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TMI Blog2018 (8) TMI 1174X X X X Extracts X X X X X X X X Extracts X X X X ..... ider the amount received as anything other than rent because in view of the clause (4(b) of the agreement which specifically provides that “The company shall be exclusively in charge of the management and running of the said business from the said premises”. The conduct of retail business from the said premises was so responsible of the company which had necessary expertise in doing so. This is also supported by the fact that appellants are neither having necessary expertise/experience in the field of retail sales of the said product - the entire amounts received in terms of these agreements are nothing but rent for providing space for conducting the said retail business. Time limitation - Held that:- There is no doubt that appellants had not disclosed the facts with regards to said two agreements to the department the other these facts which were in the knowledge where exclusively no disclosed hence suppressed. Accordingly, there is no denial that extended period has to be invoked for demanding the tax short paid - when vital facts for determination of the tax liabilities have been suppressed from the department invocation of extended period of limitation cannot be faulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of Immovable Property w.e.f. 1.6.2007. (iv) Accordingly notice dt.18/22.10.2012 was issued demanding service tax to the tune of ₹ 2,56,65,366/- along with interest and for imposition of penalty under Sections 76,77 and 78. (v) The show cause notice was adjudicated by the Commissioner confirming the demand of the service tax along with interest and imposition of penalties. (vi) Against the said order of Commissioner present appeal has been filed. 3. Heard Shri Sachin Chitnis, Ld. Counsel appearing for appellant and Shri M.P. Damle for the Revenue. 4. Arguing for the appellant Ld. Counsel took us through the various provisions in the agreement and submitted that they were not providing any taxable service under the category of Renting Immovable Property . The agreements entered by them with M/s Pantloon M/s Trent were for profit sharing. As per these agreements both the parties where sharing certain portion of their profit with them in lieu of various business activities under taken by them for assisting the said party s for conducting the business of retail sale from the said premises. 4.1 He emphasized on the following clauses in the agreement with Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intly work out a sales strategy for successful and profitable running of the business. d] The company and SAS covenants with each other to perform the terms and conditions of this agreement. e] The parties will in all matters act loyally and faithfully to the Business Arrangement. f] The parties will not in selling the goods make any representation or give any warranties other than those permitted by the company. g] SAS Agrees to immediately bring to the attention of them company improper or wrongful use of the company's trademarks, Emblems, designs or other intellectual or commercial monopoly rights which may come to the knowledge of SAS in and about the execution of its duties and use every effort to safeguard the property rights and h] The parties agree not part with any information/data provided by the company, to any other party. i] The parties agree not to store Hazardous goods. The company hereby specifically agrees and undertakes that no hazardous goods of any kid will be stored along side the product and other articles of the company so as to render any insurance policy void or voidable. 4.2 Similarly he emphasized on the following cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly required by the company for successfully running the said business. OTHER RIGHTS AND OBLIGATIONS : a] The Parties to this Agreement agree to prepare and sign an inventory of items provided by them in respect of the said premises within 7 days from 7th October, 2002. b) SAS shall be entitled to transfer or assign its right, title and interest in the said premises, only after obtaining the prior written consent of the Company. SAS shall not undergo any change in its constitution or change in its partners. - c] The Parties shall jointly work out a sales strategy for successful and profitable running of the business. d] The Company and SAS covenants with each other to perform the terms and conditions of this Agreement e] The parties will in all matters act loyally and faithfully to the Business Arrangement. f] The parties will not in selling the goods make any representation or give any warranties other than those permitted by the Company. g] SAS agrees to immediately bring to the attention of the Company improper or wrongful use of the company's trade marks, emblems, designs or other intellectual or commercial monopoly rights which may c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 (241) ELT 481 (SC) (h) Shital International 2010 (259) ELT165 (SC) 4.5 Finally he concluded stating that since there was no suppression, mis-statement, fraud, collusion etc. with intention to evade payment of tax penalty is not imposable on them. 5. Arguing on behalf of Revenue Ld. AR submits that: 5.1 The Agreement with M/s. Pantaloons and M/s. Trent are nothing but agreement for providing space for conducting the business of retail sale and hence appropriately and land/lease agreement for the same. Therefore the considerations received in terms of the said agreement should be treated as consideration for providing the space on rent and hence taxable under the category of Renting of Immovable Property. 5.2 Appellants are a partnership firm and they owned the building name Landmark situated at Plot No. 5 6, Ramdas Peth, Wardha Road, Nagpur. They are engaged in business of building and providing the space for on rent to various parties. 5.3 They do not have any experience in retail business to be undertaken by the two companies namely M/s. Pantaloons and M/s. Trent Ltd. The said companies are having their own expertise and marketing his strategies f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of service tax penalty under Section 76 rightly imposed. 6. We have gone through the submissions made by both and also written submissions filed. The issues for consideration in the present appeal can be listed as follows: (i) Whether the agreements between the appellant and M/s. Pantaloons and M/s. Trent Ltd. can be treated as agreement for renting of space or are these agreements only for profit sharing. (ii) Whether service tax can be levied in respect of the services provided by the appellant under these agreement under the category of renting of immovable property. (iii) Whether appellants have evaded payment of service tax by resorting to suppression, mis-statement, fraud etc. and to justify the demand by invoking extended period of limitation. (iv) Whether penalties under Section 76,77, 78 are justifiable on the appellants. 7. For determination of the issues it is necessary to have looked into the agreement. The relevant provisions of the said agreement with M/s Pantloon (Company) are reproduced below: 3. SAS is the owner of the building being Landmark, situate at Plot No. 5 6 Ramdaspeth, Wardha Road, Nagpur [hereinafter collectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts so determined and aggregate of the fees already paid for the year to SAS at the end of each month period of that year. , shall be paid refunded to/by SAS within 7 days from the end of the year, i.e.by 31st March of each year. 4. OBLIGATIONS OF THE COMPANY: a] The company shall punctually pay all charges and taxes with regard to the running of the business, including the charges for telephone [as per bills received from the service provider] electricity [as per the meter reading which meter is installed in the premises of the company and bills received from the provider] and all other agreed outgoings including maintenance charges, till the expiry of the period of this arrangement or its sooner determination, within 7 days of receipt of such bills. b] The company shall be exclusively in charge of the management and running of the said business form the said premises. Accordingly, the Company shall employ adequate staff of the requisite competence and skill required for conducting the business. It. is clearly agreed and understood that the sole responsibility for the employment of such staff and payment, of remuneration s also terminal benefits, if any, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use, for use in the course or furtherance of business or commerce includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings;] [Explanation 2.- For the removal of doubts, it is hereby declared that for the purposes of this clause renting of immovable property includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;] 8.1 In terms of the above definition the renting includes not mere renting but any similar arrangements in respect of immovable property for use in furtherance of business or commerce. Both the agreements under consideration are in terms of above phrase covered by the said definition of renting of immovable property. Accordingly they are leviable to service tax under said entry. Appellants have advanced the argument that the agreements entered into by them were business arrangement and that they have entered into partnership/ joint venture with the said companies for conducting the business and not into rent agreement. Thus the said agreements were nothing but profit sharing agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Gujarat in Salasar Dyeing and Printing Mills P. Ltd. v. Commissioner of Central Excise and Customs, Surat-I [2013] 290 ELT 322 (Guj) has held that: 15. Upon reading the relevant provisions contained in section 11A of the Act, it becomes clear that in the case of duty which has not been levied or paid, or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion, wilful misstatement, suppression of facts, etc., period of service of notice on the person chargeable with such duty would be five years instead of one year provided in normal circumstances. Nowhere does this provision refer to the period of service of notice after fraud, collusion, wilful misstatement or suppression, etc., comes to the knowledge of the Department. In simple terms, the Department could recover unpaid duty up to a period of five years anterior to the date of service of notice when the case falls under the proviso to sub-section (1) and such omission is on account of fraud, collusion, wilful misstatement, etc. 9.2 Further Hon ble Apex Court has in case of C.C.E.,Visakhapatnam vs M/S.Mehta Co [2011 (2) SCR 874] has held- 22. Consequently, we propose to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation by the appellant and suppression of relevant facts, the extended period of limitation was rightly invoked by the department. 9.5 Hon ble Allahabad High Court has in case of Commissioner of Central Excise vs Rathi Steels [2015-TIOL-1416-HC-ALL-CX] held has held that- The assessee, in response to the show-cause notice had stated that there is no provision in Central Excise Law to disclose the details of the credit or to submit the duty paying documents, which in our opinion is false and an attempt to deliberately contravene the provisions of the Act, 1944 and the rules made thereunder with an intent to evade the duty. In our opinion, the facts of the present case clearly suggest willful suppression of material facts by the assessee as well as contravention of the provisions of the Act and rules framed thereunder with an intent to evade the demand of duty as would be covered by Clauses IV and V of Section 11 A (1) of the Act, 1944. Therefore, the invocation of the extended period of limitation in the facts of the present case is fully justified. Reference may be had to the judgment of the Apex Court in the case of Usha Rectifier Corporation (I) Ltd. (Supra), w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stal clear that there has been suppression of material fact as well as contravention of the provisions of the Act, 1944 and the rules framed thereunder at the hands of the assessee with an intent to evade the demand of excise duty. Therefore, extended period of limitation had rightly been invoked in the facts of the present case. 9.6 Reliance placed by the notice on the cases of Coca-Cola India Pvt. Ltd. 2007 (213) ELT 490 (SC) and Jamshedpur Beverages 2007 (214) ELT 321 (SC) to argue with regards to Revenue Neutrality do not hold good as Revenue Neutrality cannot be a global concept but needs to be seen viz-a-viz one individual by the appellant. Nobody can argue that since an amount to be paid by him will be available as credit to somebody else hence the issue is revenue neutral cannot accepted. In view of decision of Larger Bench of this Tribunal in the case of Jay Yuhshin Ltd. Vs. Commissioner of Central Excise (Tri.-LB) 2000 (119) ELT 718 the ground of revenue neutrality needs to be rejected. 9.7 Further when vital facts for determination of the tax liabilities have been suppressed from the department invocation of extended period of limitation cannot be faulted with. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two offences are distinct and separate. Perhaps invoking powers under S. 80 of the Finance Act, the appropriate authority could have decided not to impose penalty on the assessee if the assessee proved that there was reasonable cause for the said failure in respect of one or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs. In case of Commissioner of Central Excise, Chandigarh Vs. Grewal Trading Co. 2010 (18) STR 350 (Tri.-Del.) upheld simultaneously penalties imposed under Section 76 78 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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