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TMI Blog2017 (8) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority dispatched it to the assesse - The SCN in question was adjudicated on 10-3-2017 when the order was dispatched by speed post. The settlement application was also filed on 10-3-2017 when the case is already adjudicated. In this case application filed upto 9-10-2017 can be considered as filed before adjudication. The application is not maintainable in terms of Section 32E(1) of the Central Excise Act, 1944 and the same is liable to be rejected on this ground alone without going into the merits of the case. X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014-15, as per ST-3 returns, applicant has paid Service Tax of ₹ 64,50,356/- against the Service Tax payable of ₹ 1,17,76,182/-. However, applicant submitted on 16-2-2016 that he has calculated his Service Tax liability for the period 2010-11 to 2014-15 on the basis of balance sheets for the relevant period as ₹ 3,73,54,189/-. While calculating Service Tax he has availed abatement of 75% of value from July, 2013 onwards as they have provided services to corporate only. They have also provided services to schools/educational institutions which are exempt. 2.5 It is evident that as per ST-3 returns submitted by M/s. VSF the Service Tax payable was ₹ 1,17,76,183/- and Service Tax paid was ₹ 64,50,356/-. Shri Chaturvedi claimed that he has paid ₹ 1,31,53,325/- towards his Service Tax liability of 2010-11 to 2014-15. From verification of challans on ACES, it was found that he applicant has paid ₹ 1,28,86,104/- towards the Service Tax liabilities. Thus for computation of Service Tax liabilities, the Service Tax paid is considered as ₹ 1,28,86,104/- 2.6 From the sample copies of invoices submitted, it is observed that M/s. VSF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to March, 2011 works out to be ₹ 3,57,03,310/-. (iv) While calculating Service Tax liability, Service Tax for the period prior to 1-7-2012 is calculated separately since Service Tax is to be paid on 100% value during the said period. The Service Tax from 1-7-2012 is calculated allowing 75% abatement to corporate clients (as per "Notification No. 30/2012-Service Tax, dated 20th June, 2012") after identifying the Co-operative societies, individual service receivers and educational institutes on the basis of 26AS copies downloaded and submitted by M/s. VSF at the time of visit on 11-2-2016. The income for 'April 12 to Jun 12' is taken from the sales ledger submitted by Ms. VSF. (v) While calculating Service Tax liability, the amount of Bad Debt has not been reduced from the gross value as except for the schedule of bad debt, detailed corelation between the invoices issued and cancelled have not been submitted by M/s. VSF, till date. (vi) Thus from the above calculations, gross Service Tax liability for the period of October, 2010 - March, 2011 to 2014-15 works out to be ₹ 4,25,55,151/- (Rupees Four Crore Twenty-Five Lakh Fifty-Five Thousand One Hundred and Fifty-one) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,75,221/- and ₹ 36,49,585/- respectively, however they have paid Service Tax of ₹ 16,35,777/- and ₹ 63,203/- only for the said period. 2.11 Thus, it is observed that M/s. VSF have short paid/not paid Service Tax (inclusive of Education Cess and Secondary & Higher Education Cess) amounting to ₹ 2,96,69,047/- on the date of visit i.e. 11-2-2016 for the period of October, 2010 - March 11 to 2014-15. 2.12 On conclusion of the investigation, the applicant was called upon to show cause to the Commissioner Service Tax-V, Mumbai as to why : - (i) The extended period envisaged under proviso to Section 73(1) of the Finance Act, 1994 should not be invoked to demand and recover the Service Tax evaded by them for the reasons discussed above, (ii) The Service Tax not paid or short paid ₹ 2,96,69,047/- during the period of 2010-11 to 2014-15 as shown above, should not be demanded and recovered from them under the proviso to Section 73(1) of the Finance Act, 1994, read with the Section 66/66B and the Section 68 of the Finance Act, 1994 read with Rule 6 of the STR, 1994. (iii) The amount of ₹ 1,17,74,483/- paid by them during the course of investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting of the same by the recipient of the service in their books of account and payment of TDS by the recipient of the services. Form 26AS is generated only when the invoice is accounted and TDS return is filed by the recipient of the service after making payment of Tax Deducted at source. Therefore, there is year to year difference, both in plus and minus side, in the value of services as reflected in the Balance Sheet and in the Form 26AS. However, since the Applicants is accounting the invoices immediately on issue of the invoices, the amount of Service Tax liability ought to have been correctly worked by taking the Balance Sheet figures only. Further, while the Applicants Balance Sheet shows the gross amount as value of services on receipt side as credit, the amount of Bad Debts and the amounts written off are reflected on debit side of the Balance Sheet. Therefore, for arriving at the correct liability, the gross amount ought to have been reduced by the amount of Bad Debts and the amounts written off as reflected in the debit side of the Balance Sheet. 3.3 The Applicants are providing services to three types of clients, viz (1) Corporate Clients; (2) Non-Corporate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect. 3.5 Therefore, the Applicants have worked out their liability for the Service Tax for the disputed period, by taking correct figures of value of services provided to corporate, non-corporate clients, educational institutions and Bad Debts; and after taking into consideration the benefit of exemption admissible to services provided to educational institutions under notification No. 25/2012-S.T., dated 20-6-2012, effectively from 1st July, 2012. In this regard, detailed year wise statements of the services provided, giving bifurcation of nature of services based on the recipient of the services and the Bad Debts amount, duly certified by Chartered Accountant. 3.6 The Applicants state that based on the above statements, the actual total Service Tax liability for the period covered by the show cause notice, works out to ₹ 3,44,92,387/- as against the Service Tax liability of ₹ 4,25,55,151/- computed in Para 6.0 of the show cause notice. In this regard a work-sheet showing the correct Service Tax liability of ₹ 3,44,92,387/- during the period covered by the show cause notice was enclosed alongwith the application. 3.7 In para 6.1 of the show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Additional Director General, DGCEI, Zonal Unit, Mumbai, may be admitted and settled as a whole, once and for all. Immunity from imposition of penalty under various provisions of the Finance Act, 1994 may kindly be granted to the Applicants. Immunity from prosecution and any other proceedings under the provisions of the Finance Act, 1994 and any of the Central enactments as might be applicable may be granted to the Applicants. 4. The application filed by the applicant was allowed to be proceeded with under Section 32F(1) of the Central Excise Act, 1944 vide orders dated 22-3-2017 on file. 5. Revenue in their report dated 9-6-2017 intimated that said SCN dated 22-4-2016 has already been adjudicated vide Order-in-Original No. 62/ST-V/SKD/16-17, dated 21-2-2017. It is further intimated that said Order-in-Original issued on 9-3-2017 whereas applicant has filed their settlement application on 10-3-2017 and therefore this was not a fit case for settlement. 6. Hearing in this case was held on 12-7-2017. The applicant was represented by Shri Nitin N. Mehta, Consultant and Shri K.S. Chaturvedi. Revenue was represented by Shri S.B. Bhosle, Superintendent and Shri P.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions made in their written reply dated 4-5-2017 sent to ADC ST-V Mumbai for filing before this Bench. It was pointed out that the Service Tax demand on services provided to education institutions was rightly demanded as no exemption was admissible to applicant during relevant period. However, they require 10 days time to examine the other three points mentioned in para 2(b) above provided the original records are produced by the applicant before them for verification. Ld. Consultant readily agreed to produce the said records within 3 days. 6.3 Bench directed the applicant to give reason wise break up of Service Tax not admitted by them to the Bench with a copy to DGCEI in 3 days. Applicant is also directed to produce all the relevant original records pertaining to point No. (i), (iii), and (iv) of para 2(b) above within 3 days before the DGCEI, Mumbai for verification. DGCEI was further directed to submit their verification report clearly stating whether said claim of applicant is admissible or not, within 10 days, to the Bench with a copy to applicant. Applicant shall file their counter reply if any within another 3 days. 7. Joint Director DGGSTl, Mumbai has subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 2017, i.e. on the day when the applicant had already filed the application for the settlement, and the same was received by the applicants on 11th March, 2017, i.e. after filing of the application. (b) It is a settled legal position that the date of the order to be reckoned as the date of communication and not the date of passing of the order. Since in the present case, the order was communicated after the date of filing of the settlement application and the same was issued after filing of the application the order passed by the Commissioner is non est (c) Applicant referred to following decisions whereunder the order-in-original passed without following principles of natural justice was held bad in law and set aside. (i) RB Shree Ram Durga and Fatehchand Nursing Das v. S.C., (1989) 176 ITR 169 (SC) (ii) Krishna Engineering Works v. C.C.E., 2001 (134) E.L.T. 14 (P & H) 8. Bench has carefully considered the contents of impugned applications, relevant records available in base file, revenue report and submissions made during hearing on behalf of applicant as well as Revenue. 8.1 In this case, before proceeding further to examine case on merits, the issue of maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing adjudication on the date the settlement application is received by it. In that context the Delhi High Court observed as under : - "32. Of course, there is the danger that to prevent an assessee from seeking a settlement of his case, the adjudicating authority may quickly pass the adjudication order the moment he gets an inkling that the assessee is about to approach the Settlement Commission. There is also the danger that the adjudicating authority may back date an order. Adjudicating authorities are not supposed to behave in this manner and are presumed to function within the boundaries of law but, these things can happen. Would not a literal construction of the provisions then come in aid of such errant officers and run counter to the legitimate hopes of assessees who want to come clean, pay their taxes and have their cases settled by the Settlement Commission. The answer to this would lie in construing the date of adjudication to be the date on which the adjudicating authority loses his locus poenitentia, or opportunity to tear off, destroy of alter the adjudication order. In other words, when the order goes out of his control. And, that happens when the order is signe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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