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TMI Blog2018 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ts reduced the net receivables to ₹ 1212.12 Crores and assigned the same to Mahimna and Traitrya for a consideration of ₹ 297 Crores. Thus in fact the transaction between the respondents and assignee is one of the assignment/ sale of receivables for a consideration and not one of providing the taxable service under the category of “Online Information and Data Retrieval” services. In the entire appeal revenue has challenged the order of Commissioner on the ground that Commissioner has failed to cause the verification of the documents, and have sought the matter to be remanded back to the adjudicating authority for causing the verification of the documents - the said ground of verification is not sustainable as all the documents relating to said transaction ₹ 297 Crores were before the Commissioner and only after consideration of the said documents he has arrived at the findings. Since no service has been provided by the respondents in the present case under the category of “Online Information and Data Retrieval” services under the transaction under consideration, there is no merit in the appeal filed by the revenue. Appeal dismissed - decided against Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e received amount of ₹ 297 Crores from the assignees, for assignment of the said receivables, service tax @ 12.36% was leviable on them under the category of Online Data Information and Retrieval services as defined under Section 65 (105)(zh) of the Finance Act, 1994. Thus the show cause notice dated 17.07.2013 was issued to the respondents demanding service tax amounting to ₹ 32,67,10,573/- by invoking extended period of limitation as provided for under Section 73 of the Finance Act, 1994, along with interest under section 75. Show Cause also proposed imposition of penalty under section 76, 77 78. 2.2 After considering the submissions made by the respondents in their written reply and during the personal hearing, Commissioner has dropped the demand holding that 18.3 Material facts on record show that the amounts received by the noticee is not attributable to services provided by the noticee to its customer. The amount is attributable to services provided by RCOM [M/s Reliance Communications formerly M/s Reliance Infocom RIC ]. This fact was not presented by the noticee to the audit party. This fact has been brought tom the notice of department only in thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assignment to SSEPL which had later on merged with RCIL and whether the respondents had paid service tax on such considerations received by them. iv. The order fails to appreciate the receivables as defined by the agreement, it refers that receivables are arising out of sale of services to its customers. This clearly indicates that the amount of ₹ 1212.12 Crores shown as receivables was on account of services provided. v. Under the DPAO scheme the handsets were initially given to their customers free of cost. It was also admitted by the respondents vide their letter dated 10.04.2006 that the cost of handsets were integrally built into the value of services provided by the telecom service provider. Since the handsets were being provided free of cost, the accounting head thereof had been under business expenses. It was only wef 2007-08 that these are indicated as operating income. As the amount is prior to that period i.e. up to 2006-07, it is imperative that such free supply of goods being not sale but only integral part of the telephoning services marketed by them as an agent without which hardware such telephoning service was not technically feasible where hardware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans receivables due and payable to RCIL by its customers arising out of services provided to its customers. In the event assignee collects receivables from the customers any amount in excess of the purchase consideration, the assignee were responsible to pay the service tax on such excess recovery. It is not even the case of the department in the show cause notice that any amount in respect of the amounts so assigned has been collected by the respondents. 4.2 Before considering the levy of service tax the basic issue that needs to be examined, is whether the transaction under consideration, i.e. the assignment of debt by the respondents to the assignee is a service liable for tax under the category of taxable services. In the present case undisputed fact is that respondents are having certain outstanding receivables in their book of accounts. These receivables are in respect of the sale of goods and services provided by them to their customer. These amounts which are shown as receivables to the extent of ₹ 1212.12 Crores in the book of account have been assigned by the respondent to the assignees for a consideration of ₹ 297 Crores. The transaction perse between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfocom, there were overdue amounts receivables from the customers of RCOM (reliance Infocom) by RIL. The amount outstanding in this respect as in the Financial Year 2004-05, was ₹ 3901 Crores comprising of ₹ 2379 Crores towards the sale of handsets. On direct sale basis and rest 1522 Crores towards the amount received under the DAPO Finance Scheme which included the sale of handsets also. 8.6 RIL entered into an agreement dated 02.04.2004, with the effective date from 26.03.2004. as per this agreement, with M/s Smart Entrepreneur Solutions (P) Ltd (SESPL) (subsequently named as Synergy Entrepreneur Solutions (P) Ltd wef 11.10.2004), RIL transferred, by way of assignment, to SESPL, all the receivables of ₹ 3901 Crores in respect of the above services and sale of handsets (after allowing discount of rest 475 Crores) for a consideration of rest 3426 Crores. The entire amount of ₹ 3426 Crores were paid on 26.03.2004, through Syndicate Bank cheques, by SESPL to RIL as per the Ledger Account in the books of SESPL, which is enclosed as Exhibit C. This is duly reflected in Schedule No (D) (B) of the Audited Balance Sheet of SESPL for F Y ended 31.03.2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion relating to service charges of ₹ 3.56 Crores (!212.12 minus 1208.56), it is also not relatable to any service rendered by RCIL to anybody including Mahimna and Traitrya, since the service had been rendered only by RIL which has been realized by RIL when it received the amount of ₹ 3426 Crores from SESPL, in which ₹ 3.56 Crores is included. 4.5 One of the grounds raised by the revenue in the appeal is in respect of the certificate issued by Statutory Auditors, for the reason that the said certificate has been signed as Chaturvedi Shah without indicating the name of the signing person/ CA. From the RUD I to the show cause notice which is copy of Auditors Report, Balance Sheet, Profit and Loss Account of M/s Reliance Communication Infrastructure Limited for the year ending 31.03.2008, it is quite evident that the said Chaturvedi and Shah are the statutory auditors of the said company, and hence any objection with regards to the manner of signing the said certificate at this stage cannot be sustained. 4.6 From the factual matrix as explained in the reply to show cause notice, undisputed fact is that RCOM was recipient of certain services from RIL wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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