Custom, Excise & Service Tax Tribunal
Oia No. 32/2012 (Pst) Dt. 1.5.201 vs P.K. Parameswaran on 25 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI S.No. Appeal No. Appellant Respondent
Arising out of OIA/OIO passed by CCE (A) Chennai /CCE Puducherry Advocate S/Shri
1. ST/S/374/12 & ST/467/12 CCE & ST Pondi-
cherry MCV & Co.
OIA No. 32/2012 (PST) dt. 1.5.2012 P.K. Parameswaran
2. ST/S/375/12 & ST/468/12
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Anand Electricals OIA No. 36/2012 (PST) dt. 2.5.2012 V. Ravindran
3. ST/S/376/12 & ST/469/12
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Thirumurugan Enterprises OIA No. 37/2012 (PST) dt. 2.5.2012
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4. ST/S/377/12 & ST/470/12
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V. Hari Krishnan OIA No. 38/2012 (PST) dt. 2.5.2012
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5. ST/S/378/12 & ST/471/12
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A. Paramasivam & Co.
OIA No. 39/2012 (PST) dt. 2.5.2012
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6. ST/S/379/12 & ST/472/12
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SLN Enterprises OIA No. 40/2012 (PST) dt. 2.5.2012
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7. ST/S/380/12 & ST/473/12
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MCN Constructions OIA No. 41/2012 (PST) dt. 2.5.2012 None
8. ST/S/381/12 & ST/474/12
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DDK Constructions OIA No. 42/2012 (PST) dt. 2.5.2012 V. Ravindran
9. ST/S/382/12 & ST/475/12
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NPS Constructions OIA No. 43/2012 (PST) dt. 2.5.2012
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10. ST/S/383/12 & ST/476/12
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P. Selvaraj OIA No. 44/2012 (PST) dt. 2.5.2012
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11. ST/S/384/12 & ST/477/12
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Neyveli Engineers OIA No. 45/2012 (PST) dt. 2.5.2012
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12. ST/S/385/12 & ST/478/12
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S. Thamizhmani OIA No. 46/2012 (PST) dt. 2.5.2012
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13. ST/S/386/12 & ST/479/12
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Indira Industries OIA No. 47/2012 (PST) dt. 2.5.2012
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14. ST/S/387/12 & ST/480/12
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V. Govindan & Co.
OIA No. 48/2012 (PST) dt. 2.5.2012
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15. ST/S/388/12 & ST/481/12
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Sri Venkateswara Constructions OIA No. 49/2012 (PST) dt. 2.5.2012
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16. ST/S/389/12 & ST/482/12
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Sakthi Engg. Works OIA No. 50/2012 (PST) dt. 2.5.2012
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17. ST/S/390/12 & ST/483/12
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KSP Construction OIA No. 51/2012 (PST) dt. 2.5.2012
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18. ST/S/391/12 & ST/484/12
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V. Loganathan & Co.
OIA No. 52/2012 (PST) dt. 2.5.2012
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19. ST/S/392/12 & ST/485/12
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V. Mathiyalagan OIA No. 53/2012 (PST) dt. 2.5.2012
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20. ST/S/393/12 & ST/486/12
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Jothi Constructions OIA No. 56/2012 (PST) dt. 2.5.2012
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21. ST/S/394/12 & ST/487/12
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G. Thirumalingam OIA No. 57/2012 (PST) dt. 2.5.2012
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22. ST/S/395/12 & ST/488/12
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Mano Engg. Co.
OIA No. 58/2012 (PST) dt. 2.5.2012
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23. ST/S/396/12 & ST/489/12
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Geetanjali Constructions OIA No. 61/2012 (PST) dt. 2.5.2012
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24. ST/S/397/12 & ST/490/12
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Sekar Engineering Works OIA No. 62/2012 (PST) dt. 2.5.2012
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25. ST/S/398/12 & ST/491/12
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P. Rajendran OIA No. 63/2012 (PST) dt. 2.5.2012
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26. ST/S/399/12 & ST/492/12
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V. Loganathan & Co.
OIA No. 71/2012 (PST) dt. 2.5.2012
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27. ST/S/400/12 & ST/493/12
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V. J.Constructions OIA No. 72/2012 (PST) dt. 3.5.2012 J.Shankar Raman
28. ST/S/401/12 & ST/494/12
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Chellappan Engg. Constructions OIA No. 73/2012 (PST) dt. 3.5.2012
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29. ST/S/402/12 & ST/495/12
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Surya Engg.Corporation OIA No. 74/2012 (PST) dt. 3.5.2012
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30. ST/S/403/12 & ST/496/12
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Kuppusamy Constructions OIA No. 75/2012 (PST) dt. 3.5.2012
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31. ST/S/404/12 & ST/497/12
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Vivek Engg. Co.
OIA No. 76/2012 (PST) dt. 3.5.2012
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32. ST/S/405/12 & ST/498/12
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A. Rajendran & Co.
OIA No. 77/2012 (PST) dt. 3.5.2012 None
33. ST/S/406/12 & ST/499/12
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N.Krishnamurthy OIA No. 78/2012 (PST) dt. 3.5.2012 J. Shankarraman
34. ST/S/407/12 & ST/500/12
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D. Sekar OIA No. 79/2012 (PST) dt. 3.5.2012
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35. ST/S/408/12 & ST/501/12
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G.Kalyanasundaram OIA No. 80/2012 (PST) dt. 3.5.2012
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36. ST/S/409/12 & ST/502/12
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S. Sundaram & Sons OIA No. 71/2012 (PST) dt. 3.5.2012
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37. ST/S/410/12 & ST/503/12
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K. Venkatesan OIA No. 82/2012 (PST) dt. 3.5.2012
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38. ST/S/411/12 & ST/504/12
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Karunai Constructions OIA No. 84/2012 (PST) dt. 3.5.2012
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39. ST/S/412/12 & ST/505/12
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M. Suriyakumar OIA No. 85/2012 (PST) dt. 3.5.2012
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40. ST/S/413/12 & ST/506/12
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M. Siva Subramaniam OIA No. 86/2012 (PST) dt. 3.5.2012
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41. ST/S/414/12 & ST/507/12
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MRM Constructions OIA No. 88/2012 (PST) dt. 3.5.2012
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42. ST/S/415/12 & ST/508/12
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N. Rathinavel & Sons OIA No. 89/2012 (PST) dt. 3.5.2012
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43. ST/S/416/12 & ST/509/12
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N. Arunachalam OIA No. 90/2012 (PST) dt. 3.5.2012
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44. ST/S/417/12 & ST/510/12
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C. Arokiasamy OIA No. 91/2012 (PST) dt. 3.5.2012
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45. ST/S/418/12 & ST/511/12
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Maruti Builders OIA No. 92/2012 (PST) dt. 3.5.2012 None
46. ST/S/422/12 & ST/515/12
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S. Ayyakannu & Co.
OIA No. 87/2012 (PST) dt. 3.5.2012 J. Shankarraman
47. ST/S/423/12 & ST/516/12
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S. Sivalingam OIA No. 83/2012 (PST) dt. 3.5.2012
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48. ST/S/41015/ 2013 & ST/41389/ 2013 S& S Constructions CCE &ST Pondicherry OIA No.80/2013 dt. 21.2.13 V.S. Manoj
49. ST/189/10 CCE & ST Pondicherry A.M.Manickam OIO No.84/2009-(C) dt. 29.12.09 V.S.Manoj
50. ST/194/10 & ST/CO/17/22010 CCE & ST Pondi-
cherry C. Vadivelu
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P.K. Parameswaran
51. ST/318/12
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T.M.S.Engg. Corporation OIA No. 16/2012 (PST) dt. 16.2.2012 None
52. ST/319/12
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Shri N.Arithas OIA No. 18/2012 (PST) dt. 16.6.2012 V.Ravindran
53. ST/320/12
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Shri G.Ramaraju OIA No. 19/2012 (PST) dt. 16.6.2012
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54. ST/321/12
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Shri P. Muthiyan OIA No. 20/2012 (PST) dt. 16.6.2012
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For approval and signature :
Honble Shri P.K. Das, Judicial Member Honble Shri R. Periasami, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ? :
3. Whether the Members wish to see the fair copy of the order? :
4. Whether Order is to be circulated to the Departmental authorities ? :
Appearance:
Shri M. Rammohan Rao, DC (AR) Shri P. Arul, Superintendent (AR) For the Revenue CORAM :
Honble Shri P.K. Das, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing : 25-08-2014 Date of Decision : 25-08-2014 FINAL ORDER No.40700-40753/2014 Per P.K. Das
1. Common issue is involved in these appeals and therefore, all are taken up together for disposal.
2. After hearing both the sides at length, we find that all these appeals may be decided at the stage of stay petition hearing. Hence after disposing the stay applications, we proceed to take up the appeals for hearing and disposal.
3. The relevant facts of the case, in brief, are that the Central Excise Officers during enquiry found that all the Assessees herein, are the contractors carried out various activities for M/s.Neyveli Lignite Corporation Ltd., (NLC), a Government of India Undertaking. It was found that the activities undertaken by the Assessees would come within the purview of the service tax under the category of Management, Maintenance or Repair Services, Commercial or Industrial Construction Service, Erection, Commissioning and Installation Service and Man Power Recruitment or Supply Agency Service etc. Most of the Assessees had obtained registration certificate under service tax law, in the year 2006 and others had taken registration in 2004 and 2005. The Central Excise Officers received the statement of the payments in respect of the amounts paid by NLC to the Assessees on the services rendered by them.
2.1 Show cause notices were issued proposing demand of service tax on the basis of statements issued by M/s.NLC under the category on various services as mentioned above. The adjudicating authority confirmed the demand of tax in all cases except in Appeal No.ST/189/2010 (A.M. Manikkam) and Appeal No.ST/194/2010 (C.Vadivelu), where the Commissioner of Central Excise dropped the demand. The Assessees filed appeals against the adjudication orders before the Commissioner (Appeals). By the impugned orders, Commissioner (Appeals) set aside the adjudication orders except in Appeal No.ST/41389/2012 (SNS Constructions) where the Commissioner (Appeals) upheld the adjudication order. Hence, Revenue filed these appeals against the orders of the Commissioner (Appeals) and Commissioner of Central Excise. In appeal No.ST/41389/2013, M/s.SNS Construction filed appeal before this Tribunal.
3. Heard both sides and perused the records.
4. The Ld. Authorised Representatives on behalf of the Revenue submit that the adjudicating authority in some appeals confirmed the demand of tax and waived penalty under Section 80 of the Finance Act, 1994. He further submits that and imposed penalty. In most of the cases, the Assessee paid tax partly and the amounts were appropriated by the adjudicating authority. In few cases, the entire amounts were paid by the Assessees and appropriated by the adjudicating authority. The demand of tax were raised on the basis of NLCs statement and the service tax was demanded on the basis of contract order. The Ld. A.R filed written submissions along with case law. The relevant portion of the written submissions filed by the Revenue are reproduced below :-
(a) The Assessees/Service Providers have not disputed the fact that they are rendering taxable services to M/s.Neyveli Lignite Corporation Ltd. (NLC). In fact, Shri A.M.Manickkam registered under the category of MMRS on 11/07/2005 and sought to include the services MRSAS & CICS on 27/03/2006 in Registration Certificate.. Similarly, Shri C. Vadivelu registered under the category of MMR, MRSAS & CICS on 11/03/2006. But they are liable for payment of service tax for the period prior to the Registration also, as these services are taxable with effect from 01/07/2003-MMR, 07/07/1997-MRSAS & 10/09/2014-CICS and they rendered these services to NLC prior to their registration with department.
(b) As there is no different rate of tax for different services, unlike Central Excise or Customs, which may vary with reference to classification/ category, the differentiation or non-furnishing of break-up of taxable value of particular services rendered by the Assessees, would in no way affect/jeopardise the interest of the Assessees and vitiate the SCN adjudication proceedings. Admittedly, the Assessees rendered the taxable services to M/s.NLC.
(c) Summons dt. 23/07/2008 to appear on 31/07/2008 was issued to Shri A.M. Manickam. He appeared on 31/07/2008 and sought time till 11/08/2008 to furnish the details of taxable services rendered and their value. But till the issue of SCN and its adjudication, he has not furnished the details of taxable services rendered and their value. Similarly summons dt. 19/09/2008 was issued to Shri C. Vadivelu. But, he has not responded even to the Summons. Hence further letter dt. 21/08/2008 was issued and for that also he has not responded. The aforesaid details exhibit the conduct of the Noticee/Respondent on non-cooperation in the adjudication proceeding.
5. The Learned Advocates appearing on behalf of the Assessees made the submissions at length and also filed written submissions along with case laws. The relevant portion of the written submissions of Shri V. Ravindran, Advocate are produced below :-
(a) The main core activity of NLC is Lignite Excavation and power generation using lignite excavated. NLC is having lignite mining units named as Mine I, Mine II, Mine IA and Barsingsar Mine. NLC is generating power in its Thermal Power Station I, Thermal Power Station -II and in Thermal Power Station I Expansion. All the southern states are beneficiaries of this power generation project.
(b) The various contractors engaged by NLC, including the Respondents herein, are engaged in the associated activities to the above said core activities of NLC. The nature of activities carried out by the Respondents are the following, among others:-
(a) Water supply-drainage for Government Hospital, Guest House in NLC
(b) Drain Cutting, dumping Yard Mines, Earth Excavation, forming Bunds, Laying of inner Roads and maintenance of such roads; Fixing Safety Grills to Courtyard, School Works, Community Halls.
(c) Earthwork, School Building and Painting of Government Hospital
(d) Renovation & Construction of Toilets in M B & G H,
(e) Electrical works
(f) Drip Irrigation Systems
(g) Making of Gate Arches, Earthwork excavation, Control Room, Development of Quarter Guard
(h) Improvement of Electrical Installations, Cable Cleaning of Kisok Motors etc.
(i) Horticulture, Lawn Gardens, Up-keeping Watch & Ward Section Office & Stores, Ancillary mining activities, Lawns & Gardens
(j) Pontoon Shifting, Pump laying, Cleaning of Drills.
(k) Loading, transporting scrap civil works in ash bund, lathe pump house, street lights, electrical work in canteen, removal of fly ash.
(l) Wiring in Mine 1,1 A entrance painting transformers, switch gears. Lighting ventilation.
(m) Water Supply Works
(n) Back feeding arrangements, AMC Water Treatment Plant rewinding of Motors.
(o) New approach ramp, CWC Hardening of Bunds.
(p) Hot vulcanizing of Wide steel cords, removal laying of wide belts, cutting rolling & transportation of wide belts
(c) On classification of services, the onus on the Department is not discharged and the Revenue appeals are liable to be dismissed on this ground alone.
(d) None of the Show Cause Notices, the Department, brought out any allegation against any one of the Assessee with reference to his/her specific/individual activity undertaken for NLC, as per the contract or the scope of work, to hold that such activity was a taxable service under Finance Act, 1994. None of the show cause notices, leading the impugned appeals herein, specified the activity with reference to a particular classification of taxable Service under the Finance Act, 1994.
(e) In certain cases, consideration received for certain activities which are clearly outside the purview of Service Tax levy, were also included in the demand of Service Tax, again without any proposal for classification of the service.
(f) The Department was aware of the activities of the Assessees right from 2002 and there were meetings of senior level officers of the Department, including the Commissioner of Central Excise, Puducherry, with the NLC officials and the Assessees in NLC. Any allegation of suppression of facts with intent to evade payment of tax was erroneous, since the basis for the show cause notices to the Assessees were the information reportedly provided by NLC or Assessees themselves in some cases through their Balance Sheets.
(g) The contention / grounds of appeal of the Department that the Assessees did not provide details/records etc. cannot be a valid ground to shift the onus of classification of the activity of Assessees under one or more of the taxable services.
(h) The Department did not follow any of the legal procedures prescribed under Section 14 of Central Excise Act, 1944 [Summon procedure to collect information] read with Section 83 of the Finance Act, 1994 or under Section 72 of the Finance Act, 1994 [Best Judgement assessment procedure], in any of the cases covered by the present batch of appeals. No specific investigation was carried out or enquiries made with NLC authorities, by the Department in any of the cases in terms of the above provisions.
5.1 Shri J. Shankarraman, Advocate reiterates the submissions of Ld. Advocate Shri M. Ravindran. He further submits as under :-
(a) In the present cases, the Assessees have entered in to different contracts for rendering various services with M/s Neyveli Lignite Corporation Ltd. Each and every contract ought to have been examined and the Department should have come to a conclusion whether the service rendered is covered under the Finance Act, 1994. Such an exercise has not been carried out by the Department while issuing show cause notice. It was not even done at the time of passing the order. Some of the activities carried out by the Assessees were not covered under the Finance Act, 1994 at the relevant point of time. These aspects have not been taken into account while issuing show cause notices. In some of the cases, the payments alleged to have been received from M/s Neyveli Lignite Corporation have been wrongly mentioned. Hence there are factual errors while quantifying the demand.
(b) The Department in some of the appeals has accepted that the tax liability falls under different category, if that is so then onus is on the Department to establish the various services rendered and the exact amount of demand under each service. In the absence of such an allegation in the notice, the demand is not sustainable.
(c) It is relevant to point out that there were meetings with the Deputy Commissioner at the premises of Neyveli Lignite Corporation Ltd. along with the officials of the Neyveli Lignite Corporation and various contractors regarding applicability of service tax on some of the activity undertaken by the contractors even prior to the disputed period. Hence it is incorrect to state that the Department was not aware of the activities undertaken by the Respondents and larger period cannot be invoked as rightly held by the Commissioner (Appeals).
5.2 Shri V.S. Manoj, Advocate also reiterates the submissions made by other advocates. In addition to that, he submits as under :-
(a) The allegation in the Show Cause Notice must be specific and it should clearly identify the activities carried out and the corresponding legal provisions under which the said activities are subject to tax. Where the Show Cause Notice is vague, lacks details and itself is sufficient to hold that it is not maintainable.
(b) There is no allegation with reference to the activity undertaken by the parties, and why it is liable for tax. There is no basis of calculation of demand. There are no averments in Show Cause Notice with reference to the applicability of a specific taxable service and the corresponding activity provided by the party. Balance Sheet figure has been the basis for the demand.
5.3 Shri P.K. Parameswaran, Advocate filed written submissions and also reiterates the submission of other advocates.
6. After hearing both sides, we find that the facts of the case in all these appeals are mostly similar in nature. All the Assessees were registered with the service tax authorities under the category of (i) Management, Maintenance or Repair Services, (ii) Commercial or Industrial Construction Service, (iii) Erection, Commissioning and Installation Service and (iv) Man Power Recruitment or Supply Agency Service. The dispute relates for the period from 2003-04 to 2007-08 and only in one case the period of dispute is 2008-09. For the purpose of proper appreciation of the facts of the case, we reproduce below the relevant portion of the Show Cause Notice No.100/2008 (ST) dt. 23.10.2008 in Appeal No.ST/467/2012 (CCE Puducherry Vs MCB and) as under :-
"M/s.MCV & Co., (hereinafter referred to as 'Assessee'), D-9, Rabindranath Tagore Salai, Neyveli 607 803 are providing certain taxable services as detailed in the Annexure to M/s.Neyveli Lignite Corporation, Neyveli (hereinafter referred to as M/s.NLC). It is seen that during theperiod from 2003-04 to 2007-08 they had been awarded different contracts under different Agreement Numbers for providing various taxable services to various units of NLC. The statements given by M/s.NLC reveals that the services rendered by the assessee fall mainly under the category of Management, maintenance or Repair Services and also other services like Commercial or Industrial Construction Services, Erection Commissioning and Installation and Manpower recruitment or Supply Agency Services which are taxable services w.e.f. 1.7.2003, 10.7.2004, 16.6.2005 and 7.7.1997 respectively. It is seen that the assessee got themselves registered under the Finance Act, 1994/Service Tax Rules, 1994 only on 27.3.2006 and is in possession of Registration Certificate Number TMPAR6498MS001 under the category of Maintenance or Repair Service (MRS), Erection Commissioning and Installation (CA), Industrial or Commercial Construction Services (CCS) and Site Preparation and Cleaning Services (SPC). Inasmuch as the assessee has obtained the Registration Certificate only on 27.3.2006, it is evident that during the period prior to 27.3.2006 he had neither applied for Registration nor paid any Service Tax for the service rendered during the said earlier period.
2. The assessee has failed to furnish the details of payments received by them from M/s.NLC for the services rendered during the period 2004-05 to 2007-08. Hence, the Superintendent of Central Excise, Vridhachalam vide OC No.822 dt. 7/8/2008 asked the Assessee to submit the details of the taxable services rendered and also the copies of agreements with M/s.NLC. The assessee has not responded to the letter so far. The Assessee has chosen not to pay eventhough they had received the amount from M/s.NLC for the services rendered by them during 2003-04 to 2007-08. This proves beyond doubt, his intention to evade payment of Service Tax which has rendered them liable which has rendered them liable for invocation of extended period and for penal action under Section 78 of the Finance Act, 1994. Further for mere non-filing of returns, extended period is invocable for demanding Service Tax upto 09.09.2004 in terms of erstwhile Section 73 (1) (a) of the Finance Act, 1994 which was in vogue till 09.09.2004.
3. M/s.NLC have furnished the details of amounts paid by them to M/s.MCV & Co. for services rendered by him during the period 2003-04 to 2007-08 (Copies of the statement showing the payment details by various units of NLC are annexed.)
4. M/s.MCV & Co. have rendered the taxable services and received the payments for the services rendered by them as per the contract agreements entered between them and the M/s.NLC authorities. Based on the payment details furnished by M/s.NLC, the total amount of Service Tax payable by them has been indicated in the Annexure."
7. The Additional Commissioner of Central Excise confirmed the demand of tax of Rs.42,31,623/- and appropriated the amount of service tax of Rs.6,33,839/- against the above SCN by Order-in-Original No.79/2009-(ST) dt. 18.12.2009. The findings of the adjudicating authority is reproduced below :-
4. I have carefully gone through the available case records and oral submissions. I see that there is no doubt that M/s.MCV & Co. had rendered services to M/s.NLC and the fact has been substantiated by the records of payment made by M/s.NLC to the noticee. It is seen that though the Noticee had registered themselves as a Service Provider with the Department on 27.03.2006 they had not been discharging their Service Tax liability properly. It is also clear that, if not for the Department's initiative, the tax payable by the noticeee to the Government exchequer would not have come to the notice of the Department and would have gone unpaid. From the records, it is seen that the services rendered by the Noticee fall under taxable services, namely, Management, Maintenance or Repair Services, Manpower Recruitment or Supply Service, Erection Commissioning and Installation Service and Industrial or Commercial Construction Services. While Management, Maintenance or Repair Services became a taxable service with effect from 1.7.2003 under Section 65 (105) (zzg) of Finance Act, 1994, Manpower Recruitment or Supply Service became a taxable service with effect from 7.7.1997 under Section 65 (105) (k) of Finance Act, 1994, Erection Commissioning and Installation Service became a taxable service with effect from 1.7.2003 under Section 65 (105) (zzd) and Industrial or Commercial Construction Services became a taxable service with effect from 10.9.2004 under Section 65 (105) (zzq) of Finance Act, 1994. As the services provided by the Noticee were taxable and as the Noticee had received the payments for the services rendered by him, the service tax amount demanded in the notice is liable to be paid by the Noticee. Inasmuch as the taxable service, viz. Industrial or Commercial Construction Services came into effect from 10.09.2004 only, the service rendered by the Noticee from this date stands liable to be confirmed.
5. I find from the Annexure that the Service tax paid by the Noticee for the impugned period was shown as Rs.11,282/- during 2005-06 and subsequently Service Tax payments were shown as nil for the remaining period. Whereas from the records available with the Department, it is found that M/s.MCV & Co. had paid an amount of Rs.6,22,561/- during 2007-08. Totally an amount of Rs.6,33,839/- has been paid by the Noticee towards their Service Tax liability. This amount may be adjusted towards the Service Tax liability of the Noticee. "
8. The Commissioner (Appeals) set aside the above adjudication order. The relevant portions of the Order-in-Appeal No.32/2012 (PST) dt. 1.5.2012 are reproduced below :-
"5.1 I find that in the impugned SCN issued by the department there was no allegation as regards to the category under which the appellant are liable to service tax and simply states that the appellant are providing taxable services and received payments for such services and therefore entire amount received is liable to service tax as could be seen from the impugned SCN.
.... ...
5.5 I find that in the instant case the impugned Order-in-Original does not contain the details like the category of services under which the service tax liability falls under activities carried out by the appellant and whether such activities could be classified under specific categories of services and applicability of relevant provisions to the said category. Hence I hold that the above case laws are applicable to the instant case.
... ....
6.1 Further these services that were levied to service tax by Finance Act, have undergone changes in nomenclature for subsequent years under Finance Act, and it is not free from doubt the activities during the period starting from 2003-04 carried out in different point of time by the appellant would fall under respective category of service and the issue would require clarity to arrive at what should be taxable value. Because of the doubt in the mind of the department the entire amount paid by the appellant to M/s.NLC during the period 2003-04 to 2007-08 was taken as assessable value and demand was worked out on the total amount received by the appellant from M/s.NLC. The department by doing so had failed to quantify the service tax payable by the appellant and to find out whether the appellant had undervalued or under declared the value of services alleged to have been rendered by them. Therefore, the demand is not sustainable since the appellant was not under notice as to what exact category he is supposed to pay Service Tax."
9. On perusal of the above cause notice, adjudication order and Order-in-Appeal, we find that all the Assessees were registered with the service tax authorities for rendering various services to M/s.NLC. In the written submissions of Shri M.Ravindran, Advocate, he has stated the nature of services details in the premises of NLC. The main contention of all the learned advocates is that the Revenue failed to determine the amount of tax with the nature of activities and the classification of service. This contention was supported by the decision of the Honble Supreme Court and Tribunal. It is also contended by the learned advocates that the Central Excise officers should have issued summons under the provisions of Section 14 of the Central Excise Act for examination of the statement of NLC. On the other hand, Ld. A.Rs on behalf of Revenue submit that the Central Excise Officers issued letters and in some cases issued summons. It is contended that in most of the cases, the Assessees appeared in the personal hearing and admitted the liability of the service tax and also paid the tax partly and agreed to pay the balance amount as and when the tax amount would be received from NLC. In some cases, they have also paid the tax partly which was appropriated by the adjudicating authority. It is submitted that in all these cases, the demand of service tax in total would be around Rs.9 crores and out of that they paid about Rs.1.8 crores, which was appropriated by the adjudicating authority. It is contended that the Revenue discharged their burden of proof by producing the statement of NLC in respect of the payments for rendering services by the Assessees at the premises of NLC. This fact was not disputed by the Assesees at any point of time.
10. On perusal of the show cause notice, and other evidences and after taking into consideration the facts and circumstances of the case, we find that the demand of service tax was raised on the basis of statements of the NLC. There is no dispute that the Assessees rendered various services at the premises of NLC and received the amount as per the statement of NLC. The dispute relates to that the Revenue had not specifically mentioned the portion of the amount received by the Assessees from M/s.NLC for rendering particular service. Shri M. Rammohan Rao, Deputy Commissioner (A.R) heavily relied on the decision of the Tribunal in the case of Ranjeev Alloys Ltd. Vs CCE Chandigarh 2009 (236) ELT 124 (Tri.-Del). The said case is related to denial of cenvat credit availed on fake invoices and the Assessee failed to prove receipt and use of the inputs in the manufacture of final product. In that case, the Tribunal held that the Revenue placed the evidence that the inputs claimed to have been received by the Assessees and the vehicles numbers shown in the invoices are light motor vehicles, incapable of carrying large quantities of iron and steel items being fake and fictitious, the onus is shifted to the Assessee to prove that the goods were duly received by them and used in the manufacture of iron and steel items.
11. In the present case, as we have already stated that the Revenue placed the statement of consideration paid by NLC to the Assessees for rendering the services at their premises. Further, there is no dispute that the Assessees rendered various taxable services at the premises of NLC. It is a fact that the Assessees had obtained service tax registration for the services rendered by them to NLC. The demand of tax is for the period prior to registration. Hence, it is the duty of the Assessees to explain the activities in respect of the amounts in question received by them from NLC as they had entered into contract with the NLC for rendering services of various nature. The learned advocates submitted that on classification of the services, the onus always lies on the department. In our opinion, while the Revenue placed the statement of NLC showing payment details received by the Assessees from NLC in respect of the various services rendered by them and this fact was not disputed by the Assessees and therefore, it would be sufficient for discharging the onus by the Revenue. So, it is shifted on the Assessee to explain the amounts in question in respect of the rendering of services.
12. Now, we discuss the case laws relied upon by the learned advocates :-
(i) In the case of CCE Mangalore Vs Brindavan Beverages (P) Ltd. 2007 (213) ELT 487 (SC), the Hon'ble Supreme Court dismissed the appeal of the Revenue. In that case, the dispute relates to brand name "Bisleri Club Soda" which has been registered by the Trade Mark Authorities. What was registered for use under the Trade Marks Act is the word "Bisleri" for goods "soda" being aerated water". The Tribunal found that no evidence was brought on record to indicate the words as used exist as a trade mark or any other mark belonging to another person who is not entitled to the benefits under the notification. In that case, the Honble Supreme Court observed that in the SCN there was nothing specific as to the role of the respondents, if any. The arrangements alleged have not been shown to be within the knowledge or at the behest or with the connivance of the respondents. There is no allegation in the SCN of the respondents being parties to any arrangement. The SCN is the foundation on which the department has to build up its case. If the allegations in the SCN are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the SCN. There is no material that the respondents were parties to the arrangement.
(ii) In the case of Securipax India India Pvt. Ltd. Vs Collector of Central Excise 2014 (299) ELT 417 (All), the issue involved is whether the Deputy Commissioner after keeping the application with him over one year, returning the same on 19.3.2002, was justified in issuing a show cause notice dt. 8.4.2002 denying the credit only on the procedural ground of lack of permission from the Commissioner without on merits holding that the appellants are in any way disentitled to take credit.
(iii) In the case of Commissioner of Central Excise, Cochin Vs Chirakkadavu Rubber Latex Works - 2002 (140) ELT 87 (Tri.-Bang.), the Tribunal dismissed the Revenues appeal. In that case, the Tribunal held that there was no evidence on record to conclude that processing undertaken on latex at the respondents premises resulted into any increase in its bonding strength.
(iv) In the case of Metal Forgings Vs Union of India - 2002 (146) ELT 241 (SC), the Honble Supreme Court held that SCN is a mandatory requirement for raising demand and communication, orders, suggestions or advices from the department is not to be taken to be a show cause notice. A specific SCN communicating the amount demanded and calling upon the assessee to show cause, if he has any objection to such demand is necessary.
(v) In the case of CCE Vs Shanmugananda Soapnut Works - 2008 (231) ELT 25 (SC), the Honble Supreme Court dismissed the appeal filed by the Revenue. In that case, it has been observed that SCN is not alleging manufacture of "Shikakai Powder" by mixing "Retta" in proportion of 10 : 1 despite investigation revealing such manufacture. The show cause notice does not contain the allegation of manufacture of "Shikkai Powder" by mixing "Retta" in proportion and hence the adjudication order was held to be derailed due to the absence of impugned allegation in the show cause notice.
(vi) In the case of TIL Ltd. Vs CST Kolkata - 2008 (10) STR 495 (Tri.-Kolkatta), the Tribunal allowed the appeal of the assessee. In that case, SCN does not give the basis of calculation for arriving at the demanded amount and despite a plea made to the Adjudicating Commissioner, no basis was provided to the appellants. The demand has been made on the basis of figures contained in the Annual Report, including the Balance Sheet and Profit & Loss Account. The Tribunal observed that since the basis of calculation of the demand has not been given to the appellant, nor the longer period of limitation has been invoked specifically in the SCN, the proceedings flowing from such defective SCN are neither legal nor proper.
(vii) In the case of SACI Allied Products Ltd. Vs CCE Meerut - 2005 (183) ELT 225 (SC), the Honble Supreme Court observed that the first proviso to Section 4 (1) (a) of the Central Excise Act, 1944 was never invoked by the department either in SCN or in the impugned order. The plea of Revenue was not raised either in SCN or in the impugned order, cannot be sustained and the appeal of the assessee was allowed.
(viii) In the case of M/s.Suganthi Vs Asst. Commissioner of Central Excise, Pollachi 2011 (23) STR 7 (Mad.), the Honble Madras High Court allowed the writ petition filed by the writ petitioner. It has been observed that the department while exercising the power under fiscal statute while passing order, bringing some one under tax net, is required to render specific finding as to the liability the demand cannot be raised on surmises and conjectures. It has been observed that the department has to necessarily examine the aspect as to whether provisions of the Finance Act, 1994 are attracted to the case of petitioners vis-a-vis the definition of "stage carriage" and "tour vehicle" as contained in the Motor Vehicles Act, 1988. The Honble Madras High Court had granted liberty to the department to issue fresh show cause notice in the light of the observations made in that order.
(ix) In the case of Union of India and Others Vs Madhumilan Syntex Pvt. Ltd. - 1988 (35) ELT 349 (SC), the Honble Supreme Court held that Section 11A of the Central Excise Act, 1944 clearly provides that prior show cause notice must be issued to the person against whom any demand on the ground of short levy or non-levy of payment of excise duty is proposed to be made. Therefore, the post-facto show cause notice cannot be regarded as adequate in law.
(x) In the case of United Telecoms Ltd. Vs CST Hyderabad 2011-TIOL-56-CESTAT-BANG, the Tribunal observed that no demand can be confirmed against any person towards service tax unless he is put to notice as to its exact liability under the statute. The show cause notice is the basis to the proceedings and the impugned activities are to be proposed for classification under Business Auxiliary Service or Business Support Service. In the absence of proposal in the Notice, as to the liability of the assessee under the specific provisions in the Act, the demand cannot be sustained.
(xi) In the case of O.P. Khinchi Vs CCE Jaipur in Service Tax Appeal No.126/2008 by final order dt. 24.5.2001, the Tribunal allowed the appeal. In that case, the authority confirmed levy of service on various services provided as proposed by SCN without examining each and every activity thoroughly to bring the appellants to the fold of charge properly under different taxable entries. Neither SCN has made any attempt to lay foundation of proceedings in clear terms in respect of each activity nor the authorities below made effort to find out the substance of allegation therein.
13. On the other hand, the Ld.AR on behalf of Revenue relied upon the decision of the Tribunal in the case of Simon Carves India Vs CCE - 1987 (32) ELT 186 (Tri). In that case, there was difference of opinion between Members as to whether on the facts and circumstances of the case, the show cause notice was fundamentally defective and, consequently, the order of adjudication should be set aside on that ground itself or whether the absence of details in the said notice was not fatal and the order adjudication is to be upheld. The Learned third Member observed that, in view of the circumstances that the show cause notice maybe held to be valid, notwithstanding that the specific amount has not been stated. It was further observed that this does not mean, as apprehended by the learned advocate, that in every case of a show cause notice under the Rule 10, the Excise authorities would omit to specific the amount of that if they did so the notice would be held valid by the appellate authorities.
14. In the case of Ranjeev Alloys Ltd. (supra), it has been held that the assessee availed cenvat credit on the basis fake invoice. The assessee contested the demand on the ground that Revenue failed to discharge onus that the goods were not used in the manufacture of the final product. The relevant portion of the said decision is reproduced below :-
"19. It was submitted on behalf of the appellant that wrong description of particulars of the vehicle per se cannot be at ground to deny Modvat/Cenvat credit. It was also submitted that the mis-description could be result of clerical error. It was also submitted that the onus lay on the Department to prove that the goods were not actually received by the appellant. It was submitted that there is no evidence to suggest that the goods were diverted to any other destination and used elsewhere. These submissions do not cut any ice. We are of the view that onus initially lies on the Department but having established that the vehicles in question were incapable of transporting large quantities of iron and steel items - as admitted by all concerned, the movement of goods from Mandigobindgarh stock-yard of TISCO being fake and fictitious, - an allegation duly made known to appellant by the show cause notice read with Annexure-I thereto, the onus shifted onto the appellant to prove that the goods were duly received by them and used in the manufacture of iron and steel items. We are satisfied that the appellant utterly failed to discharge the onus. ..."
15. In our considered view, none of the case laws relied by the learned advocates would not be applicable to the facts and circumstances of the instant case. In the present case, we have already stated that the Revenue had already discharged the onus lies on them to establish the services rendered by the Assessee in the premises of NLC. It has also placed consideration received by the Assessee in respect of rendering of services to NLC. These facts were disputed by the Assessees. It is well settled that the facts admitted with the supporting documents need not to be proved. The only grievance of the Assessees are that the Revenue had not given the break-up of the amounts with reference to each service. We are of the view that when the Revenue has given all these facts, then the onus lies with the Assessee to explain the service rendered by them in respect of the amount received from NLC.
6. Considering the overall facts and circumstances of the case, and the submissions made by both sides, we find that it is appropriate, the Assessee should be given opportunity to defend their case before the adjudicating authority. It is directed as under :-
(a) The adjudicating authority shall provide the statement of NLC to the Assessees
(b) Upon receipt of the statement, the Assessee would explain the amount received from NLC in the context of their services rendered to NLC and defend the demand of tax.
(c) Then the adjudicating authority shall pass necessary orders by giving proper opportunity of hearing to all the Assessees.
All the issues are kept open for decision by the adjudicating authority. All these appeals are allowed by remand in the above terms. All the stay applications and the cross-objections filed get disposed of.
(Dictated and pronounced in open court)
(R. PERIASAMI) (P.K. DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
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