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TMI Blog2018 (8) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... edent for invocation of the extended period of limitation - the show cause notices is not maintainable for invocation of the extended period of limitation. Appeal dismissed - decided against Revenue. - Appeal No. ST/53521/2015-CU ( DB ) - Final Order No. 52777/2018 - Dated:- 16-8-2018 - HON BLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) And HON BLE SHRI C.L. MAHAR, MEMBER (TECHNICAL) For the Appellant : Shri Amresh Jain, DR For the Respondent : Shri Vibhav Narang, Advocate and Shri A.K. Batra, CA ORDER Per Anil Choudhary This appeal by Revenue is against order-in-original dated 16th June, 2015 passed by the Principal Commissioner Service Tax, Delhi III Commissionerate, wherein the ld. Commissioner confirmed the demand on outstanding advances along with interest and further proceeded to drop the proposed demand under the head Erection, commissioning or installation services . 2. The ld. Commissioner has, for dropping the demand, observed as follows: .The assessee is appointed by various ministries of Government of India other autonomous bodies to co-ordinate gets the projects such as computerization/networking completed from various vendors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s; c. to enable government organizations to become e-Governance ready so that they can provide better services to the citizen through common service delivery outlets ensuring efficiency, transparency, reliability of services at affordable costs; 5. NICSI acts as an implementing /nodal agency or project management consultant for various projects. NICSI don t execute these projects on its own rather get them executed through empanelled vendors, who are empanelled based on Open Tender process, as prescribed in the General Financial Rules of the Government of India. NICSI further provides vairus services like website design development services, IT support service, etc. Various clients primarily ministries (both state and central) (herein after referred to as clients ) approaches NICSI in order get their projects executed. 5.1. Work orders undertaken by NICSI can be categorized as under:- a) Where NICSI is acting as implementing agency; b) Where NICSI is acting as principal service provider; c) Where projects involves supply of goods exclusively; Sample copies of agreements and invoices are enclosed, in appeal paper books. 5.2. Where NICS is acting as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, demand for the period 2008 2009 to 2012-2013 of ₹ 389.02 crores was proposed. The taxable turnover calculated by adding the advance receipts pertaining to the project(s) involving exclusive services with advance receipt pertaining to the projects involving supply and service both. From such taxable turnover, the service tax was calculated at ₹ 474.55 crores and after reducing the amount of service tax already paid ₹ 85.52 crores, the balance demand was proposed at ₹ 389.02 crores. 7. Further, Revenue alleged that the respondent has not paid the tax on the advances at the time of receipts, thereby violating provisions under Rule 6 of Service Tax Rules, 1994 read with rule 3 of Point of Taxation Rules, 2011, as applicable during the period in dispute. Prior to issue of show cause notice, the respondent deposited the service tax calculated on advance outstanding being ₹ 50.17 crore along with interest on delayed payment of tax ₹ 13.94 crores. 8. The ld. AR for Revenue, Mr. Amresh Jain, reiterating the grounds of appeal stated that the ld. Commissioner has erred in dropping the demand of ₹ 389.02 crores concluding that the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e copies of project/documents, agreements, pro forma invoice, etc., pertaining to some sample projects obtained from the respondent on examination appeared that the respondent was required to undertake the entire range of activities, which, inter alia, comprises of procurement, installation of equipments, installation of hardware, installation of software, testing of equipments, hardware and software, running of pilot projects, commissioning of equipments, systems and network, handing over the operation of the equipment to the respective clients and repair and maintenance of installed equipments and systems, supply of skilled manpower. In the projects executed by the respondent more than one or all of the above activities are involved during execution of the projects. 12. The Department of Information Technology (MT), Government of India has awarded National Knowledge Network (NKN) project to the respondent/ NICSI, as per the administrative approval dated 30/03/2010. The objective of NKN is to interconnect all universities, libraries, laboratories hospitals and agricultural institutions to share data and resources across the country over the high-speed (of gigabit capabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was given to them by the Ministry of Communication and Information Technology, Department of Information Technology, Government of India, National Knowledge Network Division directing the Pay Accounts Officer, Department of Information Technology to release the funds for the project action establishment of national knowledge network to the respondent, to be implemented by NIC, which was the implementing agency. The letter dated 30.03.2010 issued by the Ministry, wherein in para-2, it is stated that sanction of the President of India is hereby conveyed to release the amount of ₹ 240 crore towards grant-in-aid to the respondent, to incur expenditure towards the said project. Further, in para-3, it is stated the grant-in-aid given to respondent will be regulated in accordance with the provisions contained in the terms and conditions of the Department of Information Technology and are subject to Chapter 9 of General Financial Rules, 2005, as amended from time to time. It is further provided that the accounts of the respondent, NICSI and NIC shall be audited by C AG or by any person authorized by him on its behalf in accordance with the statutory provisions. Further, the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, this Tribunal observed that from reading of the agreement between the parties, it indicates that Foster is not involved in actual execution of the project. The project management functions relating to the project continued to be with Petronet L G Ltd., which was engaged in the business of setting and operating LNG terminal for receiving storage degasification etc. It was Petronet, which have entered into an EPC contract with the Japanese company to develop, design, engineer and procure equipment, materials and supplies to erect and construct storage tanks of 5 MMTPA capacity with potential to expand. The EPC contract also envisaged other works and involved offshore supply, offshore services, onshore supply, onshore services and construction and erection. Petronet had entered into an agreement with Foster for project management consultancy in relation to setting up and operating the LNG terminal and required to advise and assist in relation to the execution of the project. Foster was in the role of advisers/consultant to petronet so that the work of EPC contractors are as per the requirement and standards envisaged by Petronet. This Tribunal held that from a close r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances, the conditions precedent for invocation of extended period, being not available like suppression, fraud, intention to evade the duty liability etc, the show cause notice is fit to be held not maintainable. 22. Having considered the rival contentions, we are satisfied that the respondent has provided only Consulting Engineer Services , on which they have discharged the service tax liability. We further find that the work order issued by the Government Department is in the nature of cost plus contract, wherein the respondent has been appointed as the implementing agency on behalf of the Government Department and the money has been received as a trustee. Further, the respondent is liable to account for every single rupee spent for on behalf of the Government. They are not entitled to appropriate a single rupee more than the agreed 7% as agency charge or administrative charges. Further, the activity of the respondent is held to be in the nature of pure agent. As such, no service tax can be demanded on the amount of advance received and /or on the amount spent out of that advance for the purpose of the project. It is also an admitted fact that the respondent has themselves n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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