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TMI Blog2015 (1) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... o, I find that when law is amply clear that the explanation supra is meant for associated enterprise, there is no need to read between the lines. This fact is also strengthened by the rule of literal constriction which states that one of the fundamental principles of interpretation of statue is to interpret a statute from language used in it without adding any words to or subtracting any words from the statute, unless there are adequate grounds to justify the inference that the legislature intended something which it omitted to express and a corollary to this principle would be that an interpretation which renders some word or words in a statute redundant, must be avoided. Therefore, I hold that the reliance placed by the appellants are not sustainable and the service tax demand has been rightly upheld by the adjudicating authority. Validity of issue of SCN where service tax with interest have been deposited earlier - Extended period of limitation - Held that:- as provided under Section 73(4) of the Act, once the extended period has rightly been invoked, the appellants had been rightly issued with the show cause notice, even if they had deposited the differential service tax alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2,66,337/-. On being pointed out by the audit, the appellants deposited Service Tax liability amounting to ₹ 2,66,790/-(inclusive of cesses) along with interest amounting to ₹ 56,829/- vide GAR-7 Challan dated 19-9-2011. 2.2 Accordingly, the appellants were issued show cause notice dated 1-5-2012 for recovery of short paid Service tax under provisions of Section 73(1) of the Finance Act, 1994 (for brevity the Act ) along with interest under Section 75 of the Act by invoking extended period of limitation. Penalty under Section 77 78 of the Act was also proposed. Besides this, the show cause notice was also issued to appropriate the amounts deposited by the appellants in lieu of short paid service tax and interest as discussed supra. 2.3 The show cause notice referred above was transferred to the Assistant Commissioner, Central Excise Division, Sangrur for adjudication purpose vide corrigendum dated 7-6-2012. 2.4 The adjudicating authority vide impugned order upheld the demand of ₹ 2,66,337/-(including cesses) under Section 73(1) of the Act alongwith interest. Besides, equivalent penalty of ₹ 2,66,337/- was also imposed under Section 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarified that service tax is leviable on taxable services provided by the person liable to pay service tax even if the amount is not actually received, but the amount is credited or debited in the books of account of the service provider; that in other words service tax is required to be paid after receipt of payment or crediting/debiting of the amount in the books of account, whichever is earlier; that the appellants are conscious of the fact that circular supra had been issued in context of associated enterprises, however the legal proposition laid down therein would apply to cases of transaction between un-related parties; v. That the appellants had deposited the service tax alongwith interest before the issuance of show cause notice therefore as per Section 73(3) of the Act , there was no need to issue show cause notice; that the appellant is conscious of the fact that a show cause notice can still be issued in terms of provisions of Section 73(4) of the Act but since there was no suppression on part of the appellants therefore, the notice was not required to be issued; that in support of their contention they relied upon the following judgments :- Mannalal Khetan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix. That the appellants are entitled to refund of service tax along with interest deposited by them as the amount so deposited was not due to the government and the same was deposited only to buy peace of mind; x. That as there was no liability to pay service tax, question of interest did not arise and relied upon the decision in the case of Prathibha Processors v. UOI - 1996 (88) E.L.T. 12 (S.C.); xi. That for imposing penalty under Section 78 of the Act, there must exist an intention of the appellants to evade payment of duty and relied upon the decision in the case of Larsen Toubro Ltd. v. CCE - 2007 (211) E.L.T. 513 (S.C.), Sai Motors v. Commr. of ST - 2007 (8) S.T.R. 601 (Tri.), RR Construction Company v. CCE - 2007 (8) S.T.R. 589 (Tri.), Abdul Mazid Rehmatwala v. CCE - 2009 (239) E.L.T. 271 (T) and Saboo George v. CCE - 2008 (230) E.L.T. 535 (T); xii. That penalty ought not to be imposed in every case unless there was deliberate defiance of law and relied upon the following case laws : Hindustan Steel Ltd. v. State of Orrisa - 1978 (2) E.L.T. J 159; Akbar Badruddin Jiwani v. CCE - 1990 (47) E.L.T. 161 xiii. That as per explanation 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as fluctuation in exchange rate may result in profit or loss to the transaction and that the service tax was required to be paid after receipt of payment or crediting/debiting of the amount in the books of account, whichever is earlier. I find that before deliberating on the issue, it would be pertinent to go through Section 66A of the Act i.e. Charge of service tax on services received from outside India and Section 67 of the Act i.e. Valuation of taxable Services for charging Service Tax. Both the sections supra are re-produced as under :- 66A. Charge of service tax on services received from outside India. - (1) Where any service specified in clause (105) of section 65 is- (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and (b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. For the purposes of this section, (a) consideration includes any amount that is payable for the taxable services provided or to be provided; (b) money included any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value; (c) gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited , as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise. 6.2 Thus, in view of the above provisions of law, it is quite clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C. Circular No. 334/1/2008-TRU, dated 29-2-2008. As discussed supra, the explanation (c) of Section 67 of the act clearly states that this explanation is for such transaction where the transaction of taxable service is with any associated enterprise. This has also been agreed upon by the appellants in their appeal. Further, the appellants have contended that legal proposition laid down by explanation (c) supra would apply to transaction between unrelated parties also, I find that when law is amply clear that the explanation supra is meant for associated enterprise, there is no need to read between the lines. This fact is also strengthened by the rule of literal constriction which states that one of the fundamental principles of interpretation of statue is to interpret a statute from language used in it without adding any words to or subtracting any words from the statute, unless there are adequate grounds to justify the inference that the legislature intended something which it omitted to express and a corollary to this principle would be that an interpretation which renders some word or words in a statute redundant, must be avoided. Therefore, I hold that the reliance placed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt-levied or short-paid or erroneously refunded by reason of (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax. (emphasis supplied by me) 7.1 Thus, from the above it is amply clear that show cause notice was not required to be issued only in those cases where proviso of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder, with intent to evade payment of service tax, have not been invoked, otherwise, the show cause notice was required to be issued. Further, before deciding the issue of whether show cause notice was required to be issued or not in the present case, I have to decide first that whether proviso of extended period were invokable or not. In this regard, I find that in the present case before me, had there been no audit of the records of the appellants, the anomaly of differential service tax by the appellants would have gone unnoticed/suppressed. In this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants, in as much as a show cause notice C. No. V(ST)15/CE/91/Commr Adj/CHD-I/10/1672, dated 21-10-2010 was issued for prior period. I do not agree with the contention of the appellants in this regard as the show cause notice dated 21-10-2010 supra was issued for the reason that the appellants had not paid service tax on reverse charge basis on many services as mentioned in that SCN, whereas the present issue is with regard to non payment of differential service tax on account of taking wrong taxable value while discharging service tax liability. Therefore both the issues are entirely different. Further, I find that the appellants had also not adduced any evidence that they had reflected the differential value (on which the differential service tax was demanded by the revenue) in their ST-3 return as non taxable value. Rather, I find the appellants ought to have paid the service tax themselves on the differential value when they were in knowledge of the same on account of previous period s lapse leading to issuance of show cause notice dated 21-10-2010. Therefore, it is a clear case of deliberate intent to evade service tax. 8. The appellants have also contested that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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