Custom, Excise & Service Tax Tribunal
Raghavendra Shipping Services (P) Ltd vs Commissioner Of Central Excise, ... on 27 December, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 27205 / 2013 Application(s) Involved: ST/Stay/80/2008 in ST/133/2008-SM Appeal(s) Involved: ST/133/2008-SM [Arising out of Order-in-Appeal No. 10/2007 (V-I) ST dated 31/12/2007 passed by the Commissioner of Central Excise & Customs (Appeals) Visakhapatnam] RAGHAVENDRA SHIPPING SERVICES (P) LTD 26-3-10, 1ST FLOOR, CHITTARANJANDAS MARG, VISAKHAPATHAM Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - VISAKHAPATNAM-I CENTRAL EXCISE BUILDING PORT AREA VISAKHAPATNAM ANDHRA PRADESH-530035 Respondent(s)
Appearance:
Mr. RAM SHARMA CHUNDURU, Adv FLAT NO.12 A, SABITHA APARTMENTS, BESIDE OLD Q MART, ROAD NO,.2, BANJARA HILLS HYDERABAD AP For the Appellant Mr. S. Teli, A.R. For the Respondent CORAM:
HONBLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER Date of Hearing: 27/12/2013 Date of Decision: 27/12/2013 The appellant is engaged in providing services as a Custom House Agent (CHA). During the period from 2000-01, till February 2005, the appellant was paying service tax on 15% of the service charges received by them by following the Circular No. 5/97, dated 12/6/1997 issued by the Board. This circular provided the facility to the CHA who receive money on lump-sum basis which includes several items of expenditure which are incurred on behalf of the customers to pay service tax only on 15% of the lump-sum amount received by them for services rendered. On verification of the records of the appellants, officers came to the conclusion that while the appellant had opted for payment of service tax on the basis of the circular, they were not including certain amounts reimbursed by their customers. Taking a view that such expenses also are required to be included, proceedings were initiated. After working out the amount payable by the appellant, a show-cause notice was issued on 27/9/2005 proposing to demand service tax of Rs. 3,66,997/-. After verification, when appellant was informed, appellant made a payment of Rs. 3,14,000/- and the Managing Director of the appellant also stated that he was not conversant with the provisions of service tax law and he had left it to the Accountant. The proceedings have culminated in confirmation of the demand for the amount proposed in the show-cause notice with interest as applicable. However no penalty has been imposed by invoking provisions of Section 80 of Finance Act 1994.
2. The learned counsel relied upon the decision of the Tribunal in the case of Chandra Shipping & Trading Services Vs CCE & C Visakhapatnam [2008(08)LCX0251] and submitted that the Tribunal had considered similar issue in that case and had come to the conclusion that extended period could not have been invoked and demand could not have been confirmed. However, on going through the order, I find that in that case, the appellant had opted for payment of service tax on the basis of Board Circular in respect of services where there was no lump-sum amount received and in other cases they were opting for payment of service tax after claiming abatement of 85%. That is not the situation here. Since the facts are entirely different, I am unable to consider the precedent decision of the Tribunal.
3. The second submission for contesting the issue of limitation was that the service tax returns filed by the assessee was assessed by the Superintendent and he had seen all the records for this purpose. However, on going through the ST-3 returns of the appeal papers, I find that there is only an endorsement checked and verified without stating what exactly was checked and what exactly was verified. In one case he had pointed out a small amount as excess paid by the appellant. This could be due to calculation mistake also. From the records produced, no conclusion can be reached that the appellant had produced all the records and the same were verified. Further, the counsel also submitted that there was no self-assessment regime after Section 71 was omitted from the Statute book. Section 71 as it existed during the relevant period reads as under:
71.(1) The Superintendent of Central Excise may, on the basis of information contained in the return filed by the assessee under Section 70, verify the correctness of the tax assessed by the assessee on the services provided.
(2) The Superintendent of Central Excise may require the assessee to produce any accounts, documents or other evidence as he may deem necessary for such verification as and when required.
(3) If on verification under sub-section (2), the Superintendent of Central Excise is of the opinion that service tax on any service provided has escaped assessment or has been under-assessed, he may refer the matter to the Assistant Commissioner of Central Excise or as the case may be, the Deputy Commissioner of Central Excise who may pass such order of assessment as he thinks fit. From Section 71 it can be seen that Section 71 never made the 1assessment by the Superintendent mandatory even though it was the claim of the learned counsel that it was mandatory for the Superintendent to assess the return mandatorily. He relied upon the Circular issued by the Govt. after the budget in 2004 with regard to changes in Act and Rules. In this circular, it has been stated that Section 71 & 72 are being omitted so as to do away with compulsory verification of assessment by departmental officers and best judgment assessment. It is not the case of the appellant that there was best judgment assessment in this case. What is compulsory as assumed in the Circular is also verification of assessment made by the assessee and not assessments by the officers of the department. Therefore, I am unable to agree that prior to 2004, the assessment of the Superintendent was mandatory and therefore all the returns filed by the appellant had to be considered as assessed and therefore extended period could not have been invoked.
4. It was submitted that there was no suppression at all on the part of the appellant. It was also submitted that there was no allegation of suppression in the show-cause notice. As regards there being no suppression by the assessee, I find that admittedly in this case, the entire value before claiming the abatement of 85% was not reflected in the return. The fact that the entire value was not being reflected and certain reimbursable expenses were being collected but not included was known only to the assessee and therefore it cannot be stated that there was complete disclosure of all the facts. Coming to the second point, I find that in the show-cause notice there is a clear allegation of suppression of facts in paragraph 14 and I consider that this is sufficient. Therefore, I am unable to consider the issue on limitation in favour of the appellant.
5. Coming to the merits of the case, I find that once the assessee opts for abatement of 85%, there is no possibility of deducting anything. It is for the assessee to choose whether he would like to pay 15% of the total value received or he would prefer to claim deductions as provided in the law. Once the assessee chooses to pay tax on 15% of the total value, he cannot choose to omit certain portion and decide which one is to be included and which one is not be included. In my opinion having opted for a beneficial circular issued by the Board, the assessee could not have chosen to omit part of the Circular non-beneficial (inclusion of all receipts before abatement). Therefore, I do not find anything wrong with the stand taken by the Revenue that assessee should have paid tax on 15% of the total consideration.
6. The learned counsel submitted that even if the total value as received is taken, the total service tax payable would come to Rs. 3,05,417/- only. Further the benefit of CENVAT credit on CWC charges, SGS charges, mobile charges, telephone charges, xerox charges, courier services and insurance have not been allowed. In my opinion CENVAT credit of service tax paid on these services is allowable and therefore the assessee would be eligible for Rs. 41,403/- being the credit of service tax paid on these services provided the appellant is able to produce the relevant documents before the original authority to whom the matter is being remanded. As regards the service tax liability, the assessee has worked out Rs. 3,05,417/- as the liability and it was submitted during the hearing that the actual value on the basis of which this has been calculated includes the bad debt and therefore if the bad debt which has not been recovered by them is deducted, the liability will further come down. Further in my opinion, since it is not very clear as to whether while calculating the actual value of service provided, amount outstanding from L.G. Polymers has been deducted or not. This aspect also can be verified by the original authority.
7. In view of the above discussion and after considering the annexure and quantum of service tax payable by the assessee, the matter is remanded to the original adjudicating authority for verification of documents for extending the benefit of CENVAT credit and for verification of the claim regarding non-deduction of bad debt/outstanding from L.G. Polymers from the actual value of the service received by the appellant as shown in Annexure which results in calculation of service tax payable as Rs 5,03,417/-. The appeal is decided in above terms and the matter is remanded to the original adjudicating authority for fresh quantification after considering the documents for CENVAT credit and the issue relating to bad debt as mentioned above.
(Order dictated and pronounced in open court) (B.S.V. MURTHY) TECHNICAL MEMBER pnr...
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