9911796707
TMI Blog2016 (8) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-A attached to this SCN, should not be recovered under proviso to Section 73(1) of the Finance Act,1994 (for short 'the Act') (ii) Interest, at the applicable rate, on the amount mentioned in (i) above, should not be charged and recovered under Section 75 of the Finance Act,1994 and (iii) Penalty should not be imposed under Section 77 & 78 of the Finance Act,1994. 3. In the show cause notice, it was stated that the petitioner had incurred expenses towards the sales promotion. Upon being inquired, the company had informed that the sales promotion expenses pertained to business expenditure to promote its products by conducting the doctor meetings, scientific sessions with doctors, distributing physician samples, printing of literatures, printing of gimmicks, printing of visual aids, supporting hospitals and clinics to purchase medical instruments, field business meeting to discuss about market trends and strategies, sales target related incentives to field personnel etc. According to the authorities, these activities appeared to be covered under the category of 'Business Auxiliary Service' and the petitioner was therefore, liable to pay service tax on the same. The show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration to the department regarding the said services provided by them. They have not applied for inclusion of the said service in their service tax registration and also failed to file the requisite ST-3 returns. Thus, the assessee has contravened the provisions of Sections 66, 68, 69 and 70 of the Finance Act,1994. 9. Thus, it appears that the assessee has incurred expenses towards sales promotion pertaining to business expenditure to promote their products by conducting doctor meeting, scientific sessions with doctors, distributing physician samples, printing of literatures, printing of gimmicks, printing of visual aids, supporting hospitals and clinics to purchase medical instruments, field business meeting to discuss about market trends and strategies, sales target related incentives to field personnel, brand reminders etc. and the assessee failed to discharge service tax liability totally amounting to Rs. 4,51,68,519/- (Service Tax Rs. 4,38,52,930/- + Education Cess Rs. 8,77,059/- + S.H. Education Cess Rs. 4,38,530/-), as detailed in the Annexure-A attached to this SCN, which is required to be recovered from him under proviso to Section 73(1) of the Finance Act,1994, along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that such sales promotion services were obtained by the petitioner from Indian service providers and the consideration for such services was paid to Indian service providers and that therefore, the petitioner had no liability to pay any service tax on such services nor has been registered for such purpose. The petitioner relied upon relevant statutory provisions and judgments of different judicial fora. It was also contended that there was no suppression of facts and that therefore, neither extended period of limitation could be applied nor penalty could be imposed. 6. Ignoring such pleas of the petitioner, the Commissioner of Service Tax passed the impugned order dated 29.1.2016 for both the show cause notices and confirmed the service tax demand of Rs. 4.51 crores for the period between Financial Year 2007-08 to 2012-13 and further service tax of Rs. 1.09 crores for the period between July,2012 to June,2013. It provided for recovery of said sums with interest. He also imposed penalty under Section 76 of the Finance Act,1994. We may reproduced relevant portion of the order. "18.09 In view of above, I find that in the instant case, the assessee has provided services to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' and chargeable to Service Tax s per Section 66 of the Finance Act,1994 at applicable rate and payable as per Section 68 of the Finance Act,1994. 18.13 They have further contended that they are manufacturer of Pharma Drugs. Therefore, as a Business Protocol, they were required to use services of Medical Representatives, meet the doctors, conduct training sessions with the doctors and use other promotional and advertising services for their business. They had also appointed more than 200 field Representatives to meet the Doctors and customers, distribute, market and sell the medicines in India. Such expenses were routine Business Expenses which were incurred locally in India and are accounted in their Books of Accounts as ' Sales Promotion Expenses'. It was very much clear from their above contention that they have accepted the fact that they were providing various services for promotion of their product and I find that their contention is not correct to the extent that services provided by them were not chargeable to service tax as it was routine expenditure. It is pertinent to mention here that by their above contention, they have accepted that they had provided various services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order, statutory appeal lies before the Tribunal. However, he contended that in the present case, the Commissioner had no jurisdiction to levy service tax on the petitioner. The question of interest on such service tax and penalty therefore, would be consequential. This Court may therefore, exercise writ jurisdiction without insisting on the petitioner availing such appellate remedy. The objection to the jurisdiction of the Commissioner was based on the contention that the petitioner has not provided any taxable service, the question of bringing the petitioner within the service tax net does not arise. Elaborating such contention, learned counsel submitted that service tax as a rule is levied from the service provider unless the reverse charge mechanism is provided for a taxable service in India by a notification issued by the Government or where such mechanism would apply since the service provider is situated outside India. In the present case, the neither of the eventualities arise. In the show cause notice as well as in the impugned order, the authority has referred to the service received by the petitioner for which expenditure was incurred. If that be so, the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 65(19) of the Act. 11. Section 66 of the Act pertains to charge of service tax and provides that there shall be levied a tax referred to as service tax at the rate prescribed therein on the value of taxable services referred to in various sub-clauses contained in sub-section including sub-clause (zzb) of clause (105) of Section 65. Section 66A of the Act pertains to charge of services tax on services received from outside India. It reads, thus; "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, and such taxable service shall be treated as if the recipient had himself provided the service in India, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be prescribed. Sub-section (2) of Section 68 provides that notwithstanding anything cotnained in sub-section (1), in respect of such taxable services as may be notified by the Central Government, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66B. 12. Section 66B of the Act, which was inserted by Finance Act,2012, pertains to charge of service tax on and after Finance Act,2012 and provides a negative list of services other than those where service provided or agreed to be provided would be chargeable to service tax. In the present case, we are, however, not directly concerned with this provision. 13. In exercise of the powers conferred under the Act, the Government of India has promulgated the Service Tax Rules,1994. Rule 2 thereof contains definitions. Clause (d) thereof pertains to person liable to pay service tax. Sub-clause (i) thereof pertains to taxable service notified in sub-section (2) of Section 68, Sub-clause (ii) provides that in a case other than sub-clause (i) , means the provider of service. 14. All statutory provisions noticed hereinabove therefore, refer to one common factor, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er provided taxable service without payment of tax or was liable to pay service tax by way of reverse charge mechanism, it would be open for the department to initiate the proceedings as permissible under law, with respect to which, we offer no comment since such issue has not arisen before us. 17. The last attempt on the part of learned counsel for the department to save the order by requesting to relegate the petitioner to appellate remedy must fail on the basis of observations made hereinabove. We have proceeded on the basis of admitted facts and come to the conclusion that the Commissioner had no jurisdiction to levy tax in absence of any finding that the petitioner had provided a taxable service. When the issue rests only on admitted facts and when on the basis of such admitted facts, we find that the Commissioner of Service Tax had no jurisdiction to levy service tax on the petitioner, relegating the petitioner to appellate remedy would be futile and would cause unnecessary hardship to the petitioner. 18. At this stage, learned counsel for the department requested that the proceedings be remanded to the Commissioner of Tax Service for fresh consideration. We see no purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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