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2024 (2) TMI 306 - AT - Service TaxClassification of service - Business Auxiliary Service or not - Reimbursement of expenses - CENVAT Credit - Time limitation - penalty - Interest. Classification of service - Business Auxiliary Service or not - It is the submission of the appellant that the act of accepting the deposits is without any consideration and hence cannot be termed as service - HELD THAT - The activity of accepting deposits is a service. From the perusal of the definition, it is found that the word used in clauses (iv), (v) (vi) and (vii) is service‟ and not taxable service. It is settled principle in law that the taxing statute need to be considered on the basis of the words used by the legislature and there is no room for intendment etc. reliance is placed on the decisions of the Hon'ble apex Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT wherein it has been held When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue - thus, the services provided by the Appellant to M/s SIFCL were correctly classifiable under the taxable category of Business Auxiliary Service as defined by Section 65 (19) and amended from time to time during the relevant period. Reimbursement of expenses - HELD THAT - The impugned order in no way disputes that reimbursable expenses need to be deducted from the gross amount for determining the taxable value. However have denied the same only for the reason that appellant has failed to provide the documents and evidence in respect of these expenses - the submissions made by the appellant needs to be accepted relying on the decision of Hon ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. 2012 (12) TMI 150 - DELHI HIGH COURT and affirmed by the Hon‟ble Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT , subject to production of documents and evidences in this regard before the adjudicating authority for re-determination of the taxable value. Thus matter to this extent needs to be remanded to the adjudicating authority. CENVAT Credit - HELD THAT - CENVAT Credit of input service and documentary evidences in respect of payment of Service tax on input service the compliance of Service tax Rules for availment of Cenvat Credit has not been done. The noticee is not entitled to benefit of CENVAT Credit at this stage of proceedings. Time limitation - penalty - HELD THAT - There are no merits in the submissions of the appellant that an extended period should not have been invoked for making this demand. The issue of limitation has to be considered on the facts of case in hand and the conduct of the assessee/ appellant. There cannot be application of the decisions in determining the issue of limitation on the basis of the law laid down therein ignoring the facts of case in hand - With regards to the penalty imposed under Section 78 it is found that once the extended period of limitation has been invoked the penalty under this section is mandatory - the penalty imposed under this section cannot be faulted with. However the same needs to be modified to the extent of quantum of tax evaded to be determined in the remand proceedings. Interest - HELD THAT - Issue in respect of interest is settled by the Bombay High Court in case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS, AURANGABAD. VERSUS M/S PADMASHRI VV PATIL SAHAKARI SAKHAR KARKHANA LTD. 2007 (7) TMI 6 - BOMBAY HIGH COURT wherein it has been held that we are unable to agree with the proposition that interest u/s. 11AB is also not chargeable in case the short duty or unpaid duty is deposited with the Government before issuance of show cause notice. Appeal is partly allowed - Commissioner should recompute the demand and penalties imposable on the appellant after allowing the appellant to produce their claim to reimbursable expenses and allowing the same if admissible.
Issues Involved:
1. Classification of Services 2. Applicability of Extended Period of Limitation 3. Reimbursable Expenses 4. CENVAT Credit 5. Penalties 6. Interest Summary of Judgment: 1. Classification of Services: The Tribunal upheld the classification of services provided by the appellant under the taxable category of "Business Auxiliary Services" (BAS) as defined by Section 65(19) of the Finance Act, 1994, as amended from time to time. The appellant's activities of accepting deposits for Sahara India Financial Corporation Limited (SIFCL) were considered incidental and auxiliary support services, falling under clause (iv) for the period up to 09.09.2004 and clause (vi) for the period post 10.09.2004. The Tribunal rejected the appellant's contention that the services should be classified under "Support Services of Business or Commerce" introduced by the Finance Act, 2006. 2. Applicability of Extended Period of Limitation: The extended period of limitation was invoked due to the appellant's willful suppression of material facts and failure to obtain registration, file returns, and pay service tax. The Tribunal found that the appellant was aware of its tax liabilities but deliberately avoided compliance, justifying the invocation of the extended period under Section 73 of the Finance Act, 1994. 3. Reimbursable Expenses: The Tribunal acknowledged that reimbursable expenses should be deducted from the gross amount for determining the taxable value. However, the appellant failed to provide sufficient documentary evidence to substantiate the claim for reimbursable expenses. The case was remanded to the adjudicating authority for re-determination of the taxable value, subject to the production of necessary documents by the appellant. 4. CENVAT Credit: The Tribunal upheld the denial of CENVAT credit to the appellant due to non-compliance with the procedural requirements under the CENVAT Credit Rules, 2004. The appellant had neither obtained registration nor submitted relevant documents to claim the credit. 5. Penalties: The penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994, were upheld. The Tribunal found that the appellant's conduct demonstrated willful suppression of facts with intent to evade tax. The penalty under Section 78 was deemed mandatory once the extended period of limitation was invoked. The penalties under Sections 76 and 77 were justified as they were for contravention of statutory provisions. 6. Interest: The Tribunal upheld the imposition of interest on the unpaid service tax under Section 75 of the Finance Act, 1994, following the principle that interest is compensatory in nature and mandatory for delayed payment of tax. Conclusion: The appeal was partly allowed, remanding the matter to the adjudicating authority for re-determination of taxable value after considering the appellant's claim for reimbursable expenses. The adjudicating authority was directed to finalize the issue within three months from the date of receipt of the order.
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