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TMI Blog2012 (7) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... payable was net of taxes and taxes if any payable in addition to the price of contract was payable by the payer thereon as price of the contract and such factual aspect remaining unrebutted by appellant clearly establishes that tax payable in India was to form part of contract price. Thus consideration charged for the service provided shall include income tax deducted at source as per terms of contract and is in accord with Section 66A read with Rule 7(1) of the Service Tax (Determination of Value) Rules 2006. There shall not be levy of service tax on the engineering consultancy services availed from foreign consultant abroad prior to 18.4.2006, and at the applicable rate for the period 19.4.2006 to 30.9.2007 on the gross amount of consideration inclusive of income tax deducted at source - no levy of penalty u/s 78 considering the difficulty in understanding the law applicable at inception and date of incidence to taxability - partly in favour of assessee. - ST/219/2009 - 652/2012 - Dated:- 13-6-2012 - Dr. Chittaranjan Satapathy, Shri D.N. Panda, JJ. Shri V.V. Hariharan, JCDR For the Respondent Per D.N. Panda 1. Pursuant to Miscellaneous Order No.258/2011 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before Courts. which reads as under: 21. We may at this juncture digress and express our concern in regard to the manner in which defective Vakalatnamas are routinely filed in courts. Vakalatnama, a species of Power of Attorney, is an important document, which enables and authorizes the pleader appearing for a litigant to do several acts as an Agent, which are binding on the litigant who is the principal. It is a document which creates the special relationship between the lawyer and the client. It regulates and governs the extent of delegation of authority to the pleader and the terms and conditions governing such delegation. It should, therefore, be properly filled/attested/accepted with care and caution. Obtaining the signature of the litigant on blank Vakalatnamas and filling them subsequently should be avoided. We may take judicial notice of the following defects routinely found in Vakalatnamas filed in courts : (a) Failure to mention the name/s of the person/s executing the Vakalatnama, and leaving the relevant column blank; (b) Failure to disclose the name, designation or authority of the person executing the Vakalatnama on behalf of the grantor (where the Vakalatnama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not verify the Vakalatnamas with the care and caution they deserve. Such failure many a time leads to avoidable complications at later stages, as in the present case. The need to issue appropriate instructions to the Registries/Offices to properly check and verify the Vakalatnamas filed requires emphasis. Be that as it may [Emphasis supplied]. 7. Following aforesaid rulings of Apex Court, Hon ble High Court of Delhi disposing a writ petition W.P.No.2651 of 2009 on 8.10.2009 in the case of Deepak Khosla Vs. UOI directed as under: 13. We direct that henceforth while scrutinizing the vakalatnamas filed, be it in the Registry of this Court, the Subordinate Courts in Delhi or the Tribunals, Authorities and Foras in Delhi, failure/defect in the vakalatnamas, noted in sub paras a to e of Para 21 of the decision of the Supreme Court in Uday Shankar s case (supra), shall be treated as a deficiency in the execution of the vakalatnamas making liable the said vakalatnama to be returned Further, in the situation contemplated by sub paras f to i of Para 21 of the decision in Uday Shankar s case (supra), vakalatnamas not executed in the manner indicated in the said sub paras shall also be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source under Income tax Law to the consultancy fees paid to foreign consultant. That resulted in short payment of service tax for which adjudication was made and that resulted in proper demand by adjudication order. It was categorically submitted by Revenue that there was difference between the value paid to foreign service provider and value disclosed in the service tax return giving rise to understatement of gross amount resulting in short payment of service tax. Tax deducted at source under income tax law was not included in gross payment. Therefore, adjudication order which levied service tax on the gross value of taxable service was correct and invocation of proviso to Section 73(1) of the Act was justified for which that does not call for interference in the present appeal. According tax, interest and penalty levied in adjudication should be upheld. 12. Examined the adjudication order thoroughly in absence of Appellant. 13. Record reveals that Learned Adjudicating Authority examined the Service tax Returns of the appellant for the admitted period i.e. March 2004 to September 2007 and considered pleadings of the appellant to complete adjudication to the best of his jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vider shall be basis of levy. 16. Section 67 of the Act has made provision for valuation of taxable service for charging service tax. According to Section 67(1)(a) of the Act where there is a monetary consideration paid to provide taxable service, the assessable value for levy of service tax is gross amount charged by the Service provider for the taxable service provided. Sub section (2) of the said section has made provision to include the amount of service tax to the gross valuie of consideration where taxable service provided is inclusive of service tax. The term consideration for the valuation of taxable service is defined by explanation appearing under Section 67 meaning that consideration includes any amount that is payable for the taxable service provided or to be provided. 17. The liability of the appellant arose under the Act in terms of Section 66A of the Act as recipient of service of Engineering Consultancy from the Consultant abroad. Rule 7 (1) of the Service tax (determination of value) Rules, 2006 which came into force with effect from 19.4.2006 has made provision in respect of services covered by Section 66A of the Act. According to this Rule, measure of value f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes and taxes if any payable in addition to the price of contract was payable by the payer thereon as price of the contract and such factual aspect remaining unrebutted by appellant clearly establishes that tax payable in India was to form part of contract price. Thus consideration charged for the service provided shall include income tax deducted at source as per terms of contract and is in accord with Section 66A read with Rule 7(1) of the Service Tax (Determination of Value) Rules 2006 for the reason that net price of contract agreed to be paid to foreign consultant was to include income deducted at source thereon to be price also. Thus the tax demand on the assessable value comprising the consideration inclusive of income tax deducted at source relating to the period (9.4.2006 to September 2007) which was agreed to be price of the contract sustains. 19. The appellant in para 22 of appeal memorandum stated that in reply to Show Cause Notice dated 19.11.2007 it was pleaded that the notice was barred by limitation upto 30.9.2006. There is no quarrel to such proposition since law was not in force prior to 18.4.2006 to bring the appellant to the purview of service tax on the di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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