2016 (2) TMI 1292 - HC - Central Excise

Levy of Service Tax - Courier services - activity of door to door transportation of time-sensitive documents, goods or articles utilizing services of a person - Valuation - HELD THAT - It was held that as the appellant had misdeclared gross value in returns inasmuch as value declared after adjustment of amount payable on account of services received, the penalty was imposable under Sections 77 and 78 of the Finance Act, 1994.

Summary

Issues involved:
1. Interpretation of demand for the normal period of limitation under Section 66A of the Finance Act, 1994.
2. Sustainability of demand for the extended period under the proviso to Section 73 for un-billed shipments.
3. Imposition of penalties under Sections 77 and 78 of the Finance Act.

Interpretation of demand for the normal period of limitation under Section 66A:
The High Court admitted an appeal raising the issue of the sustainability of a demand for the normal period of limitation on services provided to a company under Section 66A of the Finance Act. The question arose in the absence of the provision of Section 73(2A) of the Finance Act during the period of dispute. The Court considered this as a substantial question of law warranting admission for further consideration.

Sustainability of demand for the extended period under the proviso to Section 73:
The Appellate Tribunal had previously held that the appellant's activity of 'door to door' transportation of time-sensitive documents fell under Courier Services, not Business Support Service as contended by the appellant. The Tribunal also ruled that the Service Tax was payable on the gross amount of receivables for services provided, disallowing the setting off of receivables against payables. Additionally, the Tribunal found that the appellant's misdeclaration of the gross value of services provided and concealment of the network agreement justified the invocation of the extended period of limitation.

Imposition of penalties under Sections 77 and 78 of the Finance Act:
The Tribunal upheld the imposition of penalties under Sections 77 and 78 of the Finance Act on the appellant. This decision was based on the appellant's misdeclaration of the gross value of services provided and the concealment of the network agreement. The penalties were deemed imposable due to the misdeclaration in returns and the adjustments made in the amount payable on account of services received, leading to the imposition of penalties under the relevant sections of the Finance Act.

This judgment from the Bombay High Court addressed various legal issues related to Central Excise Appeal, including the interpretation of demand for the normal and extended period of limitation under the Finance Act, sustainability of demands for un-billed shipments, and the imposition of penalties under relevant sections of the Act. The Court admitted the appeal based on substantial questions of law, highlighting discrepancies in the appellant's declarations and agreements, leading to a detailed analysis and ruling on each issue raised in the appeal.