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2024 (12) TMI 1362 - AT - Service TaxInvocation of extended period of limitation - suppression of facts or not - levy of service tax - sponsorship services - inter company management/service expenses shared with parent company - Renting of Immovable Property - import of services availed from associate enterprises - software license and maintenance/support agreement produced by the appellant - interest on failure to remit the tax as per the Point of Taxation Rules, 2012. Invocation of extended period of limitation - suppression of facts or not - HELD THAT - As per the law laid down by Hon'ble Apex Court in the matter of M/s Anand Nishkawa Co Ltd Vs. CC Meerut 2005 (9) TMI 331 - SUPREME COURT if correct information is not disclosed deliberately to evade payment of duty and when facts are known to both the parties, omission by one to do so be would not render suppression of facts. Mere failure to declare will not amounts to wilful suppression. There must be some positive act from the side of assessee to find wilful suppression as per Section 11A of the Central Excise Act, 1994. Thus, the impugned order confirming demand beyond the normal period of limitation is unsustainable. Nonpayment of service tax of Rs. 1,01,6,502/- under 'sponsorship' services - HELD THAT - The appellant produced sufficient evidence to prove that the consideration for demanding said amount under 'sponsorship; services has been arrived without considering the details of expenses as explained in ibid, paras. Since, the actual amount of sponsorship fee is only Rs. 2,15,55,828/- and considering the fact that the appellant had discharged their liability on the said amount on Reverse Charge basis, service tax of Rs. 1,01,6,502/- demanded as per the impugned order under 'Sponsorship' services is unsustainable. Demand of Rs. 13,30,558/- on inter company management/service expenses shared with parent company - HELD THAT - The appellant produced the challan evidencing payment of service tax of Rs. 2,23,79,555/- on a consideration of Rs.21,66,08,189/- against various services on inter company management/service expenses shared with the parent company. As regards demand of Rs. 13,30,558/-there are no details furnished by the Adjudication authority or as per the SCN to find out the category under which alleged short payment of Rs. 13,30,558/- was demanded. In the absence of any specific allegation, no finding can be made that there is a short payment as held in the impugned order. Thus, the said demand is also unsustainable. Demand of interest of Rs.20,371/- alleging failure to remit the tax as per the Point of Taxation Rules, 2012 - HELD THAT - Since the detail breakup of the amount is not specified in the SCN, Appellant could not produce any submission to that effect. Considering the fact that the Appellant were paying service tax continuously and discharged huge amount of service tax under different categories as and when they were liable to pay, demand of interest of Rs.20,371/- without specifying the detailed breakup of the amount is unsustainable. Demand of Rs. 2,45,58,483/- under 'Renting of Immovable Property' - HELD THAT - As per the evidence produced by the appellant including the certificate issued by Chartered Accountant, the total service tax liability is only Rs. 1,77,00,220/- and not Rs.2,46,02,902/- as alleged. Out of this, service tax of Rs. 58,28,607/- was already deposited by landlords and for Rs.10,74,075/-, the appellant claims that the amount represents rent less charged by landlords, who were not liable to register under the service tax registration, since their turnover during the impugned period was below the threshold limit prescribed in this regard. However, Adjudication Authority confirmed higher amount on the ground that during the course of audit the assessee could produce only two challans of Rs.41,00,483/- each dated 31.10.2011 and 28.12.2011 and the third challan of Rs.6,49,143/- dated 31.03.2012. But the assessee has failed to produce any challan for the payment of the remaining amount of Rs.34,29,130/-. Since the assessed has not fulfilled the Court's order, they are not eligible for the concession i.e. deposit of 50% of the service tax liability with the department. Hence Adjudication Authority confirmed Service Tax of Rs. 2,45,58,483/- under the above head - there is an omission on the part of appellant and as well as Adjudication Authority to appreciate the facts in right perception - The facts can be considered only by the adjudication Authority on the above directions after extending reasonable opportunity for adducing evidence regarding the payment of service tax. Demand of Rs. 73,00,732/- on import of services availed from associate enterprises - HELD THAT - There are strong force on the submission made by the appellant that the overall income is only attributed to trading activity and same cannot be considered as receipt of any commission. However, the details can be verified only after verifying the records produced by the appellant. Hence issue is remanded to adjudication authority for considering the documents /evidence relied by the appellant and to find out the demand for normal period, if any payable by the appellant. Non-payment of service tax of Rs.2,80,40,921/- on software license fee - HELD THAT - As per the software license and maintenance/support agreement produced by the appellant, no conclusion can be made that the onus for payment of license fee both for new licenses as well as for maintenance and support is on M/s Levi Strauss Co., both in respect of company owned/operated stores as well as for franchises as held by Adjudication Authority. The issue can be settled only on careful consideration of the role of the appellant whether they acted as pure agent of the parent company as claimed by the appellant. Hence, Adjudication Authority is directed to verify the contract and the role played by the appellant in providing software license during the relevant period in the De-novo Adjudication. Conclusion - The impugned order confirming demand beyond the normal period of limitation is unsustainable. Penalties imposed by adjudication authority are also set aside. Further the demand confirmed on 'Sponsorship' services under Reverse Charge Mechanism (RCM) is set aside. Regarding demand under renting of immovable services, service tax demand of Rs. 2,45,58,483/- is set aside, appellant shall produce evidence regarding payment of remaining amount of Rs.34,29,130/- and in case the appellant fails to produce sufficient evidence regarding payment of entire amount, appellant is liable to pay balance amount with interest. As regarding other services, the demands as per impugned order is set aside and appeal is remanded to adjudication authority to conduct de-novo adjudication as per the above finding for the normal period. Appeal disposed off. 1. ISSUES PRESENTED and CONSIDERED The judgment primarily revolves around the following core legal questions:
2. ISSUE-WISE DETAILED ANALYSIS Sponsorship Services:
Intercompany Services:
Import of Services:
Software License Fees:
Renting of Immovable Property:
Extended Period of Limitation:
3. SIGNIFICANT HOLDINGS
The judgment underscores the importance of precise categorization and evidence in tax liability cases and highlights the necessity of adhering to procedural requirements before imposing penalties and extended limitations. The tribunal's decision to remand certain issues for further examination reflects the need for thorough scrutiny and fairness in adjudication processes.
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