Custom, Excise & Service Tax Tribunal
The Tehsildar Koil General Secretary vs Cgst & Ce Agra on 27 October, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70661 of 2017
(Arising out of Order-in-Original No.AGA-EXCUS-000-COM-0012-16-17 dated
21/07/2016 passed by Commissioner of Customs, Central Excise & Service
Tax, Agra)
The Tehshildar Koil, .....Appellant
(General Secretary,
Rajkiya Audyogic Evam Krishi Pradarshini, G.T. Road Aligarh)
VERSUS
Commissioner of Customs, Central Excise &
Service Tax, Agra ....Respondent
(113/4, Sanjay Palace, Agra)
APPEARANCE:
Shri Namit Kumar Sharma, Advocate for the Appellant
Shri Manish Raj, Authorised Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70159/2023
DATE OF HEARING : 17 October, 2023
DATE OF PRONOUNCEMENT : 27 October, 2023
SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Original No.AGA-
EXCUS-000-COM-0012-16-17 dated 21/07/2016 passed by
Commissioner of Customs, Central Excise & Service Tax, Agra.
By the impugned order following has been held:-
ORDER
(i) I hereby confirm the demand of Service Tax amounting to Rs.1,18,63,353.00 (Rs.63,40,783.00 + Rs.55,22,570.00) [Rupees One Crore Eighteen Lakhs Sixty, Three 2 Service Tax Appeal No.70661 of 2017 Thousand Three Hundred Fifty Three only) against the Noticee under Section 73(1) of the Act for the period from July'12 to March'15.
(ii) I also confirm the demand of interest at applicable rates on aforesaid amount of Service Tax against the Noticee under Section 75 of the Act.
(iii) I hereby impose a penalty of Rs.31,70,392.00 (Rupees Thirty One Lakhs Seventy Thousand Three Hundred Ninety Two only) upon the Noticee under Section 78 of the Act for the period from July'12 to March'14.
(iv) I also impose a penalty of Rs.5,52,257.00 (Rupees Five Lakhs Fifty Two Thousand Two Hundred Fifty Seven only), upon the Noticee under Section 76 of the Act for the period from April' 14 to March'15.
(v) I also impose a penalty of Rs.10,000.00 (Rupees Ten Thousand only) upon the Noticee under Section 77 of the Act.
(vi) I hereby also demand Late Fee of Rs.1,20,000.00 (Rupees One Lakh Twenty Thousand only) for non- submission of ST-3 returns under Section 70 of the Act read with Rule 7C of the Rules, as discussed above."
2.1 Appellant has been giving the premises situated at Krishi Pradarshini, Aligarh on rent to different vendors/persons for carrying out business from that premises. The premises comprises of certain constructed shops and vacant land which is used for providing the space for parking of sand/soil filled trucks and vehicles. Revenue was of the opinion that the activities undertaken by the appellant are taxable in the category of 'Renting of Immovable Property Services' as defined under Section 66(E) of the Finance Act, 1994, as amended, read with Section 65B(41) of the said Act ibid.
2.2 Appellant did not took registration with the Department and also was not paying any service tax on the amount received as rent for letting out the shops and vacant land for use by their 3 Service Tax Appeal No.70661 of 2017 clients. They also did not file any statutory ST-3 returns as perescribed.
2.3 Show cause notice dated 30.11.2012 was issued to the appellant seeking the demand of service tax from them under the category of 'Renting of Immovable Property' for the period from 10.06.2007 to 30.06.2012 inspite of this show cause notice issued, the appellant did not take registration and did not started started paying service tax. Thus, Revenue was of the view that appellant was willfully contravening the provisions of the law to evade payment of service tax and therefore by invoking extended period of limitation a show cause notice dated 12.08.2015 was issued to the appellant for the period from July, 2012 to March, 2014 seeking to demand service tax as indicated in the table bellow:-
In case of Constructed Shops/Building:
Period Amount Rate of Service Tax Remark of Rent Service payable (including collected Tax Ed. Cess & S.H. Ed.
Cess) July, (45,34,07 12.36% 5,60,164.00 (1) Rs.2,136/-
2012 to 4- being rent
March, 2,136)=4 received from
2013 5,32,074. April,2012 to
00 June, 2012 taken
from SCN
No.74/ADC/
LKO/ST/2012-13
dt 30.11.2012
(2)
Rs.45,34,074/-
being amount for
April, 2012 to
March, 2013
April, 42,54,535 12.36% 5,25,861.00 --
2013 to .00
March,
2014
TOTAL 10,86,025.00
Period Amount Rate of Service Tax Remark
of Rent Service payable (including
collected Tax Ed. Cess & S.H. Ed.
Cess)
July, (2,22,03, 12.36% 24,20,610.00 (1)
2012 to 939.00 - Rs.26,19,713.00
March, 26,19,71 being rent
2013 3.00) received from
=1,95,84, April, 2012 to
226.00 June, 2012 taken
from SCN
No.74/ADC/
LKO/ST/2012-13
4 Service Tax Appeal No.70661 of 2017
dt.30.11.2012
(2)
Rs.2,22,03,939.00
being amount for
April, 2012 to
March, 2013
April, 2,29,30,0 12.36% 28,34,148.00 12.36%
2013 to 00.00
March,
2014
TOTAL 52,54,758.00
Grand Total:-
Period Amount of Rate of Service Tax payable
Rent collected Service Tax (including Ed. Cess & S.H.
Ed. Cess)
July, 2012 to 5,13,00,835.00 12.36% 63,40,783.00
March, 2014
Total 63,40,783.00
2.4 This show cause notice also proposed to demand interest
under Section 75 and proposed imposition of penalties under Section 77 and 78 of the Finance Act, 1994 and penalty and late fee are imposed for non-submission of ST-3 returns under Section 70 of the Act read with Rule 7C of Service Tax Rules, 1994.
2.5 Subsequently, a statement of demand dated 22.03.2016 was issued seeking to demand of service tax, which is as follows:-
IN CASE OF CONSTRUCTED SHOPS/BUILDING:
Period Amount of Rent Rate of Service Tax payable collected (IN Service Tax (including Ed. Cess & Rs.) S.H. Ed. Cess) (In Rs.) April, 2014 59,31,290.00 12.36% 7,33,107.00 to March, 2015 TOTAL 59,31,290.00 12.36% 7,33,107.00 IN CASE OF VACANT LAND:
Period Amount of Rent Rate of Service Tax payable
collected (IN Service Tax (including Ed. Cess &
Rs.) S.H. Ed. Cess) (IN Rs.)
April, 2014 3,87,49,700.00 12.36% 47,89,463.00
to March,
2015
TOTAL 3,87,49,700.00 12.36% 47,89,463.00
Grand Total:-
Period Amount of Rent Rate of Service Service Tax payable
collected (IN Rs.) Tax (including Ed. Cess &
S.H. Ed. Cess) (IN Rs.)
April, 2014 to 4,46,80,990.00 12.36% 55,22,570.00
March, 2015
5 Service Tax Appeal No.70661 of 2017
2.6 This show cause notice also proposed for recovery of
interest under Section 75 and penalty under Section 76 of the Act ibid. It also proposed imposition of late fee for non- submission of ST-3 returns for the period from April, 2014 to March, 2015 under Section 70 of the Act ibid read with Rule 7C of the Service Tax Rules, 1994.
2.7 These show cause notices have been adjudicated as per the impugned Order-in-Original as referred in para-1 above. Aggrieved appellant have filed this appeal. 3.1 We have heard Shri Namit Sharma learned Counsel appearing for the appellant and Shri Manish Raj, learned Authorized Representative appearing for the revenue.
3.2 Arguing for the appellant learned Counsel submits that- The order has been passed in violation of the principles of natural justice as the appellant was not heard before passing of the order. Accordingly, the appeal may be allowed in favour of the appellant.
the appellant is registered charitable trust/society and deriving income not solely with the spirit and object of plant national development and advancement to utility of common people as to provide unique forum for economic agricultural, industries activities and likewise. It is clear that these activities as whole by the appellant trust with these objects are charitable nature which is defined under Section 2 (15) for the charity to ensure the benefit/advantage to general public utility. Commissioner Income Tax, Agra has granted registration under Section 12 AA of Income Tax Act, 1961. Accordingly, they should be granted exemption as a charitable trust under the provisions of Notification No.25/2012-ST dated 20.06.2012. The demand made is hit by limitation because they were having a bonafide benefit for non-payment of the service tax.
Further, he relies upon the following decisions:-
o Indian Institute of Chemical Technology 2012 (26) S.T.R. 97 (A.P.)] 6 Service Tax Appeal No.70661 of 2017 o Hotline CPT Ltd. [2015 (318) ELT 141 (Tri.-Del.) o Classic Strips Pvt. Ltd. [2015 (318) ELT 20 (SC)] o Jubilant Industries Ltd. [2013 (31) STR 181 (Tri.-Del.)] o Acquire Services Pvt. Ltd. [2014 (36) STR 1148 (Tri.-
Del.)] o Subhash Khandelwal & Sons [ 2011 (24) STR 461 (Tri.- Del.)] o Century Denim [2014 (310) ELT 939 Tri.-Del.)] o Reliance Industries Ltd. [2013 (293) ELT 679 (Tri.- Mumbai)] 3.3 Learned Authorized Representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the submissions made in the appeal and during the course of argument.
4.2 We do not find any merits in the submissions of the appellant that the order has been passed in violation of the principles of natural justice. Commissioner has in para no.16 of the impugned order observed as follows:-
16. Noticee was given five opportunities of Personal Hearings, which were duly received by them. The details have been given supra, in the hearing records of P.H.; but not attended by them. Hence I am left with no option but to decide the case on the basis of available records. I also observe that it cannot be termed a violation of principles of Natural Justice in view of Hon'ble Supreme Court's decision in case of F.N. Roy Vs. Collector reported in 1983 (13) ELT 1296 (SC), wherein it has been held that if the party concerned does not avail of the opportunity of personal hearing, the decision without hearing in such case cannot be treated as any violation of the principles of natural justice. Similar view was taken by Hon'ble Apex Court in the case of Jethmal Vs UOI reported in 1999(110)ELT379 (SC). Further Section 33A of the Central Excise Act, 1944 as made applicable to the Service Tax matters vide Section 83 of the Act provides that in the adjudication proceedings 7 Service Tax Appeal No.70661 of 2017 no such adjournment shall be granted more than three times to a party during the proceedings. Therefore, I find that, it is not feasible to keep the case pending for an indefinite period and I have no option except to decide the case on the basis of evidences available on record."
It is seen from the above that sufficient numbers of opportunities were given to the appellant to appear for personal hearing, which appellant choose not to avail, having not appeared when the opportunities were being provided for personal hearing appellant cannot complain for violation of principles of natural justice. Hon'ble Justice Krishna Iyer in case of Board of Revenue Vs Ramjee [1977 SCC (2) 256] observed as follows:
"Natural justice is no unruly horse, no lurking land mine, nor a judicial cure-all. If fairness is shown by the decision- maker to the man proceeded against, the form features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation. no breach of natural justice can be complained of. Unnatural expansion of natural justice without reference to the administrative realities and other factors of a given case, can be exasperating."
4.3 On the merits, for confirming the demand Commissioner has observed as follows:-
"17.1 Leviability of Service Tax on the services rendered by the noticee is by virtue of clause (a) of Section 66E of the Act, which provides as under:
"Declared services.-The following shall constitute declared services, namely:-
(a) renting of immovable property."
Further, various terms and phrases have been defined under Section 65B of the Act, and which are relevant to the instant case are reproduced below with respective clauses of said Section 65B of the Act:
8 Service Tax Appeal No.70661 of 2017 (22) "Declared service" means any activity carried out by a person for another person for consideration and declared as such under section 66E.
(34) "negative list" means the services which are listed in section 66D.
(37) "person" includes.-
(1) an individual,
(ii) a Hindu Undivided Family.
(ii) a company.
(iv) a society.
(v) a limited liability partnership,
(vi) a firm.
(vii) an association of persons or body of individuals, whether incorporated or not,
(viii) Government,
(ix) a local authority, or
(x) every artificial juridical person, not falling within any of the preceding sub-clauses. (41) "renting" means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.
(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-
(a) an activity which constitutes merely,-
(i) a transfer of title in goods or immovable property, by way of sale. gift or in any other manner, or
(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or 9 Service Tax Appeal No.70661 of 2017
(iii) a transaction in money or actionable claim:
(b) a provision of service by an employee to the employer in the course of or in relation to his employment:
(c) fees taken in any Court or tribunal established under any law for the time being in force.
Explanation 1.- For the removal of doubts, It is hereby declared that nothing contained in this clause shall apply to,-
(A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity, or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section.
Explanation 2. For the purposes of this clause, transaction in money shall not include any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
Explanation 3.- For the purposes of this Chapter-
(a) an unincorporated association or a body of persons, as the case may be and a member thereof shall be treated as distinct persons;
10 Service Tax Appeal No.70661 of 2017
(b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons.
Explanation 4, - A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory.
(49) "support services" means infrastructural, operational, administrative, logistic. marketing or any other support of any kind comprising functions that entities cany out in ordinory course of operation themselves but may obtain as services by outsourcing from others for ony reason whatsoever and shall include advertisement and promotion, construction or work contract, renting of immovable property, security, testing and analysis. 17.2 I also observe that in the instant case the information in respect of amount of rent received by the noticee in respect of shops/ building and vacant land given for commercial purpose has been obtained from the Tehsildar of Koil Tehsil/ Addl. District Magistrate (City), Distt. Aligarh, as such the service provider in the case is Government because Tehsildar/ Addl. District Magistrate are the officials of District Administration under a State Government. Furtner, certain services have been kept out of purview of levy of Service Tax under Section 668 of the Act, which have been provided in the Negative List of Services under Section 66D of the Act. The services provided by Government or a local authority during the disputed period, which have been specifically excluded from levy of service fax have been enumerated in clause
(a) of Section 66D of the Act, which is reproduced below:
SECTION 66D. Negative list of services.-The negative list shall comprise of the following services, namely:-
11 Service Tax Appeal No.70661 of 2017
(a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere-
(i) services by the Department of Posts by way of speed post, express parcel post. Ife insurance and agency services provided to a person other than Government;
ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport:
iii) transport of goods or passengers: or
(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities.
17.3 In view of above mentioned statutory provisions it is evident that the renting of Immovable property is a declared taxable service under the provisions of Section 65B(44) and 66E(a) of the Act and leviable to service tax under the provisions of Section 668 of the Act. As per definition of renting provided under Section 65B(41) of the Act. the immovable property includes the constructed buildings/ shops as well as vacant land given to any business entities for commercial purposes. Further, the support services, which include renting of immovable property, provided by the State or Central Government is leviable to Tax, as the same is specifically excluded from the Negative List of Services. Moreover, under the provisions of Notification No. 30/2012-ST dated 20.06.2012, which provides the ratio of payment of service tax under Reverse Charge Mechanism by the provider of service and recipient of service, the service tax liability an the gross amount received in lieu of renting of immovable property is on the Government itself. I thus find that the gross amount received by Noticee in lieu of renting of immovable property to business entities for commercial purposes is leviable to Service Tax. As the noticee has not 12 Service Tax Appeal No.70661 of 2017 deposited the Service Tax, the same is demandable from Noticee along with interest under Section 73[1] and Section 75 of the Act respectively.
18. I further find that the noticee has neither got themselves registered with the department for payment of service tax within stipulated period under Section 69 of the Act read with Rule 4 of the Rules nor did they pay service tax on the value of taxable services received, under Section 68 of the Act read with Rule 6 of the Rules. They also did not file any ST-3 half yearly Return under Section 70 of the Act read with Rule 7 of the Rules. Further the noticee has supplied the details of receipt of rent after issuance of several reminders and pursuance to them, the submission of the desire information was apparently delayed willfully. This act of reluctance and delaying tactics adopted by the noticee reveals the act of suppression of facts by them with an intention to evade payment of service tax. As such the noticee is liable for penal action under Section 78 of the Act for the period from July'12 to March'14 and under Section 76 of the Act for the period from April 14 to March 15 and penalty under Section 77 of the Act. Further, Noticee has also not filed six statutory ST-3 Returns from the period July'12 to March 15, as such they are also liable to pay Late Fee of 1.20,000.00 under the provisions of Section 70 of the Act read with Rule 7C of the Rules. Further, the penalty imposable under Section 76 of the Act is 10% of the Service Tax evaded during the relevant period."
4.4 Definition of 'Renting of Immovable Property" has been reproduced by the Commissioner hence, it is not being. It is noted that 'Renting of Immovable Property' is a declared service as per Section 66 (E) of the Finance Act, 1944. Erstwhile Section 66 (105) (zzzz) of the finance Act, 1994 as the same it stood prior to the amendment made by the Finance Act, 2012, defined Renting of Immovable Property as follows:-
13 Service Tax Appeal No.70661 of 2017 "90a "renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include -
(i) renting of immovable property by a religious body or to a religious body; or
(ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre.
Explanation 1.--For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings;
Explanation 2.-- For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property"
includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property; (105) "taxable service" means any service provided or to be provided (zzzz) to any person, by any other person, by renting of immovable property or any other service in relation to such renting for use in the course of or, for furtherance of business or commerce.
Explanation 1.--For the purposes of this sub-clause, "immovable property" includes--
(i) building and part of a building, and the land appurtenant thereto;
(ii) land incidental to the use of such building or part of a building;
(iii) the common or shared areas and facilities relating thereto; and 14 Service Tax Appeal No.70661 of 2017
(iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate,
(v) Vacant land, given on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce. but does not include-
a. vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes;
b. vacant land, whether or not having facilities clearly incidental to the use of such vacant land; c. land used for educational, sports, circus, entertainment and parking purposes; and d. building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities.
Explanation 2.--For the purposes of this sub-clause, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce;"
4.5 Even for the definition as it existed prior to the amendment made by the Finance Act, 2012, Allahabad Bench has vide Final Order No.70230 of 2020 dated 20/02/2020 has observed as follows:-
"2. The service tax demand stands confirmed against the appellant under the category of 'Renting of Immovable Property'. We note that in the appeal memo, the appellants through their authorized representative have submitted that they are not disputing their liability to pay service tax but the request is only on the ground of invocation of extended
15 Service Tax Appeal No.70661 of 2017 period, inasmuch as, in the same assessee, we have held that the appellant was under legal obligation to discharge their service tax liability under 'renting of immovable property'.
3. --------
4. We note that the demand stands raised for the period 01.06.2007 to 30.03.2012 vide show cause notice dated 30.11.2012 i.e. by invoking the longer period of limitation. We have already held in the case of same assessee that in the light of the fact that issue involved was a bonafide issue of interpretation and in the absence of any evidence of malafide on the part of the assessee, longer period of limitation would not be available to the Revenue. Accordingly, it is held that the demand beyond the normal period is unsustainable. The demand falling within the normal period would be recalculated by the Original Adjudicating Authority which the appellant would pay alongwith interest." 4.6 Though this definition is irrelevant for determining the tax liability in respect of the amended provisions, we note that the Tribunal has even with pre amended definition held that the services provided by the appellant would fall under the taxable category of 'Renting of Immovable Property Service' as defined by Section 65 (90a) read with Section 65 (105) (zzzz_ of the Finance Act, 1994, making it clear that the activities of providing space (vacant land) for storage of sand, soils i.e. Balu, Badarpur at Krishi Pradarshini ground, Aligarh to different Vendors/ persons on payment of certain amount by the party is covered under the category of Renting of Immovable Property Service with effect from01.07.2010 by way of clause (v) of Explanation 1 of the definition of renting of immovable property; hence is liable for payment of Service Tax on such services with effect from 01.07.2010.
16 Service Tax Appeal No.70661 of 2017 4.7 The taxable service under the category of renting of immovable movable property with effect from 01.07.2012 has been made declared service as per Section 66E of the amended Finance Act, 1994. Also all the expansions in the definition as it existed prior to this date have been deleted. Thus all cases of renting of immovable property has been declared as taxable service and made liable to service tax, without any exception for those specified under the negative list. We do not find that appellant falls under any of the category as specified by the negative list.
4.8 Appellant has claimed the benefit of exemption under Notification No.25/2012 stating that they are registered under Section 12 AA of the Income Tax Act, as charitable society/trust for sake of convenience the relevant entries of the is reproduced bellow:-
"4. Services by an entity registered under section 12AA of the Income Tax Act, 1961 (43 of 1961) by way of charitable activities;´ 4.9 From the plain reading of above it is evidence that this entry exempts the services of charitable nature of fake registered society/trust registered under Section 12AA of the Income Tax Act. It does not say that the trust/society registered under Section 12AA of the Income Tax Act is exempt from payment of service tax. The activities undertaken by the appellant are in nature of commercial activities or a consideration for providing certain income. We do not find any merits in the arguments advanced by the appellant to affect that for the reason that they are registered under Section 12AA of Income Tax Act, this exemption should be allowed to them. In our view this exemption Notification is not available to the appellant.
4.10 Similar views have been taken by the Mumbai Bench of this Tribunal in the case of 2017 (5) GSTL 408 (Tri.-Mumbai) para-4 of the said order is reproduced bellow:-
"4. We have carefully considered the submissions made by both the sides. We find that under the category of 17 Service Tax Appeal No.70661 of 2017 renting of immovable property, the service is taxable, if the property is rented out for the purpose of business or commerce. In the present case even though the appellants are charitable trust, the immovable property rented out is undisputedly for the purpose of commerce or business. There is no specific exemption notification in respect of renting of immovable property by a charitable trust. Therefore, the service tax is clearly leviable on the services of renting of immovable property and the service tax demand is upheld."
4.11 We also note that despite the notice being issued for earlier period appellant had not taken any registration under the provisions of Finance Act, 1994 and rules there under and was not paying service tax and also not filing the due taxes. Nothing has brought on record as per which it can be said that appellant had acted in a bonafide manner by making any inquiries subsequent to the show cause notice for the past period with the department. In our view extended period of limitation has been rightly invoked by the impugned order for making this demand. Chennai Bench has in case of M/s. Apex Viswa Engineering Services Private Limited [Final Order Nos. 40525-40526/2023 Dated 28.06.2023] relying on the Mumbai Bench decision held as follows:
"The Tribunal, Mumbai in the decision rendered in the case of Bharat Automotive Pressings (I) Pvt. Ltd. Vs. Commissioner of Central Excise, Pune reported in 2010 (262) ELT 720 (Tri. Mum.) has observed at paragraphs 5 and 6, as under:-
"5. We have considered these submissions also. Though we are not impressed with the submissions relating to the "test audit‟, we are not in a position to ignore the submission of the ld. SDR that the appellant continued to exclude the amortized cost of moulds from the assessable value of the goods supplied to Telco even after the Tribunal‟s decision in Flex Industries case (1997), which was to the effect that such cost was liable to be included in 18 Service Tax Appeal No.70661 of 2017 the assessable value of the goods. A contra decision of the Tribunal came, admittedly, after January 1999. Having made an endeavour to derive benefit out of the so-called "confusion arising out of conflicting decisions of the Tribunal", the appellant cannot turn around and say that they were not aware of the Tribunal‟s decision in Flex Industries case. The facts and circumstances of this case are explicit enough for us to hold that the appellant deliberately excluded the amortized cost of moulds (supplied free of cost by Telco) from the assessable value of the excisable goods supplied to Telco (buyer) even after the Tribunal‟s decision (1997) in Flex Industries case, which was in favour of the Revenue. It appears to us that this conduct of the appellant was wilful with intent to evade payment of appropriate duty on the goods in question. For the period prior to 1997, the appellant seems to be in a position to claim support from the view taken in Bright Brothers Ltd. case (supra) and Star Glass Works case (supra). 6. We also find a valid point in the submission of the ld. SDR that the demand of duty for the extended period cannot be resisted by the appellants on the premise that whatever duty paid by them would ultimately be available as Modvat/Cenvat credit to the buyer. The submission of the ld. SDR is well-founded vide Jay Yuhshin Ltd. (supra)."
19. The provisions of proviso to Section 73 (1) of Finance Act, 1994 are pari pasu and pari materia to the provisions of proviso to Section 11A of the Central Excise Act, 1994. The intention to evade payment of tax is clearly manifest and articulated by the non-disclosure of the details of the provision of services and receipt of consideration. Non- filing of ST-3 returns for such a long period i.e, from March 2006 to March 2010 will make the intent to evade tax obvious. So invocation of extended period is justified, consequently, the imposition of penalty are also required to be upheld."
19 Service Tax Appeal No.70661 of 2017 4.12 We do not find any merits in the submissions made by the appellant either on merits or on the issue of limitation, as appellant have willfully and knowingly not filed ST-3 returns. Accordingly, we hold that appellants are liable for penal action under Section 78 of the Finance Act for the period July, 2012 to March, 2014 and under Section 76 of the Finance Act, 1994 for period thereafter. Commissioner has in the impugned order in para 19 recorded as follows and imposed penalties:-
"19 As regard the imposition of penalty under Section 78 of the Act, I find that under first proviso to the Section 78 of the Act there is provision that the period from 08.04.2011 to the date of enactment of Finance Act, 2015 [i.e. 14.05.2015], if the details relating to transactions, are recorded in specified records maintained under any other law, the penalty impossible under Section 78 is only 50% of tax evaded. Since Noticee declared these amounts of various services provided by them under their specified records; 50% of tax evaded is liable to be imposed as penalty for the transactions made between the period from July' 12 to March'14 which is calculated as Rs 31,70,392.00. The provision of imposition of penalty under section 76 & 78 of the Act are applicable in the instant case by virtue of Section 78 B(1) of the Act."
4.13 section 78B (1) of the Finance Act, 1994 reads as follows:
"SECTION 78B.Transitory provisions. --
(1) Where, in any case,--
(a) service tax has not been levied or paid or has been short-
levied or short-paid or erroneously refunded and no notice has been served under sub-section (1) of section 73 or under the proviso thereto, before the date on which the Finance Bill, 2015 receives the assent of the President; or
(b) service tax has not been levied or paid or has been short- levied or short-paid or erroneously refunded and a notice has been served under sub-section (1) of section 73 or under the proviso thereto, but no order has been passed 20 Service Tax Appeal No.70661 of 2017 under sub-section (2) of section 73, before the date on which the Finance Bill, 2015 receives the assent of the President, then, in respect of such cases, the provisions of section 76 or section 78, as the case may be, as amended by the Finance Act, 2015 shall be applicable."
From the impugned order it is quite evident that penalty has been imposed under Section 78 for the period July 2012 to March 2014 and penalty under Section 76 has been imposed for the period April 2014 to March 2015. There is no overlap in the penalty imposed under the two sections and hence the penalties imposed under these sections for different periods cannot be faulted with. Further Hon'ble Supreme Court has in case of Rajasthan Spinning and weaving Mills [2009 (238) ELT 3 (SC)] held as follows:
"17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced.
18. One cannot fail to notice that both the proviso to sub- section 1 of Section 11A and Section 11AC use the same expressions : "....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...". In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped
21 Service Tax Appeal No.70661 of 2017 duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also submitted that Sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of Section 11AC would come into play only after an order is passed under Section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC.
19. From the aforesaid discussion it is clear that penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section.
20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in paragraph 2 of the decision, as follows :
"2. A Division Bench of this Court has referred the controversy involved in these appeals to a larger Bench doubting the correctness of the view expressed in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai & Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals is whether Section 11AC of the Central Excise Act, 1944 (in short the "Act') inserted by Finance Act, 1996 with the intention of imposing 22 Service Tax Appeal No.70661 of 2017 mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the duties so determined. The assessee on the other hand referred to Section 271(1)(c) of the Income Tax Act, 1961 (in short the IT Act') taking the stand that Section 11AC of the Act is identically worded and in a given case it was open to the assessing officer not to impose any penalty. The Division Bench made reference to Rule 96ZQ and Rule 96ZO of the Central Excise Rules, 1944 (in short the "Rules') and a decision of this Court in Chairman, SEBI v. Shriram Mutual Fund & Anr. [2006 (5) SCC 361] and was of the view that the basic scheme for imposition of penalty under section 271(1)(c) of IT Act, Section 11AC of the Act and Rule 96ZQ(5) of the Rules is common. According to the Division Bench the correct position in law was laid down in Chairman, SEBI's case (supra) and not in Dilip Shroff's case (supra). Therefore, the matter was referred to a larger Bench."
After referring to a number of decisions on interpretation and construction of statutory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows :
"26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given.
23 Service Tax Appeal No.70661 of 2017 "27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered.........".
21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application.
22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows :
"5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under Section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue to establish that the extended period of limitation is applicable. Once that hurdle is crossed by the revenue, the assessee is exposed to penalty and the quantum of penalty is fixed. It is pointed out that even if in some statues mens rea is specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, 24 Service Tax Appeal No.70661 of 2017 therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated "which he knows or has reason to believe". The said clause referred to wilful action. According to learned counsel what was inferentially provided in some respects in Rule 173Q, now stands explicitly provided in Section 11AC. Where the outer limit of penalty is fixed and the statute provides that it should not exceed a particular limit, that itself indicates scope for discretion but that is not the case here."
23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides."
Section 78 is pari material with Section 11AC of the Central Excise Act, 1944. Since we have held that extended period has been rightly invoked under Section 73 of the Finance Act, 1994, penalty under Section 78 cannot be faulted with.
4.14 Accordingly, we do not find any irregularity in respect of penalties imposed. Further, penalty under Section 77 has been imposed for the reason that appellant was not filing the ST-3 returns during the said period and also the penalty imposed seems to be reasonable we uphold the penalty for non- submission of ST-3 return. Late fee also imposed under Section 70 of the Act read with Rule 7C of the Act seems reasonable. 4.15 As the appellant has failed to pay the service tax by the due date, the demand of interest under section 75 of the Finance Act, 1994 is upheld.
25 Service Tax Appeal No.70661 of 2017 4.16 Appellant has in his submissions relied upon various decisions which in our view do not support the case of the appellant.
o Indian Institute of Chemical Technology 2012 (26) S.T.R. 97 (A.P.)] o Hotline CPT Ltd. [2015 (318) ELT 141 (Tri.-Del.) o Classic Strips Pvt. Ltd. [2015 (318) ELT 20 (SC)] o Jubilant Industries Ltd. [2013 (31) STR 181 (Tri.-Del.)] o Acquire Services Pvt. Ltd. [2014 (36) STR 1148 (Tri.-Del.)] o Subhash Khandelwal & Sons [ 2011 (24) STR 461 (Tri.- Del.)] o Century Denim [2014 (310) ELT 939 Tri.-Del.)] o Reliance Industries Ltd. [2013 (293) ELT 679 (Tri.-Mumbai)] All the above cases have held that extended period of limitation cannot be invoked in the facts and circumstances of those case as tribunal had concluded that the party in appeal in these case were either under bonafide belief or the facts were in the knowledge of the department. The facts in case in dispute are not identical appellant were aware of their liability to service tax under the category of "Renting of Immovable Property" at least from 30.11.2012, when the show cause notice for the period June 2007 top March 2012 was issued to them. It was there submission as we have noticed from the order dated 20.02.2020 of the tribunal in the appellants own case that they were not disputing the leviability of service tax under that category, but were only seeking to contest the demand on limitation. Having known that service tax was leviable under this category appellant should have taken registration and started paying the service tax. They deliberately did not took registration and did not paid the service tax during the period of demand. Hence the benefit of bonafide belief cannot be extended in the present case to the appellant. Also it is on record that appellant were not filing any returns etc during the period and have never declared the services provided to the department, despite being aware that the services provided by them were taxable. Hence these 26 Service Tax Appeal No.70661 of 2017 decisions relied upon by the appellant cannot help the cause of their case.
4.17 We do not find any merits in the appeal challenging the impugned order.
5.1 Appeal is dismissed.
(Pronounced in open court on- 27/10/2023) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp