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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 ..... anding late fee for belated filing of ST-3 returns. The SCN also proposed appropriation of Rs. 68,73,813/- paid by the applicant towards Service Tax liability. 1.2. Briefly stated the facts of the case are as follows : * The applicant is a partnership firm with Shri Sunil R.M. and Shri Sanjay R.M. as partners engaged in laying of Optical Fibre Cable (OFC) for various telecom companies by using Horizontal directional drilling machines. * The applicant is registered with Service Tax department vide Registration No. ABQFS5172ASD003 for rendering "Maintenance 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Tax on such services rendered to telecom companies and L & T during the period 1-10-2010 to 30-6-2012 and the amount of Rs. 14,18,525/- collected by the applicant reflecting as Service Tax in their invoices is liable to be paid to the Government in terms of Section 73(2) of the Finance Act, 1994. * Further, the activity of boring and jacking of MS pipes under railway track classifiable under "Commercial or Industrial Construction Services" is not taxable in view of the Board's Clarification No. 116/10/20109-S.T., dated 15-9-2009. However, as the applicant has charged and collected Service Tax amounting to Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As the applicant did not pay the admitted interest liability of Rs. 15,93,021/-, the application 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 Rs. 72,19,719/- as against Rs. 80,15,272/- demanded in the show cause notice along with interest of Rs. 32,46,589/- and disputing the balance amount of Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to M/s. Krishna Bhagya Jalanigam Ltd. (KBJNL), a wholly owned company of Govt. 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 Rs. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Commissioner of Service Tax for comments/report on the application. The Commissioner of Central Excise and Service Tax, Mangaluru vide his report dated 23-6-2017 while confirming the payment of admitted Service Tax and interest liability by the applicant pointed out that the applicant had not accepted total liability of Rs. 7,96,008/- without specifying the amount disputed in each category. 3.2 The jurisdictional Commissioner in his report, inter alia, made the following submissions :- * PThe total Service Tax demand in the SCN is Rs. 80,15,727/ whereas the Service Tax liability accepted and paid by the applicant is only Rs. 72,19,719/-. * PThe applicant accepted that in most of the cases, they had collected Service Tax from their customers but failed to remit the same to the Govt. Exchequer within the due date and their contention that there is no suppression on their part is not correct. * PEven though the applicant had taken Service tax registration on 21-1-2010 and had been providing services and collecting Service Tax from the year 2010-11, the first payment was made only on 26-3-2014 and that too after issue of letter dated 15-3-2014 by the department and furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant is able to prove with documentary evidence that Service Tax has not been charged and collected. * PThe applicant did not disclose the full Service Tax liability in their initial statements and only in the statement dated 16-10-2015, they accepted that during the periods 2010-11 to 2014-15, they charged and collected Service tax amounting to Rs. 68,73,513/- and are liable to pay Service Tax collected by them to the Government exchequer. The fact that they had not filed any statutory returns till the department started investigations clearly prove wilful misstatement and suppression of facts by the applicant. * PThe entire responsibility is cast on the applicant to comply with the provisions and failure to comply attracts suppression clause in the era of self-assessment system and therefore, the applicant is liable for penalty under Section 78 of the Finance Act, 1994 and the case laws are not applicable to the facts of the case. * PThe evasion of Service Tax by the applicant came to the knowledge of the department only through detailed investigation without which the applicant would have gone scot free. As the applicant had paid entire dues only after initiating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Service Company Ltd. (JUSCO) is untenable in law; though work order initially indicated the Service Tax liability to be charged by them, no Service Tax was actually collected by them and the same is evidenced by way of invoice raised. This fact has been agreed by the Department. 4.4 In case of services rendered to M/s. Krishna Bhagya Jalanigam Ltd. (KBJNL) (A Government of India Undertaking) for the period from 1-7-2012, the show cause notice by merely alleging rendering of Works Contract Service and mere mention of description of works as "Construction of Road Crossing of National Highway" does not render the work order to be a non-irrigation project and deny the benefit of Mega Notification No. 25/2012-S.T., dated 20-6-2012. Since the service rendered to KBJNL is relating to irrigation projects, they are entitled to the benefit of exemption. 4.5 Further, the services rendered prior to 1-7-2012, though falling under "Commercial or Industrial Construction Service" was exempted under Board's Circular No. 80/10/2004-S.T., dated 17-9-2004 and Circular No. 116/10/2009-S.T., dated 15-9-2009, since construction of Canal for Government for supply of water for irrigation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Rs. 1,80,000/- towards late fee, as against late fee of Rs. 1,89,900/- resulting in short payment of Rs. 9,900/-. Since the applicant had raised invoices charging Service Tax at applicable rates and not paid the amount so collected to the Government, it has been prayed that request for waiver of penalty may be rejected. 4.11 The Learned Advocate submitted that he had no occasion to lay hands on the Commissioner's report. So, ten days time has been sought. Bench, accordingly, provided 15 days to the Advocate to submit a rejoinder. Further submissions by the applicant : 5.1 A copy of the Commissioner's report was sent to the applicant for their comments. The applicant vide letter dated 13-11-2017 sought further 10 days time to submit the rejoinder. Accordingly, the applicant made further submissions which was received in this office on 24-11-2017. The applicant had further revised the admitted Service Tax liability to Rs. 72,02,080/- (as against the original admitted liability of Rs. 72,19,719/- accepted in the application) out of the total demand of Rs. 80,15,727/- made in the show cause notice as detailed below : Particulars Amount in Rs. Amount in Rs. Demand a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem. * Without prejudice, it is submitted that despite discharging the Service Tax dues, the SCN has demanded Service Tax on exempted/non-taxable services amounting to Rs. 11,59,583/- and the same has been arrived without providing the benefit of cum-tax-valuation to the applicant. * Since no Service Tax has been collected on the exempted/non-taxable services, the gross amount has to be treated as value of services plus Service Tax payable in terms of Section 67(2) of the Finance Act, 1994 and accordingly, the applicant accepts additional liability of Rs. 3,46,206/- on the services rendered to BSNL, Goa as against Rs. 3,88,997/- demanded in the SCN. * The actual liability worked out to Rs. 72,02,080/- out of which the applicant had already paid Rs. 68,73,513/- and the balance amount payable is Rs. 3,28,567/-. 5.3 The applicant prayed for settlement of the case on the above liability accepting the plea for grant of exemption and sought relief from payment of penalty. Additional submission by the jurisdictional Commissioner : 6.1 The rejoinder dated nil of the applicant received in this Registry on 24-11-2017 was forwarded to the jurisdictional Commissioner for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by way of construction, erection, commissioning, installation of canal, dam or other irrigation works and laying of Pipelines conduit for water supply or water treatment and the same are eligible for exemption is rejected by the Commissioner on the ground that the services rendered to M/s. KBJNL, a Govt., of Karnataka undertaking fall under the category of "Works Contract Service" and as such being a declared service under Section 66E(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. 7.4 The Bench observes that the issues raised by the applicant with regard to services rendered by the applicant to the M/s. KBJNL are rejected by the jurisdictional Commissioner on the ground that the applicant's activity is rightly classifiable under "Works Contract Service" involving transfer of property in goods also and hence is covered under "Declared Service " under Section 66E(h) of the Finance Act, 1994 and not eligible for exemption under Notification No. 25/2012-S.T., dated 20-6-2012. It is seen that the applicant claims that even if the services are not covered by clauses (d) &(e) of Entry No. 12 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings before the Central Excise authorities and where complex issues of fact and law are involved for which a detailed inquiry is necessary, settlement proceedings cannot act as a proper substitute for the adjudication proceedings". 7.8 In Picasso Overseas and Others v. Director General of Revenue (Intelligence) and Another [W.P. (C) No. 1495 of 2007 and W.P. (C) No. 4401 of 2007] decided on 3-8-2009 the issue posed before this Court was : ".....can the Settlement Commission substitute itself for the adjudicating officer and arrive at a decision on highly contentious issue requiring detail and complex investigation for arriving at an adjudication of such facts". In paragraph 9 the following principles were set out :- (i) "The Settlement Commission cannot substitute itself for the adjudicating officer by deciding complicated and highly disputed or contentious questions and issues of facts themselves, because the expression "settlement" is used in the Customs Act in contra-distinction with "adjudication" and the very scheme of the settlement provisions is to settle and not adjudicate'. 7.9 Similarly in the case of Vinay Wire Poly Product Pvt. Ltd., reported in 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the Revenue, by the impugned order, the Settlement Commission has set a bad precedent." 7.11 In view of the foregoing discussions, 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 notification and consequently determining the tax liability or otherwise of services merely on the basis of claims made by the applicant vis-a-vis the counter claims made by the department cannot be decided in this forum as in an adjudication proceeding. The case on hand, the Bench observes, involves both disputed questions of fact and law. Hence, it would be more appropriate that the case is adjudicated upon by the proper adjudicating authority after appreciation of facts and evidence let in by the applicant and pass order by following the due process of law. Accordingly, the following order is passed. ORDER 8.1 The Bench, by virtue of the powers vested in it in terms of Section 32L of the Central Excise Act, 1944, mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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