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TMI Blog2018 (1) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... E(h) of the Finance Act, 1994 is not eligible for exemption under clauses (d) & (e) of Sl. No. 12 of the Notification No. 25/2012-S.T. Held that:- The Bench is of the considered view that Settlement Commission is not the forum to decide upon contentious issues, by evaluating the evidences let in by the rival parties to the proceedings. Such an act would tantamount to the Settlement Commission adjudicating upon the notice, based on the submissions made by the rival parties to the proceedings. It is now a well settled proposition that the Settlement Commission is not an adjudicating authority. It is only an arbitration forum where a dispute is settled in the interest of both the parties within the framework of law. This principle has clearly been enunciated by the Hon’ble High Court of Bombay in the case of Amrut Ornaments [2014 (3) TMI 418 - BOMBAY HIGH COURT]. The Bench observes that the case is not one that can be settled in this Forum in view of rival claims, leading to total divergence on facts and on law, which fall under the domain of adjudicating authority. The Bench observes that the issue of analysing the facts, interpretation of legal provisions and exemption noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce or Repair services , Erection, Commissioning or Installation Services and Business Auxiliary services . Based on third party information that the applicant received substantial amounts as contract receipts and did not pay Service Tax during 2012-13, the Superintendent of Central Excise, Headquarters Preventive Unit (HPU) vide letter dated 15-3-2014 requested the applicant to furnish financial documents/details relating to the services rendered by them for the periods 2008-09 to 2012-13. Shri R. M. Sunil, partner appeared before the Officers on 10-7-2014 and a statement was recorded from him wherein he stated that laying of underground cable and underground pipelines for irrigation and drinking water projects undertaken by them is exempt from payment of Service Tax. He undertook to produce orders/bills documents/balance sheets and TDS statements for the periods 2010-11 to 2013-14 within 7 days. As the applicant failed to produce documents further reminders were sent to them to furnish the same and pay the Service Tax collected by them along with interest. The applicant vide letter dated 31-10-2014, furnished the Form 26AS for 2013-14. In response to the summons da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s charged and collected Service Tax amounting to ₹ 31,187/- during the period, they are required to be paid to the Government in terms of Section 73(2) of the Finance Act, 1994. For the period from 1-7-2012 to 31-3-2015, the applicant has provided taxable services by charging and collecting Service Tax on the invoices raised to various telecom operators, M/s. Railtel, M/s. PGCIL amounting to ₹ 54,37,348/- as detailed under : (in Rupees) Period Value of exempted services Value on which tax not collected Invoice value on which tax collected Service Tax collected 1-7-12 to 31-3-13 12,97,400 4,44,800 2,19,26,212 27,10,080 2013-14 0 0 97,38,396 12,03,666 2014-15 0 31,47,228 1,23,26,884 15,23,603 Total 12,97,400 35,92,028 4,39,91,492 54,37,348 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication was rejected under Section 32F(1) of the Central Excise Act made applicable to Service Tax vide Section 83 of the Finance Act, 1994 as non-maintainable vide Order No. 01/2017-S.T., dated 13-4-2017. 2.2 The applicant filed application again on 2-5-2017 which was numbered as SA (ST) 49/2017 and based on the reply to the first notice dated 13-5-2017, the application was allowed to be proceeded with by the Bench vide order dated 19-5-2017. 2.3 The applicant, in their application admitted a liability of ₹ 72,19,719/- as against ₹ 80,15,272/- demanded in the show cause notice along with interest of ₹ 32,46,589/- and disputing the balance amount of ₹ 7,95,553/- as being eligible for exemption. 2.4 The applicant in the application submitted, inter alia, the following : The quantification of demand of ₹ 80,15,727/- is without considering the benefit of exemptions and non-taxable services provided by the applicant. The show cause notice inadvertently without considering the non-taxable services prior to 1-7-2012 and exempted service post - 1-7-2012 had arrived at Service Tax liability of ₹ 80,15,727/- which is not correct. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. of Karnataka, engaged in irrigation projects, the applicant is eligible for exemption under clauses (d) and (e) of Sl. No. 12 of the Mega exemption Notification No. 25/2012-S.T., dated 20-6-2012 and demand of Service Tax be set aside. As regards laying of underground pipes for M/s. STS Private Limited and M/s. BSNL, Goa, the applicant has not collected any Service Tax for the period 1-10-2010 to 30-6-2012 as mentioned in para 7.1.2 of the SCN and wherever it is collected, the same has been paid by the applicant. The demand of ₹ 11,59,583/- is grossly overstated and as no Service Tax has been collected by them separately, the gross amount has to be treated as cum-tax value as taxable value plus Service Tax payable in terms of Section 67(2) of the Finance Act, 1994. In respect of admitted Service Tax liability amounting to ₹ 72,19,179/-, the applicant has paid consequential interest and it is prayed that the interest with respect to non-taxable and exempted services may be waived in the interest of justice and equity. The amount demanded in the SCN and the amount accepted as payable by the applicant are tabulated as under : ST Liability as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,69,808 72,19,719 Relying on various case laws, it is contended that there is only a bald allegation of suppression of facts with intent to evade payment of Service Tax and mere non-disclosure of details does not attract provisions of Section 78 of the Finance Act, 1994 and hence no penalty is imposable under Section 78 of the Finance Act, 1994. The penalties under Section 77(1)(a) for not taking registration under Works contract service and under Section 77(2) for failure to pay the Service Tax collected cannot be imposed as they had rectified the defect by subsequent registration and made good the payment of Service Tax prior to issue of show cause notice besides paying the late fee for belated filing of ST3 returns. The applicant also prayed for immunity from imposition of penalty and prosecution. Report of the jurisdictional Commissioner : 3.1 A copy of the application was forwarded to the jurisdictional Commissioner of Service Tax for comments/report on the application. The Commissioner of Central Excise and Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the services provided by the applicant is classifiable under Works Contract Service , it appeared that they are not eligible for any exemption under clauses 12(d) and (e) Notification No. 25/2012-S.T., dated 20-6-2012 even though it was undertaken towards irrigation works by M/s. Krishna Bhagya Jala Nigam Ltd., a Govt. of Karnataka undertaking. PAs regards services provided to M/s. JUSCO, though exempted in terms of Notification No. 25/2012-S.T., since Service Tax component is included in the work order, Service Tax has been rightly demanded even though Service Tax has not been separately shown in the invoices and demand of ₹ 54,977/- is sustainable. PSimilarly the demand of Service Tax of ₹ 7,15,879/- for services rendered to M/s. KBJNL towards irrigation projects is rightly sustainable. PThe applicant has not produced any document to prove that they had not charged and collected Service Tax on services rendered to M/s. STS Private Limited and M/s. BSNL Goa for the period 1-10-2010 to 30-6-2012. PThe cum-tax-benefit may be extended to the applicant wherever the applicant is able to prove with documentary evidence that Service Tax has not been charged and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 4.1 The case was posted for hearing on 24-10-2017. Shri Balram R. Rao, Advocate represented the applicant and none represented the jurisdictional Commissioner. 4.2 The Learned Advocate, besides reiterating the rebuttal submissions made in their grounds of settlement, has further submitted that the applicant was engaged in the work of laying of underground Optical Fibre Cable for various telecom service providers and laying of underground pipelines for irrigation and drinking water purposes; that in some cases they did not collect Service Tax as the services rendered to them was exempt from payment of Service Tax. 4.3 He drew attention of the Bench to para 12 onwards or the paper book and stated that in the case of services to BSNL, Goa they had charged Service Tax in the invoice but no Service Tax was actually collected. The quantification of demand of Service Tax of ₹ 80,15,727/- in the show cause notice is without considering the benefit of exemptions and non-taxable service rendered by them. Also, the demand of Service Tax towards the services rendered to M/s. Jamshedpur Utilities and Service Company Ltd. (JUSCO) is untenable in law; though work order initiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f property in goods involved in execution of such contract. Hence, the services provided were correctly classifiable under Works Contract service. Thus, they are not eligible for exemption under clause 12(d) and (e) of Notification No. 25/2012 dated 20-6-2012, although the same was undertaken towards irrigation works. The demand on M/s. JUSCO is also correct, as the Service Tax component is included in the work order, even though the same has not been separately shown in the invoices. Hence, demand of ₹ 54,977/- is sustainable. Similarly, the demand of ₹ 7,15,879/- raised on M/s. KBJNL and demand raised on M/s. STS Private Limited and M/s. BSNL, Goa for the period 1-10-2010 to 30-6-2012 correctly raised as the applicant had failed to prove that they had not charged and collected Service Tax. However, Commissioner has stated that the cum-duty benefit may be extended wherever the applicant is able to prove with evidence that Service Tax has not been charged and collected. 4.10 Commissioner has confirmed payment of ₹ 72,19,719/- towards Service Tax and ₹ 32,46,589/- towards interest including ₹ 1,80,000/- towards late fee, as against late fee of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand of Service Tax during 2013-14 (Rs. 3,41,708/-) and 2014-15, (Rs. 3,74,171/-) for services rendered to M/s. Krishna Bhagya Jala Nigam Ltd. (KBJNL) a Govt. of Karnataka Company for implementation of Upper Krishna Project in the State of Karnataka, it is an undisputed fact that they are engaged in irrigation projects and vide Sl. No. 12 (d) (e) of the mega exemption notification No. 25/2012-S.T., dated 20-6-2012 , the applicant is eligible for benefit of exemption as supported by the work order. Without prejudice, the applicant is also eligible for exemption vide Sl. No. 12(a) of the mega exemption notification No. 25/2012-S.T., dated 20-6-2012 even if the services rendered are considered as original works and not Erection, Commissioning and Installation service as alleged by the department in the SCN. As regards Service Tax demand of ₹ 54,977/- on services rendered to JUSCO, during 2012-13, it is submitted that the services rendered are treated as not taxable in the SCN itself though the allegation for demand was on the assumption that the applicant has charged Service Tax in the work order No. 2500003993, dated 14-6-2012 wherein Service Tax component was sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice demanded ₹ 80,15,727/-, the applicant had admitted liability to the extent of ₹ 72,19,719/- (revised to ₹ 72,02,080/-) claiming relief on the ground that the services relating to irrigation/canal projects rendered by them to Government undertakings are covered under exemption in terms of mega exemption Notification No. 25/2012-S.T., dated 20-6-2012. The Bench finds that the applicant had not admitted their Service Tax liability of ₹ 54,977/- in respect of services rendered to M/s. JUSCO for the period 2012-13 and ₹ 7,15,879/- in respect of services rendered to M/s. KBJNL during 2013-14 and 2014-15 on the ground that the same were eligible for exemption under Notification No. 25/2012-S.T., dated 20-6-2012. The applicant has also claimed cum-tax benefit in respect of services rendered to BSNL, Goa on the ground that they have not collected the Service Tax charged by them although the activity was not taxable. 7.3 Perusal of the application and the submissions made by the applicant and the jurisdictional Commissioner revealed that the issues left to be decided in the case is whether the applicant is eligible for exemption in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement Commission is not an adjudicating authority. It is only an arbitration forum where a dispute is settled in the interest of both the parties within the framework of law. This principle has clearly been enunciated by the Hon ble High Court of Bombay in the case of Amrut Ornaments reported in 2014 (305) E.L.T. 365 (Bom.), by the Hon ble Delhi High Court in the case of Union of India v. Dharampal Satyapal as reported in 2013 (298) E.L.T. 653 (Del.), by the Hon ble Allahabad High Court in the case of Vinay Wire Poly Product P. Ltd. v. Dir. General of Central Excise Intelligence reported in 2014 (307) E.L.T. 438 (All.) and also by the Hon ble Madras High Court in the case of Australian Foods Ltd. v. Commissioner of Central Excise, Chennai-II reported in 2010 (254) E.L.T. 392 (Mad.). 7.6 In the Amrut Ornaments case, the Hon ble High Court of Bombay observed as below : 8. The proceedings before the Commission is not an [adjudication] proceedings where it is for the other side to prove its case. In settlement proceedings a party seeks to end the dispute and is meant for a person who is sorry about his conduct and wants to make amendments. It is not an alternative [adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of evidence, were required to be settled through adjudication. A fair amount of discretion has to be given to the Settlement Commission in cases where matters are placed before it for settlement keeping in mind the well settled principle that settlement is not akin to adjudication. 7.10 In the Australian Foods Ltd. case, the Division Bench of Hon ble Madras High Court has observed the following with regard to the jurisdiction of the Settlement Commission in terms of Section 32E of the Central Excise Act, 1944. 14. From this Section, it is seen that the assessee may approach the Settlement Commission, before adjudication to settle the case, disclosing his duty liability which has not been disclosed before the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as the applicability of the provisions of law like the one in hand where in the issue centres around the applicability of whether Section 4 or Section 4A of the Central Excise Act. Though the assessee has admitted the short levy on dough and paid the duty thereof, since he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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