rs 36,558/- and Secondary education cess -Rs 18,282/-) in respect of "Construction of Complex" service and the same is demandable and recoverable from them.
Service Tax Appeal Nos.70115, 70110 & 14 70109 of 2015
26. And whereas, it appears that the party was engaged in providing services of 'Construction of Complex' but, they did not provide any documents/ evidence to the department to substantiate the facts stated in their statements as discussed above. The officers also noticed that there have been inter unit transactions among the four companies of the same group namely a) M/s Pushpanjali Construction (P) Ltd., (b) M/s Krishna Kanha Shelters (P) Ltd., (c) M/s P P Buildcon (P) Ltd., (d) M/s Pushpanjali Buildcon (I) (P) Ltd., operating from the same address i.e. Pushpanjali Palace Delhi Gate, Agra. On scrutiny of balance Sheets for the F Y 2007-08 to 2010-11 (Rud 27) it was noticed that a huge amount of advances/ loans were given by the aforesaid 4 companies to each other as shown under the head of 'other liabilities'. Further, even if the tabulation made by the officers on the basis of Cheque Deposit/ cheque Issue Register, it was noticed that there were huge amount of inter unit transactions among themselves. The party was asked to submit the documentary evidences regarding the inter unit transactions and agreements between company to company vide office letters dated 11.10.12 & 12.10.12. However, the party failed to produce any evidence for segregation of accounts. Therefore, it appears that the inter-unit transactions were made to manipulate the figures of transactions with intent to evade payment of service tax. On the basis of details of entries tabulated in the above said Annexure-A and Annexure-B and on co- relation of the inter companies transactions with respective balance sheets of the company, a chart has been prepared, which is annexed as Annexure C to this SCN, which shows that the party has not paid Service Tax on the "Construction of Complex' services to the tune of Rs 5,42,94,460/- as tabulated below:
Service Tax Appeal Nos.70115, 70110 & 15 70109 of 2015 Financial Value of Rate Service Edu Cess HEC Total Year Taxable of Tax Service Service service Tax after tax abatement 2007-08 86152607 12% 10338313 206766 103383 10648462 2008-09 119365575 12% 14323869 286477 143239 14753585 2009-10 121365386 10% 12136539 242731 121365 12500635 2010-11 159143474 10% 15914347 318287 159143 16391777 Total 486027042 52713068 1054261 527131 54294460 From the above it, it appears that the party had not paid the service atx on the "Construction of Complex services"
amounting to Rs 5,42,94,460/- which is liable to be demanded and recovered from them.
27. And whereas, on the scrutiny of the records of the party, it was also noticed that the party was paying freight (inward) on which as service recipient the party being a private limited company was liable to pay Service Tax under the head 'Transport of Goods by Road Service'. But, it appears that the party has not paid any Service Tax on the 'Transport of Goods by Road Service' as defined under Section 65 (105) (zzp) of the Finance Act, 1994 as amended.
28. The 'Goods Transport Agency" is defined .....
29. ...
30. And whereas on the absis of the details of freight submitted by the party a chart (Annexure-D) showing the year wise details of freight paid by the party and the calculation of service tax under the category of under "Transport of Goods by Road Service" has been prepared:-
Service Tax Appeal Nos.70115, 70110 & 16 70109 of 2015 Financial Freight Value of Service Edu HEC Total Year Taxable Service Tax Cess Service after Tax abatement @ 75% 2007-08 300 75 9 0 0 9 2008-09 11605 2901 348 7 3 359 2009-10 158016 39504 3950 79 40 4069 2010-11 286483 71621 7162 143 72 7377 Total 456404 114026 11461 229 115 11804
31. And whereas, on going through the charts prepared on the basis of cheque issue register and summarized in Annexure B, for the period 2007-08 to 2010-11, it revealed that payment of freight to M/s Shanker Road Carrier has been made by the party but the same has not been shown in the details of freight submitted by the party in the Annexure D mentioned above. The details are tabulated as below:
Financial Freight Value of Service Edu HEC Total Year Taxable Tax Cess Service Service after Tax abatement @ 75% 2007-08 789338 197335 23680 474 237 24391 2008-09 619581 154895 18587 372 186 19145 2009-10 833896 208474 20847 417 208 21473 2010-11 1408606 352152 35215 704 352 36272 Total 3651421 912856 98330 1967 983 101280 From the above, it appears that the party had not paid the service tax on the 'Transport of Goods by Road Service' to the tune of Rs. 11,804/- + 1,01,280/- = 1,13,084/- which is liable to be demanded and recovered from them."
Service Tax Appeal Nos.70115, 70110 & 17 70109 of 2015 4.4 For determining these issues against the appellant Commissioner has in the impugned orders observed as follows:
"ISSUE OF DEMAND OF RS. 12,58,619.00 (DETAILED IN CHART -III) On this issue, I find that the party has pleaded that the amount represents advance received against sale of land and in their written submission dated 04.09.2014 stated that once all the Non RUDs are made available to them, they will produce documentary evidences to satisfy that the entire aforesaid gross receipt represent, advance received against the sale of land. Moreover. The party also pleaded that certain advance receipts, that are included in the gross receipts, may have also been refunded back to the customers, wherein the deal of sale of land has not materialized and details of such transactions can only be provided after receipt of all the copies of Non Ruds forming part of the instant case. I observe that all the Non RUD's were received by the party on 29.05.2015 but they did not submit any documentary evidence in their contention, even after lapse of more than two months time and at no point of time the party submitted such documentary evidences in support of their contention. Even at the time of personal hearing the party did not submit any defense or any document evidencing their contention. As such, I am of the view that the plea taken by the party is nothing except a method adopted by them to suppress the actual value of taxable amount received by them as advance from their customers for construction of flat/ house in the garb of advances received against sale of land, I also find that the party neither during investigation nor at later stage, at any point of time could produce any substantial documentary evidence in support of their contention that the gross receipt represent advance received against sale of land, as such allegation of suppression of taxable amount received by the party for construction of flat/ Service Tax Appeal Nos.70115, 70110 & 18 70109 of 2015 houses in the garb of advances received against sale of land stands proved and demand of service tax amounting to Rs 12,58,619.00 is liable to be confirmed and interest at applicable rate is also liable to be recovered under the provisions of Section 73 & 75 of the Act.
ISSUE OF DEMAND OF RS. 5,42,94,600.00 In the Demand Cum Show Cause Notice, it has been alleged that huge amount of advances/ loans were given by the party and M/s Pushpanjali Construction (P) Ltd.; M/s Pushpanjali Buildcon (I) (P) Ltd.; M/s Krishna Kanha Shelters (P) Ltd.; (operating from the same address i.e. Pushpanjali Palace Delhi Gate, Agra) to each other as shown under the head of "other liabilities". From the records it was noticed that there was huge amount of inter unit transactions among themselves. Even on being asked to submit the documentary evidences regarding inter-unit transactions and agreements between company to company the part failed to produce any evidence for segregation of accounts; therefore, the inter unit transactions were made to manipulate the figures of transactions with intent to evade payment of service tax. I find neither during investigation of case nor at later stage i.e. either at the time of submitting written brief dated 04.09.2014 or at the time of personal hearing the party was able to produce any documentary evidence, clearly showing segregation of accounts in support of their contention. As regards, party's contention that they have made arrangements of inter unit transactions, I find that the party has submitted the copy of resolutions passed on various dates in their company wherein it has been mentioned 'to grant loans and make investments of such amount(s)' but failed to produce such resolution passed by their sister concerns. Further, they have also failed to produce any documentary evidence establishing that the said loans/ funds were required by the other unit/ Service Tax Appeal Nos.70115, 70110 & 19 70109 of 2015 company or vice versa. The party's contention that the department has failed to produce any positive evidence to prove that such inter unit transactions in actually represents service consideration and that too for construction of complex services, I find that in earlier Para(s), it has been established that the party is providing construction of complex services to its clients and to manipulate to records with intent to evade payment of service tax they have shown in their records the receipt of amounts as advances received against sale of land but failed to produce any concrete document in support of their contention, even for their submissions that some advances may have also been refunded back in case the deal of sale of land has not materialized, which clearly establishes that the party manipulated the records with intent to evade payment of service tax. Here also the party failed to produce any concrete documentary evidence showing clear segregation of accounts. Thus I am of the view that allegations leveled in the impugned show cause notice stand substantiated and the demand is liable to be confirmed under the provisions of Section 73 of the Act and interest is demandable under Section 75 of the Act.
ISSUE OF DEMAND OF RS. 1,13,084.00 On the instant issue service tax liability on "Transport of Goods by Road" service the party has accepted the demand of Rs 11,804.00 and contested the demand of Rs 1,01,280.00 on the ground that amount of taxable value shown against the said demand relates to supply/ purchase of material from the said firm and the department has presumed that amounts paid to M/s Shanker Road Carrier represents freight merely on the basis of name of firm. They also submitted the sample invoices issued by the said party. On going through the sample invoices, submitted by the party, I find that all the invoices were issued for "Trips of Gitti/ Stone dust" and Service Tax Appeal Nos.70115, 70110 & 20 70109 of 2015 charges were made @ Rs 19.00 to Rs 30.00. I also find that in a invoice issued on 31.03.2011 for Rs 3,22,000.00, it is mentioned that '1 trip of Gitti @ Rs 30.00: 02 trip of Gitti @ Rs 30.00; 1 trip of Stone Dust @ Rs 22.00 and 8 trips of Stone Dust @ Rs 22.00. Moreover on the said it is mentioned "PO-1378, PO 1387, PO 1363, PO-1380' which represents Purchase Order Number against which the goods were received. If the party's contention was correct, the party must have produced the said purchase order in support of their contention which may prove that the said supply order was issued in favour of M/s Shanker Road Carrier, but the party failed to produce such purchase order. If the party produces the said purchase order, the said purchase order clearly establishes to whom the order for supply of goods were issued and who were given the job of transporting the same. Thus party has intentionally not produced the said purchase order in their support and suppressed the correct taxable value under the category of Transport of goods by Road service with an intent to evade payment of appropriate service tax due thereon, thus the demand is liable to be confirmed under the provisions of Section 73 of the Act and interest is demandable under Section 75 of the Act."
4.5 We have earlier noted that the matter in the case of M/s Pushpanjali Buildcon another sister concern of the appellants to whom similar show cause notice was issued and adjudicated by the similarly worded order in original No AGA-EXCUS-000-COM- 004-15-16 dated 20.08.2015, was subject matter in appeal No ST/70108/2015. This appeal was decided by the tribunal vide Final Order No 70028/2019 remanding the matter back to adjudicating authority. Adjudicating authority has in remand proceedings on reconsideration, of these three issues observed as follows:
"25.2 Issue of Demand of Rs 1,75,587.00 (Detailed in Chart - II of para 26 of SCN) Service Tax Appeal Nos.70115, 70110 & 21 70109 of 2015 I find that the Noticee pleaded on this issue, that the entire aforesaid gross receipt of Rs 51,65,850.00 represents advance received against sale of land. In support of their claim, the Noticee submitted copies of all such receipts with the relevant customer ledger A/c, copy of letter of confirmation showing receipt against sale of Plot (land) and in case the Plot finally handed over to buyer, copy of Registry/ Sale Deed. I observe that all the receipts issued by Noticee to respective customer/ buyer invariably show the name of residential colony and Plot Number with details of mode of payments etc. The concerned Ledger A/c show the entire transactions between the Noticee and customer, including the balance amount (if any) received by Noticee from customer after search conducted by the officers. Further, in some cases, where entire consideration was not received from customer, sale Deed was not executed and in one case amount was subsequently refunded to customer. I have perused all such receipts, Ledger A/c, Sale deed etc. and find that the amounts received by Noticee and shown in Chart - III of the impugned SCN are actually against the sale of and there is no service element in such transactions. I am explaining some of transactions for the sake of clarity. In the case of receipt No 6597 dated 09.09.2010 issued to Ritu Vishnoi for Rs 60,000/- for Plot No 170 in Pushpanjali Eco City. As per the receipt the said amount was paid to Noticee through Cheque No 95974 dated 09.09.2010 of ICICI bank and in the registered sale deed of said residential Plot No 1700, said cheque number is mentioned. In another case of Receipt No 6721 dated 15.10.2010 for Rs 50,000/- issued to Pramila Sharma for Rs 50,000/- for Plot No 116 in Pushpanjali Homes and paid through Cheque No 130788 dated 14.10.2010 of Bank of Baroda. The said cheque number is also mentioned in the registered sale deed for residential Plot No 116 in the said colony. From careful perusal of all the documents, it is Service Tax Appeal Nos.70115, 70110 & 22 70109 of 2015 evident that the entire receipt of rs 51,65,850/- mentioned in Chart - III of the impugned SCN pertain to sale of land/ plots, which did not involve any service element. Therefore, demand of Service Tax calculated in Chart - III of the SCN is not sustainable against the Noticee.
26. Issue of demand of Rs 3,72,55,357.00 (Para 27 of SCN).
In the impugned SCN, it has been alleged that huge amount of advances/ loans were given by the Noticee and M/s Krishna Kanha Shelters (P) Ltd.; M/s P P Buildcon (P) Ltd. And M/s Pushpanjali Buildcon (I) (P) Ltd. (operating from the same premises i.e. Pushpanjali Palace, Delhi Gate Agra). From the records it was noticed that there were huge amount of inter-unit transactions among themselves. Even on being asked to submit the documentary evidences regarding inter unit transactions and agreements between company to company, the Noticee failed to produce any evidence for segregation of accounts, therefore it was alleged in the SCN that the inter unit transactions were made to manipulate the figures of transactions with intent to evade payment of Service tax on Construction of Complex Service. Further, the Hon'ble CESTAT in its Final Order observed that, "The Revenues entire case is based upon the entries picked up from the balance sheet without further corroboration of fact of services by other evidences. The appellant's plea that figures reflected in the balance sheets were the loans availed by them from their sister concern is required to be examined and verified seriously. Further the fact that the appellant has returned a part of the said loans is also required to be examined."
26.1 I find that during the present remand proceedings, the Noticee pleaded that the Dept. has grossly failed to indicate the gross amount on which present demand is created; failed to indicate as to what percentage of abatement is allowed while computing the taxable value of Service Tax Appeal Nos.70115, 70110 & 23 70109 of 2015 Rs 34,90,31,206/- (for the period from 2007-08 to 2010-
11); failed to indicate as to what is the absis of taking abatement percentage; failed to indicate as to which kind of construction services have been rendered by the Noticee so as to get covered under the definition of 'Construction of Complex' as defined under Section 65 (30a) of the Act so as to allege service tax demand for the period prior to 0-..07.2010. They further pleaded that these transactions are 'Inter Corporate deposits' within the provision of the companies Act and the Department itself has accepted in SCN that these are 'inter unit transaction', therefore, these are transactions in money in the form of loan/ advances, which are out of purview of Service tax. In support of their contentions the Noticee submitted year wise details with copies of respective ledger A/c of advances given and loans taken from their group companies, and closing Balances in respect of each companies is shown and tallied with the Schedule 7 (Other Advances) and Schedule 8 (Other Liabilities) of Balance Sheets of respective financial years. Further, the Noticee also submitted copies of Resolutions passed board of Directors of each of the group companies every year, including Noticee. I find that the details of loan/advances provided by Noticee are also part of Balance Sheet of Noticee and clearly reflected in Balance Sheets of every financial year. Further from the ledger A/c of such Inter-unit/ inter corporate transactions it is evident that these are simply transaction in money between the group companies. I have also perused the copies of Board's Resolutions passed by each group company every year, wherein similar language was used in resolutions of each company granting permission to the board of directors of company to grant loan and make investments of such amount(s) in accordance with the provisions 372 (A) of the Companies Act, 1956 as may be decided from time to time without charging/ paying interest on such loan/ advances given to associate/ sister concern/ group Service Tax Appeal Nos.70115, 70110 & 24 70109 of 2015 companies. From the copies of these Board's Resolution it is evident that these inter corporate transactions were carried out under the provisions of Companies Act, 1956. I also find that that as per details provided by Noticee with their defence submissions and balance Sheet of Noticee relied upon by the department for the F Y 2010-11, there was no balance left either on loan side or advance side in respect of M/s Krishna Kanha Shelters (P) Ltd.; M/s P P Buildcon (P) Ltd. And M/s Pushpanjali Buildcon (I) (P) Ltd, which shows that all the pending dues of loans were paid back by the respective company to the other group company. However, as far as the Noticee is concerned, in the F Y 2010-11 they have extended advance to other companies, but the name of the above referred three companies was not reflected in the Balance Sheet of 2010- 11 under the Heads of Loan or Advances. In the SCN, the Department has relied upon Cheque Issue and Cheque Receipt Registers of Noticee and accordingly certain details were prepared, wherein amounts have been transferred to the account of other group companies and vice versa; and only considered the inter corporate transactions of these three companies with the noticee for calculation of service tax liability under 'Construction of Complex' service. On close scrutiny of all the relevant records I do not find any evidence showing any service element among the group companies. The Hon'ble Tribunal has also directed to examine the fact that the appellant has returned a part of the said loans. I have also examined the said fact with the Balance Sheets, respective ledger A/c and other details submitted by Noticee now with their defence submissions. I find that these type of inter-corporate transactions were carried out by Noticee during the impugned period i.e. 2007-08 to 2010-1, but in financial year 2010-11, the closing balance in respect of these three companies and Noticee is Nil which shows that all the loans among these group companies were settled during the F Y 2010-11 Service Tax Appeal Nos.70115, 70110 & 25 70109 of 2015 itself, thus I find that the transaction relied upon by the Department were merely transaction in money without any service. There is not an iota of evidence to show that these transactions were either payments for 'Construction of Complex service' or payments received by Noticee for providing such services to group companies. 'Construction of Complex' service involves not only service but a major portion involves goods which are tangible and visible. The department could not produce any evidence to the effect that where such constructions were carried out; who was the buyer of residential units, when the sale deeds of such dwelling units were executed., in absence of such evidences, it cannot be ascertained that such inter- corporate transactions were considerations for 'Construction of Complex' service. Moreover the fact is on record that such inter-corporate loans and advances between these three companies and Noticee were settled later on.
26.2 I have also examined the relevant documents, which have been relied upon by the Department to calculate the Service tax liability of Rs 3,72,55,357.00. These figures were extracted from cheque Issue and Cheque Receipt registers of Noticee and from the 'other Liabilities' shown in Balance Sheet. For better understanding of the method of calculation adopted in SCN, a part of calculation chart in respect of one of the group company relied upon in the SCN is reproduced in Table A below:
TABLE-A Sl Financial Receipts Last F Y Total Current Difference No Year from M/s liability of liability of Pushpanjali M/s M/s Buildcon Pushpanjali Pushpanjali (I) (P) Ltd Buildcon Buildcon (I) (P) Ltd (I) (P) Ltd 1 2 3 4 5 (3+4) 6 7 (5-6) 01 2007-08 2324000 10027760 12351760 10042620 2309140 02 2008-09 1650000 10042620 11692620 18520658 03 2009-10 16559700 18520658 35080358 0 35080358 04 2010-11 300000 0 300000 0 300000 20833703 38591042 59424738 28563284 35380358 Service Tax Appeal Nos.70115, 70110 & 26 70109 of 2015 On perusal of Table A, it is noticed that figure shown in Col.4 and Col.6 are figures of 'Other Liability' shown in Balance Sheets of Noticee for the respective years. As per SCN, the figures in Col. 3 appears to be taken from Cheque Receipt register of Noticee. However, on meticulous calculation from the documents relied upon in the case, the figures shown in Col.3 could not be identified that how such amount was calculated and taken for calculation of tax liability of Noticee. Further, as evident from the figures of FY 2008-09 of Table-A, in case the amount in Col.6 exceeded from the amount in Col.5, the difference in Col.7 was considered as Nil in the SCN without any reasoning. On the basis of such calculation methodology the amount calculated in Col.7 is considered as gross receipt towards providing 'Construction of Complex service'. Moreover, only the amount received by Noticee from group companies was taken into account and any amount paid back by Noticee has not been considered.
Similar calculations have been made in respect of other two group companies namely M/s P P Buildcon and M/s Krishna Kanha Shelters (P) Ltd. I however find that as per ledger A/c of said group company, namely M/s Pushpanjali Buildcon (I) (P) Ltd. In the FY 2007-08 had received Rs 26,47,600/- and paid back Rs 26,32,740/-; in FY 2008-09 Noticee had received Rs 1,17,71,600/- and paid back Rs 32,93,562; in F Y 2009-10 the Noticee has received Rs 1,68,20,629/- and paid back Rs 3,53,41,287/- to the said group company and thus the liability of Noticee towards said group company became Nil in the F Y 2009-10. This fact is also evident from the Col.6 of Table A as well as from Balance Sheet/ Ledger A/c. I thus find that the gross receipts arrived at in the SCN is the amount of loan taken by Noticee from its group companies which is also reflected in the balance sheets of Noticee under the Head of 'Other Liabilities'. The methodology adopted in SCN for calculation of tax liability is baseless and without any footing to Service Tax Appeal Nos.70115, 70110 & 27 70109 of 2015 establish that there was provision of any service in such transactions.
26.3 In the calculation chart referred in above Para, another calculation was made in the said chart, wherein total receipts of Noticee reduced by the total amount transferred to group companies was considered as gross receipt towards providing the services of Construction of Complex as shown in Table-B as under:
TABLE-B Sl Financial Total Receipts in Total Net Receipts in No Year current Financial Year Transfer Current Financial Year 1 2 3 4 5 01 2007-08 122397790 14534000 107863790 02 2008-09 79067599 21322700 57744899 03 2009-10 273807558 34631623 239175935 04 2010-11 522749933 4213819 518536114 Total 998022880 74702142 923320738 I find that the total receipts shown in Col 3 of Table B was calculated from the details prepared on the basis of Cheques Receipt register of Noticee for the respective financial years and amount shown in Col 4 was calculated from the details of Cheque issue register and according the amount in Col 5 was considered as Gross Receipt against providing 'Construction of Complex service'. Though there is no clarity from the calculation that which amount was considered as 'Total Transfer in Col. 4, however it appears that the cheques issued by the Noticee to its group companies was considered as 'transfer' of amounts. To check the amount shown in Col.4, the figures from details of Cheque issue register are now again calculated and details are tabulated as under:
TABLE-C Sl. Name of Amount (in Rs) transferred to group companies No. the Group Company to which 2007-08 2008-09 2009-10 2010-11 TOTAL the amount transferred 1 M/s 0 180000 29251764 124201 29555965 Krishna Service Tax Appeal Nos.70115, 70110 & 28 70109 of 2015 Kanha Shelters (P) Ltd.
2 M/s P P 5279000 12863212 35258309 3580000 56980521 Buildcon (P) Ltd 3 M/s 2320000 5104000 30095110 14612000 52131110 Pushpanjali Buildcon (I) (P) Ltd Total 7599000 18147212 94605183 18316201 138667596 I find that there is huge difference in the amount of Total Transfer shown in Table _B and amount transferred to other group companies for respective years calculated in Table-C. Thus, basis of determining of gross receipts in the SCN is totally misconceived and baseless. I further find that it is fact on records that in the case of the builders engaged in the construction of complex and receiving advances from prospective buyers of house/ apartment, the service tax liability came into effect only from 01.07.2010 and prior to this date, receiving of such advances was not considered as Service of Construction of Complex and Service Tax on advances received w.e.f 01.07.2010 had been separately calculated in the impugned SCN in chart - I & II. I further find that as per details of Cheque issue register the Noticee had issued Cheques for the toatal amount of r s 16,00,09,626/- during 2007-08 and as per such details, cheques were issued for purchase of iron, cement, sanitary, marble, wooding, bricks etc. Hence, such receipts cannot be considered as amount received for providing "construction of Complex Service" during the impugned period. I thus find the calculation made in the SCN is vague, irrelevant and without any basis and the demand of Service Tax amounting to Rs 3,72,55,357.00 raise the impugned SCN is not sustainable and liable to be dropped.
28. Issue of demand of Rs 1,85,198.00 (para 33 & 34 of SCN) Onn the instant issue of Service Tax liability on 'Transport of Goods by Road service' the Noticee has accepted the Service Tax Appeal Nos.70115, 70110 & 29 70109 of 2015 demand of Rs 22,035.00 and contested the demand of Rs 1,63,163.00 on the ground that amount of taxable value shown against the said demand relates to supply/purchase of material from M/s Shanker Road Carrier and the department has presumed that amounts paid to the said party represents freight merely on the basis of name of the firm and submitted sample bills issued by the said party and copies of Ledger A/c of M/s Shanker Road Carrier for the period from 2007-08 to 2010-11 in their support. I find that these bills are issued on Letter Head of M/s Shanker Road carrier, wherein they have charged amount on the basis of number of trips and quantity of gitty/ stone dust/ sand supplied by them viz. in a bill issued on 31.08.2007 for Rs 1,61,500.00 it is mentioned that '10 trips of Stone Dust q-500' @ Rs 16.00; '03 trips of Gitti q-500' @ Rs 19 and 2900 C/f Stone Dust shift from Push Town Shastripuram @ Rs 15.00. I observe that in these bills letter 'q' represent for quantity ad 500' represent '500 cubic feet' and on the basis of these narrations the said party has charged amount from Noticee. This type of measurement is also a general practice in these type of trade. Further, in the copies of Ledger A/c submitted by the Noticee, the narrations show that they have purchased "Chambal Sand/ Gitti" from the said party. Noticee has also submitted an affidavit dated 14.05.2019 of the proprietor of M/s Shanker Road Carrier, wherein he has declared that his firm is engaged in the trading of gitti & dust and they have supplied these goods to Noticee and he is not a good transport agent or transporter. All these records clearly establish that actually the noticee had purchased goods like gitti, sand, sand dust etc., from M/s Shanker road Carrier, thus the demand of Service tax of rs 1,63,163.00 on the amount paid by Noticee to M/a Shanker road carrier on the 'Transport of Goods by Road service' is not sustainable. However, the demand of rs 22,035.00 is accepted by Noticee but they claimed that Service Tax Appeal Nos.70115, 70110 & 30 70109 of 2015 this amount should be adjusted from the excess amount already deposited by them under 'Construction of Complex service' against the demand in Chart-I & II. I find that there was no excess deposit by Noticee rather they are required to deposit the short paid interest against demand calculated in Chart I & II. I thus find that the Noticee has intentionally suppressed the correct taxable value under the category of 'Transport of Goods by Road service' with an intent to evade payment of appropriate Service tax due thereon thus the demand of Service tax amounting to Rs 22,035.00 is liable to be confirmed under section 73 (1) of the Act along with interest under Section 75 of the Act."
I. Demand made against amounts received as advances received towards sale of land:
4.6 The demand made under this category has been confirmed by the Commissioner only for the reason that appellants have not produced the documents to establish their claim that these amounts were received by them towards sale of land. Appellants have constantly taken the stand that these amounts were received by them towards the sale of land. In para 16, Show Cause Notice records the statement dated 28.09.2012 of Shri Mayank Agarwal wherein he has stated that:
He had seen the panchnama dated 29/30.08.2012 drawn for the proceedings of taking printouts of the retrieved data and also put his signature on the panchnama and the 25 files and folders as mentioned in the annexure to the said Panchnama.
He had seen the said chart and stated that the transactions shown in the said chart appears to be in the nature of payments received against land. He shall give the complete details after going through their records within a week.
Appellants have before us produced some of the registered sale deed of land whereby the details payments received by them have been indicated giving the details of transactions made. In Service Tax Appeal Nos.70115, 70110 & 31 70109 of 2015 the show cause notice or in the order in original it has not been stated as why the revenue authorities have considered these amounts shown to be advances against the purchase of land by the appellant have been considered as advances against the provision of construction of complex service. Not in a single case which has been listed in the Chart - III in the Show Cause Notice, revenue authorities have during the investigation or at any stage thereafter have adduced any evidence to contradict the claim made by the appellant that these amounts were received by them as advances against sale of land. There is only presumption made without even verification of the documents which were resumed from the appellants. Appellants have throughout taken the same stand even during the course of investigation. The demand which has been made by the revenue merely based on the presumption made contrary to the evidences which were available cannot be sustained and needs to be set aside. It is settled principal in law that demand made on the basis of presumptions without any substantial evidence has to fail. In case of Bengal Beverages Pvt. Ltd. [2023 (383) E.L.T. 29 (Cal.)], Hon'ble Calcutta High Court has held as follows:
"6. The Learned Tribunal after considering the submissions made by the assessee as well as the revenue and perusing the entire records placed before it, pointed out that the allegation made against the assessee is only on the basis of figure work of the department without production of evidence for demand of reversal of Cenvat credit such as conducting of investigation on suppliers of raw materials, recording of input-output ratio etc. Further, the Learned Tribunal took note of the RG-23A Part 1 register which was produced before the Tribunal and a summary stock account and upon perusal of the same, the Tribunal has recorded the factual finding that the registers clearly show that raw materials are used in all three units of the assessee under the same excise registration in the same manufacturing complex. Further, the Tribunal has Service Tax Appeal Nos.70115, 70110 &
32 70109 of 2015 pointed out that the department has not objected to the inter unit transfer of input which was the consistent case of the assessee. The Tribunal also examined the sample stock account for pre-form submitted by the assessee and, in fact, a screen shot of the said stock account has been incorporated in the order passed by the Tribunal. After examining the facts and figures in the said stock account, the Tribunal pointed out that there is inter unit transfer from unit-3 to unit-1 which is included in the total issued quantity of unit-3; whereas the same is shown as inter unit receipt from unit-3 in unit-1 stock account and is also apart of total receipt of unit-1 and thereby the same will also be part of consumption of unit-1 in the column 'total issue'. Further, the Tribunal was satisfied with the inter unit transfer of raw material as captured by the appellant in the stock account is netted off while filing ER-6 returns as the same is for single excise registration number and all units are treated as one single assessee. Therefore, after being satisfied with the factual position, the Tribunal held that the assessee shown excess consumption of inputs in its stock records cannot be sustained. Furthermore, the Tribunal noticed that the adjudicating authority has also stated the finding as recorded by the Tribunal, but erroneously proceeded to confirm the demand on the alleged ground of incorrect challan numbers for transferring and receiving units. Further, before the Tribunal, the assessee had produced the chartered accountant's certificate showing the detailed reconciliation of each raw material type and the Tribunal has found that the adjudicating authority has incorrectly understood the total matter and erroneously proceeded to confirm the demand on irrelevant ground. Furthermore, the Tribunal had agreed with the submission made on behalf of the assessee that there is no allegation levelled against the assessee showing the excess procurement of inputs and there has been no investigation in this regard by the Service Tax Appeal Nos.70115, 70110 & 33 70109 of 2015 department. Further, with regard to invoking the extended period of limitation, the Tribunal found there is absolutely no justification to do so and there is no explanation given by the department for the gross delay in initiating proceedings."
In the case of Lalitpur Power Generation Co. Ltd. [2017 (356) E.L.T. 82 (Tri. - Del.)], following was held:
"42. The appellants have further submitted that the value of Rs. 300 crores reflected by them in the Bill of Entry was not only the value of designs and drawings but the same was for the entire services to be rendered by M/s. CIPL under the head Engineering information, design and drawings. The Revenue's adoption of the said price only for design and drawings by eliminating engineering information aspect is against the factual position, as reflected in the contract. The rejection of the appellants plea as an afterthought is neither proper nor justified inasmuch as reading of the contract between two parties clearly lead to the inevitable conclusion that the amount of Rs. 300 crores was not only for drawing and designs but same was for engineering information and other aspects also. The findings of the adjudicating authority that the inflating the value of the impugned drawings was intentional and deliberate to transfer foreign exchange outside India cannot be appreciated inasmuch as the Revenue has not produced any evidence to that effect. The observations made by the adjudicating authority that the said drawings has no intrinsic value is without any basis and evidence. It may be observed here that the value of the designs and drawings is not based upon any costing factor and being intangible property, the same is relatable to intellectual value of the design and drawings. The Revenue's conclusion that the value of these drawings, design was much on the lower side is based upon assumption and presumption and not on any concrete Service Tax Appeal Nos.70115, 70110 &
34 70109 of 2015 evidence on record. They have not sought the opinion of any technical expert in the field, in support of the allegations and findings."
II. Demand against the amounts which are inter- corporate loans and advances amongst the sister concerns;
4.7 In the present case the demand has been made against the appellant on the basis of the inter-corporate transactions made by them with their sister concerns, taking into account the transactions made under these recorded transactions in their ledger and balance sheet account for the period starting from 2007-08 to 2010-11. It is interesting to note that show cause notice issuing authority and the adjudicating authority were fully aware of the fact that service - "Construction of Complex Service" under which taxable category demand has been made was made taxable from 01.07.2010. We also note that the demand has been confirmed against the appellant by stating that though the appellant has produced board resolution for undertaking such inter corporate transactions of their company but the same for the sister concerns has not been produced. The observation made by the adjudicating authority is devoid of any merits and only reflects the pre-conceived state of mind whereby the demand was to be confirmed against the appellant. The identical observation has been made by him while adjudicating each of the show cause notice, which have emanated from the common search and investigation proceedings. Even each of the Noticee was heard by him on the same date and time. If the resolution in case of each of sister concern as per his own admission was available in the file of that concern, than what made him not admit the same for adjudicating the case of sister concern. Appellant has produced the copy of Board resolution made for every year in respect of themselves and the sister concerns. One of these resolutions which are identically worded is reproduced below:
Service Tax Appeal Nos.70115, 70110 & 35 70109 of 2015 CERTIFIED TRUE COPY OF BOARD RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF P P BUILDCON PRIVATE LIMITED HELD AT THE REGISTERED OFFICE OF THE COMPANY AT 12TH APRIL 2007 AT 10:30 AM.
The board was informed that a request has been received to make/ receive loan (s) and/ or give guarantee(s)/ provide any security(ies) in connection with loan(s) made to and/ or acquire by way of subscription, purchase or otherwise the securities in one or more tranches as per the business requirement. The board was further informed that if approved the making of loan to this company would attract provisions of Section 372A of the companies Act, 1956. The Board discussed consider the same and passed the following resolution:
"RESOLVED THAT pursuant to the provisions of section 372 A and other applicable provisions if any of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force) the consent of the Company be and is hereby accorded to the board of directors of the company to grant loans and make investments of such amount (s) in accordance with the provisions of Section 372 A, as may be decided from time to time."
"RESOLVED FURTHER THAT no interest shall be charged/ paid on loans/ advances given to associates/ sister concerns/ group companies."
"RESOLVED FURTHER THAT Mr Mayank Agarwal be and are hereby severally authorized to take such steps as may be necessary for obtaining approvals, statutory, contractual or otherwise, in relation to the above and to settle all matters arising out of and incidental thereto and sign and execute all deeds, applications, documents and writings that may be required, on behalf of the Company Service Tax Appeal Nos.70115, 70110 & 36 70109 of 2015 and generally to do all acts, deeds and things that may be necessary, proper, expedient or incidental for the purpose of giving effect to the aforesaid Resolution."
Further all these inter-corporate transactions amongst the four sister concerns are duly recorded in the ledger accounts of the respective concerns maintained by the appellant and are also reflected in the balance sheets of the each of the concern. These balance sheets are the part of the relied upon documents in the show cause notice. The relevant extract as per the balance sheet of each concern showing these transactions are reproduced below:
P. P Buildcon Receipt Payment Difference Krishna Kanha Opening Balance 17265602 -17265602 2007-08 1000000 1139710.06 -17125891.94 2008-09 7126000 8454026 -15797865.94 2009-10 11542867 27340732.94 0 2010-11 3117996 3117996 0 Total 40052465 40052465 Pushpanjali Const Opening Balance -21423081 21423081 2007-08 9864675 20904646 32463052 2008-09 15412256 12773611 29824407 2009-10 38901112 9076705 0 2010-11 15903000 15903000 0 Total 58657962 58657962 Pushpanjali Opening Balance 12119322 -12119322 2007-08 14196456 44614056 18298278 2008-09 63166000 19420954 -25446768 2009-10 18685774 44132542 0 2010-11 9810000 9810000 0 Total 117977552 117977552 Grand Total 216687979 216687979 Pushpanjali Receipt Payment Difference Krishna Kanha Opening Balance 3320000 -3320000 Service Tax Appeal Nos.70115, 70110 & 37 70109 of 2015 2007-08 124000 2500000 -944000 2008-09 680688 5860000 4235312 2009-10 16608039 12372727 0 2010-11 0 0 0 Total 20732727 20732727 Pushpanjali Const Opening Balance -10105520 10105520 2007-08 2710500 2647600 10042620 2008-09 3293562 11771600 18520658 2009-10 35341287 16820629 0 2010-11 16724559.38 16724559.38 0 Total 47964388.38 47964388.38 P P Buildcon Opening Balance -12041562 12041562 2007-08 44614056 14274216 -18298278 2008-09 19420954 63166000 25446768 2009-10 44132542 18685774 0 2010-11 9810000 9810000 0 Total 105935990 105935990 Grand Total 174633105.4 174633105.4 Krishna Kanha Receipt Payment Difference P P Buildcon Opening Balance -17265602 17265602 2007-08 1139710.06 1000000 17125891.94 2008-09 8454026 6526000 15197865.94 2009-10 27430732.94 12232867 0 2010-11 3027996 3027996 0 Total 22786863 22786863 Pushpanjali Const Opening Balance -14999694.5 14999694.5 2007-08 0 5441100 20440794.5 2008-09 280397 618165 20778562.5 2009-10 30087066 9308503.5 0 2010-11 840351 840351 0 Total 16208119.5 16208119.5 Pushpanjali Opening Balance -3320000 3320000 2007-08 2500000 124000 944000 2008-09 5860000 680688 -4235312 Service Tax Appeal Nos.70115, 70110 & 38 70109 of 2015 2009-10 12372727 16608039 0 2010-11 0 0 0 Total 17412727 17412727 Grand Total 56407709.5 56407709.5 In fact the revenue should have not been bothered about any such transactions that were prior to 01.07.2010 as the service against which the demand has been made is not taxable prior to that date. Further for the period 2010-11 the inter-corporate transactions have been squared up in case of each concern at the close of financial years. Thus except for some very short period loans and advances there is no loan/ advance made by any of the company to any of the remaining three sister concerns at the close of the financial year.
Further we do not find basis for the determination of the gross receipts and determination of the taxable value after abatement in the show cause notice. Table in para 26 of the show cause notice starts from the "Taxable Value after abatement", without even specifying the gross receipt and the abatement percentage. In absence of the Gross receipt and percentage abatement allowed for determining the taxable value the entire contents of this table are in doubt. Further when the show cause notice itself that the services under the category of "Construction of Complex Service" became taxable with effect from 01.07.2010, then on what basis the rate of service tax has been fixed at 12% for the FY 2007-08 and 2008-09 and @ 10% thereafter. The inherent contradictions in this table itself are enough to set aside the demand made on the basis of these unsubstantiated calculations in this table. Commissioner has failed to record any finding in respect of the calculations made in this table. In fact the demand has been confirmed on frivolous ground even without looking into the basis of the demand. Thus this demand needs to be set aside.
III. Demand against amount received towards transport of good services, which appellant claim to have been payment made towards purchase of gitty and stone dust.
Service Tax Appeal Nos.70115, 70110 & 39 70109 of 2015 4.8 Appellant have challenged the demand made under the category of Good Transport Agency Service, to the extent it pertained to the documents which were issued by Shanker Road Carrier, Nainana, Agra. Their contention is that these documents were not against the supply of taxable service but were for the supply of the material procured by them from M/s Shanker Road Carrier i.e. Gitty and Stone Dust. To ascertain the facts we perused the documents under dispute. Some on sample basis are scanned below:
Service Tax Appeal Nos.70115, 70110 & 40 70109 of 2015 Service Tax Appeal Nos.70115, 70110 & 41 70109 of 2015 From the perusal of the documents as above of the Shanker Road Crarrier it is evident that these documents are not the documents for transportation of the goods as the name of consignor and consignee is missing on these documents. If these documents were transportation of the goods then the anme of consignor and consignee would have definitely been mentioned on these documents. Further these documents do not indicate the freight charged on the basis of mileage or kms, but charge on the basis of quantity. Some of entries which are taken from the above documents read as follows:
"4 Trips 10 mm Guitty q-650 @ 20/- 52000." 4 X 650 X 20 = 52000/-
3 Trips 20 mm Guitty q-650 @ 24/- 46800" 3 X 650 X 24 = 46800/-
1 Trip 20 mm Guitty q - 1100 @ 24/- 26400" 1 X 1100 X 24 = 26400/-
1 Trip Stone Dust q-1100 @ 19/- 20900" 1 X 1100 X 19= 20900/-
1 Trip Stone Dust q - 650 @ 19/- 12350" 1 X 650 X 19 = 12350/-"
Thus it is seen that the charges are made on the basis of the quantity supplied and number of trips undertaken. Thus we have no doubt that these documents are not for the transportation of the goods by road, from a consignor to consignee but are towards the supply of these material, by the Shanker Road Carrier. Revenue has relied upon these documents for making the demand against these documents by treating them to be the charges paid toward transport of goods by road service on the basis of the word "Carrier" used on the letter head on which these documents have been made. No investigations/ enquiries were even made with the Shanker Road Carrier to ascertain the nature of these documents or the entries made in these documents. Commissioner has in the impugned order also referred to "PO-1378, PO-1387, PO-1363, PO-1380", and have Service Tax Appeal Nos.70115, 70110 & 42 70109 of 2015 held that these represent these were the purchase orders against which these goods were received. But he proceeds to hold contrary, by stating that appellant had not produced copies of these purchase orders before him. Was that even relevant when Commissioner has held that these charges were paid against the supply of goods and not the supply of taxable service under the category of "Transport of Goods by Road Service". The demand made under this category is contrary to the definition of "good transport agency" as defined by Section 65 (50b) of the Finance Act, 1994 And sub clause (v) of the Rule 2 (1) (d) of the Service Tax Rules, 1994. Hence the order to the extent it makes demand in respect of these documents by treating them document for supply of ""Transport of Goods by Road Service" is set aside.
4.9 Thus we do not find any merits in the impugned order to the extent it has confirmed the demand under these three heads discussed above. In respect of the remaining two heads the appellants do not dispute the demand made and confirmed as per the impugned order. Thus in nut shell the impugned orders to the extent of demands as in table below stand confirmed and remaining amounts is dropped.
Construction of Complex Service GTA Service
Appellant Total
demand admitted and paid admitted and paid
P P Buildcon 624145 11804 6,35,949
Krishna Kanha 2083310 45909 21,29,219
Pushpanjali Buildcon 280799 3914 2,84,713
4.10 We also take note of the penalties imposed on the appellant. In the case of demands made on the taxable services under the category of Construction of Complex Service, the services became taxable for the first time from 01.07.2010. Appellant had taken the registration and was paying the service tax in respect of the services provided, from the date when these services became taxable. The officers conducted the search at the premises of the appellant on 22.03.2011 and found certain short payment of taxes till date. Appellants admitted the tax liabilities as above in respect of the service tax payable under the category of Construction of Complex Service. For the Service Tax Appeal Nos.70115, 70110 & 43 70109 of 2015 period of demand i.e. from 01.07.2010 the appellants had paid service tax on the services provided by him as detailed below:
M/s P P Buildcon Service tax + Edu Cess + H&S cess Payable (@10.3%) Challan Month Amount Taxable Amount Due No Date Amount Received Value Tax Interest Jul 10 2112813 555283 57194 1 03.11.10 11900 387 Aug 10 0 0 0 2 31.01.11 144024 2159 Sept 10 1842716 502807 51789 1 30.03.11 501112 0 Oct 10 2451522 703713 72482 Nov 10 2526423 714392 73582 Dec 10 1839061 581933 59939 Jan 11 1833658 537332 55345 Feb 11 4480686 1439942 148314 Mar 11 3131486 1024265 105499 Total 20218365 6059667 624146 657036 2546 M/s Krishna Kanha Shelters:
Service tax + Edu Cess+H&S cess Payable (@10.3%) Challan Month Amount Taxable Amount Due No Date Amount Received Value Tax Interest Jul 10 6696380 1674095 172432 2 03.11.10 85718 1776 Aug 10 6380443 1621254 166989 2 29.01.11 73870 1203 Sept 10 5844815 1559256 160603 2 30.03.11 2152007 0 Oct 10 113484480 2992928 308272 Nov 10 7969382 2082969 214546 Dec 10 13134841 3368102 346914 Jan 11 10940432 2762188 284505 Feb 11 8664980 2196984 226289 Mar 11 7703879 1968523 202758 Total 180819632 20226299 2083309 2311595 2979 M/s Pushpanjali Buildcon Service tax + Edu Cess + H&S cess Payable (@10.3%) Challan Month Amount Taxable Amount Due No Date Amount Received Value Tax Interest Jul 10 193425 63830 6576 3 03.11.10 5441 118 Aug 10 396521 130852 13478 1 31.01.11 152490 2131 Sept 10 353000 116490 11998 3 30.03.11 350139 0 Oct 10 938110 309576 31887 Nov 10 2325938 767560 79059 Dec 10 957455 315960 32544 Jan 11 521294 133031 13702 Feb 11 2504398 748461 77092 Mar 11 425535 140427 14464 Total 8615676 2726187 280799 508070 2249 4.11 In the present case demand has been made for the period 01.07.2010 to 31.03.2011. The demand has been made for the amount including the amounts which had been deposited by the appellant even prior to visit of the officers on 22.03.2011, by invoking extended period of limitation. The remaining amount was paid by the appellants on 30/31.03.2011. Show cause notice Service Tax Appeal Nos.70115, 70110 &
44 70109 of 2015 and order in original makes this demand invoking extended period of limitation, although the return for the period October 2010 to March 2011, was due only in the month of April 2011. It is not understood by what mechanism it could have been alleged that for this period the appellants have suppressed the value of taxable services, when all the receipts against which they had received were accounted for in their book of accounts and the ST-3 return for this period was filed including all these receipts. It is also not understood how can there be charge of suppression against the appellant even prior to ST-3 return being filed. There may be some delay in payment of tax but for delay in payment of tax charge of suppression etc., cannot be made and the provisions of section 78 be invoked for imposition of penalty equivalent to the tax amount confirmed. In our view as the appellants have paid the due service tax prior to filing of the return for the period October 2010 to March 2011 and have included the value of these services in their ST-3 returns, invoking extended period for making the demand by show cause notices issued to the appellant cannot be justified, specifically the penalty imposed under Section 78 in respect of these demands cannot be upheld.
4.12 In respect of the demand made on the transport of goods by road service appellant have admitted the tax liability for the entire period of 2007-11; however same has been done much later only after the matter was investigated and documents relating to such transactions were recovered from them. Definitely during the period of dispute i.e. from 2007-11 appellants had suppressed the factum of receipt of these services from the department and have not paid the service tax leviable in respect of these transactions/ services which was required to be paid by them on reverse charge basis. In fact they had not taken registration or filed any ST-3 return during this period. The demand made by invoking extended period of limitation as provided by section 73 cannot be faulted with. As we uphold invocation of extended period of limitation as per the Section 73, penalty needs to be imposed in respect of these Service Tax Appeal Nos.70115, 70110 & 45 70109 of 2015 demands under Section 78 equivalent to amount of tax demand confirmed in view of the decision of the Hon'ble Supreme Court in case of Rajasthan Spinning and Weaving Mills [2008 (239) ELT 3 (SC)].
4.13 As appellants have not paid the service tax by the due date in respect of the above transactions we do not find any reason to interfere with penalties imposed upon them under 77 (1) (a), 77 (1)(b) and 77(1)(e) of Chapter V of the Finance Act, 1994 and the late fees imposed upon them under Section 70 (1) of Chapter V of the Finance Act, 1994 read with Rule 7(c) of the Service tax Rules, 1994.
4.14 We also uphold the demand of interest made in terms of Section 75 of Chapter V of the Finance Act, 1994, in respect of the demands upheld by us for the period starting from the due date for payment of these amounts to the date on which these amounts are actually paid.
5.1 Appeals filed by the appellants are partly allowed and the impugned orders modified to the extent indicated in para 4.9, 4.10, 4.11, 4.12, 4.13, & 4.14.
(Pronounced in open court on-18/10/2023) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp