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TMI Blog2019 (6) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... Agent services - N/N. 14/2004-ST - HELD THAT:- The entire defence of the appellants is that if the turnover in respect of Commission Agent services, which as per them is exempted under Notification No 14/2004-ST is excluded then their total turnover will be less then 10 Lakhs and they will be exempted under Notification No 6/2005-ST. Since we do not agree with the contention of the appellants that the services provided by them as commission agent are exempt from payment of service tax the entire defence set up for getting this demand set aside collapses. Time limitation - Bonafide belief - HELD THAT:- We do not find anything placed on record to show the existence of such a bonafide belief - the demands made by invoking the extended period of limitation as provided by Section 73 of the Finance Act, 1994 are sustainable. Demand of interest - HELD THAT:- Since we have upheld the demand of service tax, the demand of interest under Section 75 is natural corollary. Penalties - HELD THAT:- Since service tax has been demanded invoking extended period of limitation under Section 73 of Finance Act, 1994, penalty under Section 78 will follow - Since appellant have failed to take registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.5) I impose a penalty of ₹ 19,07,162/- (Rupees Nineteen lakh Seven thousand One hundred and Sixty-two only) on the Noticee, under Section 78 of the Act. If the Noticee pays the service tax confirmed, as mentioned in para 25.3 above, along with the interest on delayed payment within 30 (thirty) days from the date of communication of this Order, the amount of penalty liable to be paid by the Noticee under Section 78 of the Act shall be twenty-five percent of the service tax payable/confirmed in para 25.3 above. However, the benefit of reduced penalty under Section 78 of the Act shall be available only if the said service tax confirmed, interest and the penalty, of twenty-five percent of the service tax payable/confirmed, so imposed under the aforesaid Order, has been paid within the period of 30 (thirty) days from the date of communication of this Order. 27.6) I impose the penalty of ₹ 10,000/- (Rupees Ten thousand only) or ₹ 200/- (Rupees Two hundred only) per day during the period of failure to obtain registration continues, whichever is higher, under Section 77(1)(a) of the Act. 27.7) I impose the penalty of ₹ 10,000/- (Rupees Ten thousand only) un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the benefit of exemption notification No 14/2004-ST is admissible to them. The phrase "in relation to" used in the notification as has been interpreted by the Apex Court in case of Doypack Systems (P) Limited [1988 (36) ELT 0201 (SC)] is wide enough to cover the activities undertaken by them. v. Exemption could not have been denied merely for the reason that exempted activity is combined with sale of goods. It is settled law that principles of classification are not relevant for interpreting the notification. {Mewar Bartan Nirman Udyog [2008 (089) RLT 319 (SC)]} vi. Service Tax demanded under category of Management or Business Consultants Services rendered to Prathmesh Investment, is exempted under Notification No 6/2005-ST, since excluding the turnover in respect of exempted/ non taxable services of 'Business Auxiliary Services" their turnover will be less that the prescribed limit of ₹ 10 lakhs, for determining the service tax liability. vii. Since they were under bonafide belief that activities undertaken by them are not leviable to service tax, extended period of limitation cannot be invoked in the present case for demanding the service tax. Hence demand is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No 14/2004-ST. ii. The decision in case of- * Arvind A Traders was in respect tax demand under reverse charge mechanism and the facts of case with respect to Notification No 14/2004-ST are not forth coming in the order. Hence distinguishable. * Texyard International, was a case were the person was engaged in all activities from procuring yarn, dyes/ chemicals and other raw material to the manufacturer of textile made up. Thus it was held that that activities was predominantly of textile processing (para 4). In the present case the service recipient was only a grey fabric manufacturer and was not carrying out any processing of textile/ grey fabrics. Thus ratio of this decision is not applicable. * The decisions of tribunal in case of Texyard International has been distinguished by the tribunal in case of Shree Ranie Gums and Chemicals Pvt Ltd. 5.1 We have considered the impugned order along with the submissions made in appeal, during the course of arguments and in written submissions. 5.2 The undisputed fact as recorded in para 2 of Show Cause Notice and admitted by the appellants in relation to the activities undertaken by them are- * Development of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of this clause, - (a) "Commission Agent" person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - means any (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) "Excisable Goods" …….; (c) "Manufacture" ……….; 5.5 From the undisputed activities undertaken by the appellants it is quite evident that the activities undertaken by them will qualify as "Business Auxiliary Service" as defined by Section 65(19) ibid. In the present case having determined the service provided by the appellants, we have also no hesitation in holding that appellants are providing the services to the manufacturer of grey fabrics and also receiving the consideration, "commission" from them. They ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly if the services provided are in relation agriculture, printing, textile processing or education. Thus only services provided by the person (service provider) to his client if they fulfill the other conditions specified by the notification are only exempted. In the present case the services provided by the appellant to their client i.e. grey manufacturers are in respect of sale of their goods and do not fall within the four categories specified by clauses "a" to "d" in the notification. 5.9 The reliance place by the appellants on the decision of Apex Court in case of Doypack Industries, supra for interpretation of the phrase "in relation to" do not advance the case of appellants any further. For claiming the benefit of exemption the person claiming the exemption has to establish that services provided by him fall within those exempted. Independently it has to be shown that the activities undertaken by the appellants for their clients fall within the clauses "a" to "d" of the said notification. Admittedly the services provided by the appellants to their clients is for sale of the goods manufactured by them and in no way fall within any of category specified in the said four cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled." 5.9 Since we have held that services provided by the person (service provider) to the client are only exempted in terms of the said notification, and services provided by the appellant to their clients do not fall within the any of the clauses referred at 'a' to 'd' in the said notification the benefit of exemption will not be admissible to the appellants. 5.10 We also do not find merits in the submissions made by the appellants relying on the decision of Apex Court in case of Mewar Bartan Nirman Udyog as in the present case it is not the principle of classification used for interpreting the exemption notification but the notification is interpreted in terms of the language used in notification. 5.12 The decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order]following was held:- "5. The agreement between the M/s. TFL and the Appellant clearly provides that the Appellant will inter alia undertake the following activities :- "(a) Explore and promote potential markets for vehicle finance scheme of TFL. (b) Approach, interview and market to persons who would probably be inclined to and/or interested to avail vehicle finance scheme offered by TFL. (c) Provide potential applicants with information brochures and pamphlets and explain to them the salient features of the products and vehicle finance scheme. (d) -------------------------------" (e) Provide the Designated Officer, in the form as specified by TFL, with the names, address, telephone numbers and other relevant information relating to the persons who have expressed an interest or inclination or desire to wither obtain more information on the Vehicle Finance Scheme of TFL. (f) -------------------------------" Thus it is clear that the Appellants were to provide services which clearly fell under the scope of promotion and marketing and the services were provided to M/s. TFL and not on behalf of M/s. TFL. M/s. TFL paid them for the services so provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n adjudicating authority has in para 22.2 of his order recorded as follows: "22.2) It is further seen in this regard that Noticee had not only paid the said service tax of ₹ 19,07,162/- under "Business Auxiliary Service" or "Management and Business Consultancy" service for the period 2008-09 to 2012-13 against the impugned activities of Sales promotion and Consultancy, demanded in the subject Notice dated 15.10.2013, on due dates but also not declared these facts to the department by filing a ST-3 return, incorporating these facts, for the relevant period as required under Section 70 of the Chapter V of the Finance Act, 1994, read with Rule 7 of the Service Tax Rules, 1994. This undoubtedly amounts to suppression of facts with intent to evade payment of service tax. Noticee's reliance on various judgments in support of the time-bar contention is, therefore, misplaced and irrelevant to the subject case. Extended period under proviso to Section 73(1) of the Chapter V of Finance Act, 1994, had been correctly invoked in the Notice." In the case of M/s. Interscape [2006 (198) E.L.T. 275], it was held that "bona fide belief is not blind belief and a belief can be said to be bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the undisputed facts are that the appellant has not taken the service tax registration nor filed any service tax return or paid any service tax. Taking of the registration, filing of the return and payment of service tax are the requirements under the Finance Act, 1994/Service Tax Rules. These documents only provide the facts, information and other details about the activities of a service provider to the service tax authorities. Therefore, under the circumstances there can be no doubt that there was suppression of facts and also contravention of various provisions of the Service Tax Law. The main contention of the learned Advocate is based upon bona fide belief, interpretation of the statute, knowledge of the department and revenue neutrality. I find that none of these concepts find any mention in the said proviso. The Hon'ble High Court of Gujarat in the case of Neminath Fabrics [2010 (256) E.L.T. 369 (Guj.)] [quoted by learned Member (Technical)] has held as follows :- "The termini from which the period of "one year" or "five years" has to be computed is the relevant date which has been defined in sub-section (3)(ii) of Section 11A of the Act. A plain reading of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the appellant was paying VAT under works contract would indicate that they were providing some service. Obviously, the appellant should have kept track whether their service would, at any time, become a taxable service. The least that could have been expected was that the appellant start paying service tax after the introduction of works contract service under the Service Tax Law. Even this was not done. The other reason advanced is that there was excise litigation with respect to same activity. The appellant was litigating and not agreeing that their activity amounts to manufacture and, therefore, is not chargeable to excise duty should have made them believe that their activities involve services and would be liable to payment of service tax. In view of this position, I do not find any merit whatsoever in the appellant's contention that they had bona fide belief. In fact, conduct only indicates wilful intention. As far as their contention relating to interpretation of statute, the first contention is that initially the department raised the demand on the said activity on various assessees under 'interior decorator service' and later on under 'commercial or industrial con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax officials were aware of appellant's activities. On the contrary, the appellant would be knowing the same and should have approached the Service Tax official for registration and inform of all the facts relating to their activities. The last contention is relating to revenue neutrality. I do not find any substance whatsoever in the argument of the learned Advocate. If such a theory is accepted, it will lead to a situation wherein the final consumer of goods or services only should be taxed or charged and all other irregularities by various manufacturers or service providers would become non-taxable. It is also noted that service tax authorities issued summons in February 2006 but appellant did not cooperate. Appellant also did not take registration. It was only in 2010, after lot of persistence that details could be obtained. Conduct of the appellant cannot be considered as bona fide." Thus in view of the above decisions we hold that demands made by invoking the extended period of limitation as provided by Section 73 of the Finance Act, 1994 are sustainable. 5.15 Since we have upheld the demand of service tax, the demand of interest under Section 75 is natural corollary. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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