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TMI Blog2019 (12) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... ctures Pvt. Ltd. to be the taxable services under Section 65(105)(k) and 65(105)(zzzzj), to be erroneous and incorrect. Appellant has also drawn our attention to the provisions of 65(25b) of the Act wherein, the activity/service of Commercial or Industrial Construction purposefully, excludes the services provided in respect of construction of roads' from the very definition of taxable service given under section 65(105) of the Act ibid - We are in total agreement with the Appellant s contention that the taxable services defined under Section 65(25b) has categorically excluded the activities of construction of road from the scope of levy of Service Tax. Even otherwise also, we find that the Activities relating to the construction of road has been placed under the exemption notification No.17/2005-ST dated 07-06-2005 so as to grant benefit to the service providers from being taxed. Thus, the Appellant qualifies in its claim for the non-levy of Service Tax on such activity of construction of Road, rendered to M/s.Adhunik Infrastructures Pvt. Ltd. and accordingly, the SCN fails on this aspect. In the instant case, it is relevant to place here that first of all, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioning, (ii) Site formation, Clearance, Excavation Earthmoving activities. The present appeal is filed by the Assessee in relation to the dispute arising out of the Adjudication Order (Order-in-Original) passed by the Commissioner, Bhubaneswar Commissionerate wherein, a demand of Service Tax of ₹ 22,98,33,478/- has been confirmed under the proviso to Section 73(1) of the Finance Act, 1994 invoking the extended period along with the imposition of Penalty under Section 78 and applicable Interest payable thereon, under Section 75, of the Act, ibid. 2.1 The Appellant has filed the Appeal before this Bench, on the ground that the services rendered by them during the period i.e. from Financial Year - 2010-11 to Financial Year -2012-13 (up-to June) were specifically excluded from the purview of taxable services and/or excluded from the scope of levy of Service Tax. The Original Authority vide Order-in-Original dated 27-04-2018 has unlawfully confirmed the demand of Tax proposed in the Show Cause Notice dated 19-04-2016 against the following remuneration received by them. (a) Site formation, and clearance, excavation and earthmoving and demolition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. As the said activities undertaken by the Appellant constitute the taxable services under the category of Manpower Recruitment and Supply and Supply of Tangible Goods , defined under Section 65(105)(k) and 65(105)(zzzz) of the Finance Act, 1994, the Appellant is liable to pay Service tax on such remuneration received. The said amount taken into consideration on the basis of the copies of 26-AS Statement, the Appellant in toto has received an amount of ₹ 222,71,48,088/- during the period October- 2010 to March-2013 (up-to June 2012) against the execution of Contractual Works on which they are liable to pay Service tax of ₹ 22,98,33,478/- (including Cess). The SCN alleged that it was statutory obligation on the part of the Appellant to declare all their incomes in their ST-3 Returns even if, the same are exempted from Service Tax. Such Non-declaration of the Income in the ST-3 Returns is an act of suppression of facts with an intent to evade the payment of Service Tax and therefore, the extended period of Five years provided under the proviso to Section 73(1) of the Act is invokable in the case and accordingly the Appellant is liable to pay tax along with Inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods , defined under Section 65(105)(k) and 65(105)(zzzz) of the Finance Act, 1994. Their claim is that the activity of construction service undertaken towards the Construction of Road is specifically excluded from the levy of Service tax. Hence, the remuneration amount of ₹ 3,55,77,102/- allegedly received by them from the Contractee M/s.Adhunik Infrastructures (P) Ltd does not attract any levy of Service Tax. (d) The Appellant has categorically disputed the calculated value/amount of the remuneration received from M/s. PACL India Ltd in relation to the service rendered during the period 2011-12. While the SCN has considered the remuneration received by the Appellant as ₹ 30,00,00,000/-(Thirty Crore), they claim the same to be ₹ 3,00,00,000/- (Three Crores) only. They have submitted the statement of 26AS issued by the Income Tax Department stands as a testimony to such claim. 2.5 The Appellant refuted the allegation in the SCN about their indulgence in any Suppression of Facts by virtue of which the extended period of limitation of five (5) Years has been invoked by the Department under the proviso to the Section 73(1) of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of limitation up-to five years . The Original Authority imposed a penalty equal to the demand of Tax under Section 78(1) along with appropriate interest under Section 75 of the Act ibid. At Para- 3.10 of the impugned Order the Original Authority has held that the plea of availing of exemption without establishing their proof, cannot save the Appellant from its obligation to pay Service Tax. Further, the Original Authority has also imposed a penalty of ₹ 1,00,000/- on Shri Mahendra Kumar Gupta, Managing Director of the Appellant-Assessee in terms of Section 78A of the Finance Act, 1994 for his involvement in the act of contravention of the provisions of the Act and the Rules made there under. 3.1 During the scheduled hearing of the case, Shri K. K. Acharya, Learned Advocate, pleading for the Appellant, reaffirmed their point of view as has been claimed in the Appeal Memorandum. Shree Acharya submitted that on a conjoint reading of the allegations in the SCN and findings in the Original Order, it is evident that the process of demand of Service Tax and the confirmation of the same has been initiated and concluded on the erroneous premise that the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l land development. This is more evident from paragraph 3.4 of the impugned Order wherein, it has been stated that the Appellant neither charged nor paid any Service Tax on the aforesaid site-grading and levelling work, claiming the said works as exempted, vide Circular No.B1/6/2005-TRU dated 27.05.2005, being rendered on agricultural land . In this connection Ld. Advocate submitted that when a particular activity has been expressly kept out of the purview of the tax net vide Section 65(97a) of the Act, there cannot be an occasion for an assessee to seek exemption from payment of Service Tax on such activity, inasmuch as exclusion from the tax net is wholly different from exemption from payment of tax. Further, on these fundamentally erroneous premises the impugned Order finds that the Appellant failed to discharge its obligation cast on it by the statute, which is contrary to settled law, inasmuch as, in cases where an assessee seeks exemption from tax, the onus lies on him to prove the eligibility to such exemption; But in cases where a particular activity is excluded from the levy of tax and taxability thereof is asserted by the Revenue, the onus shifts over to the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e activities in the ST-3 Returns nor does the Statute prescribe anything to be complied with. Thus, the Original Authority indicting them with the act of suppression of facts with the intent to evade the payment of tax, being absent and/or unproved by the Department, the SCN invoking the extended period of limitation of 5-years is not sustainable. Accordingly, the outcome of the Adjudication proceedings stands void ab initio. In support, they have cited the Tribunal s decision of Kirloskar Oil Engines Ltd. Vs. CCE, Nasik [2004 (178) ELT 998] wherein, it has been held that the Extended Period is not invokable, if the demand has been made on the basis of audited Balance Sheet and Profit Loss Account. 3.6 Opposing the appeal of the Appellant, the Learned Authorized Representative, representing the Respondent-Department, justified the findings of the Order-in-Original and stated that the Appellant are liable for the levy of Service Tax as the Appellant has failed to provide proper reasons/grounds for claiming the exemption from the payment of Service tax. Unless the Appellant proves its eligibility to avail the benefit of exemption from payment of Service Tax, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (105)(zzq) of the Finance Act, 1994 and is subjected to the levy of Service tax at appropriate rate. Based on the above, we hold the interpretation of the Original Authority in classifying the activities undertaken by the Appellant for M/s.Adhunik Infrastructures Pvt. Ltd. to be the taxable services under Section 65(105)(k) and 65(105)(zzzzj), to be erroneous and incorrect. 4.3 However, in this aspect, the Appellant has also drawn our attention to the provisions of 65(25b) of the Act wherein, the activity/service of Commercial or Industrial Construction purposefully, excludes the services provided in respect of construction of roads' from the very definition of taxable service given under section 65(105) of the Act ibid. We are in total agreement with the Appellant s contention that the taxable services defined under Section 65(25b) has categorically excluded the activities of construction of road from the scope of levy of Service Tax. Even otherwise also, we find that the Activities relating to the construction of road has been placed under the exemption notification No.17/2005-ST dated 07-06-2005 so as to grant benefit to the service providers from being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant. 4.7 On this front, we find that the SCN has not placed any conclusive evidence in putting the fact that the service rendered by the Appellant is something other-than related to agriculture so as to inflict the levy of tax on Appellant. No revelation to this effect has been recorded in the findings of the Original Authority either. On the other hand, the Original Authority in its order has been heavily dependent on the Appellant to prove its claim of getting itself exempted from the payment of Service Tax. In the instant case, it is relevant to place here that first of all, there must be a levy of Tax for anyone to claim the benefit of exemption from such levy of Tax . The Department could have come up with sufficient cause to inflict the levy of Tax on the activities undertaken by the Appellant- rather than seeking the Appellant to prove the cause of non-levy of Service tax. Moreover, the cause placed by the Department for the imposition of levy of Service tax cannot be a mere assertion based on the assumptions or presumptions envisaged in the SCN and instead, such assertions should be beyond reasonable doubt to inflict the levy of Tax upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.9 The Original Order does not boast any material evidence/facts beyond reasonable doubt in the SCN which outweigh the averments made by the Appellant Assessee both in reply to the SCN as well as submissions made before us. Moreover, we have also been apprised by the Appellant that they had submitted a request before the Original Authority to conduct due diligence and survey of the work performed which was not given any heed thereto (refer Para 3.2 Supra). This very aspect stands a testimony to the fact that the Respondent Department, without conducting any inspection/verification of the work undertaken by the Appellant, has drawn its conclusion in haste thereby, confirming the Demand of tax proposed in the SCN. The foremost being the failure to distinguish between the Exclusion from Tax and Exemption from Tax which holds the vital key to the demand being confirmed or otherwise. The present case being confined to the admissibility of the Non-levy of Tax under the exclusion clause as provided under Section 65(97a) of the Act, the Original Authority placing all its decision in relation to the availability of benefit of Exemption from levy of Tax is held as erroneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Order-in-Original, the original authority has relied on the provisions of taxation prevalent in the Negative List regime (w.e.f. 01.07.2012 to 30.06.2017) and drew conclusion from the Negative List regime so as to impose the taxability on the activities undertaken during the era of Pre-Negative List or say the taxation on positive list regime. Such an interpretation of the Original Authority does not withstand the sanctity of the legal dictum in enforcing the provisions prevalent in the Negative List regime to the disputes of the pre-negative list regime. The Original Authority cannot create a legal fiction of its own and dictate for garnering the revenue. Even otherwise, we agree to the contention of the Appellant before us that they have never claimed any exemption from payment of tax and instead what they are claiming is exclusion from the levy of tax. The averment of the Original Authority, that exemption is not available to the Appellant, does not hold any basis. Therefore, we are constrained to hold that the decision of the Original Authority is deemed to be non compus mentis. The issue as noted at 4.1(b) is answered accordingly. 4.13 Further to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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