9911796707
TMI Blog2021 (7) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... is applicable to service tax case by virtue of Section 83 of FA, 1994. 3. Every appeal under sub-section(1) [or sub-section(2) or sub-section(2A)] of Section 86 of FA,1994 shall be filed within three/four months of the date on which the order sought to be appealed against was received by the assessee/ the [Committee of the Commissioners], as the case may be. 4. The appeal, as referred to in Para 2 above, should be filed in S.T.5/S.T.-7 proforma in quadruplicate; within three/four months from the date on which the order sought to be appealed against was communicated to the party /Deptt., preferring the appeal and should be accompanied by four copies each (of which one should be a certified copy), of the order appealed against and the Order-in-Original which gave rise to the appeal. 5. The appeal should also be accompanied by a crossed bank draft drawn in favour of the Assistant Registrar of the Tribunal, drawn on a branch of any nominated public sector bank at the place where the Tribunal is situated, evidencing payment of fee prescribed in Section 86 of the Act. The fees payable are as under: (a) where the amount of service tax and interest demanded and penalty levied by any Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority). 2. The appellant company is engaged in providing taxable services viz., TV broadcasting, advertising, operation and maintenance of studios etc., under the brand / TV channel name 'STUDIO ONE'. They are registered for the purpose of payment of service tax on taxable services rendered by them under the category of "Broadcasting Service" and "Copyright Service Transfer Temporarily/Permit Use or Enjoyment". 2.1 Intelligence developed by the officers of the Directorate General of Goods & Services Tax Intelligence, Hyderabad Zonal Unit, Hyderabad (for short 'DGGI') Indicated that the appellant company resorted to evasion of service tax by not paying service tax charged I collected from their clients / customers in respect of taxable services viz,. TV programming, Advertising, Broadcasting etc., and also by not filing statutory returns from October 2014 to June 2017. Therefore, investigation was initiated by conducting a search on 20.12.2019 and certain documents such as Balance Sheets for the Financial Years from 2014-15 to 2018-19, Advertisement Sales Ledger Account (Revenue from Operations) for the period from October 2014 to June 2017, Month-wise Advertisement Sales Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in terms of clause (51) read with clause (44) of Section 65B of the Finance Act, 1994 and the appellant company is liable to pay service tax along with interest and penalty. 2.3 From scrutiny of books of accounts, Annual Reports / Balance Sheets, Other Income & Party Ledgers and the appellant company's letter dated 23.03.2020, it also appeared that they provided videos / contents i.e., Cooking, Devotional and Entertainment programs to M/s Manam Digital Network, Hyderabad who received, controlled, supervised, managed and uploaded the said contents on YouTube channel for public viewing. The appellant company received consideration from M/s Manam Digital Network, Hyderabad for provision of above services and declared the same in their books of accounts under the head 'Other Income'. The appellant company vide their letter dated 23.03.2020 informed that they did not have any agreements with M/s Manam Digital Network, Hyderabad and they did not raise any invoice for the said transactions. Scrutiny of books of accounts of the appellant company revealed that they received net service consideration of Rs. 4,50,309/- and also collected service tax of Rs. 67,546/- from M/s Manam Digital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made with mala fide intention in contravention of the provisions of Section 125(1)(f)(i) of the Finance (No 2) Act, 2019. Further, it appeared that they falsely declared the service tax liability of Rs. 73,54,987/- only for the period from October 2014 to June 2017 in the above said SVLDRS application while their actual service tax liability is Rs. 1,82,07,288/-. In terms of section 129(2)(c) of the Act ibid, where any material particulars furnished in the SVLDRS declaration are subsequently found to be false, it shall be presumed as if the said declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted. Therefore, the above said application appeared to be liable for rejection, disqualification and shall be presumed as if the same was never made. Since the appellant company filed the SVLDRS application on online under the category of 'Voluntary Disclosure', Form SVLDRS-3 was issued by the Designated Committee concerned on 09.01.2020. However, it appeared that Discharge Certificate in Form SVLDRS-4 was not issued by the Designated Committee since the appellant company has not paid the tax dues declared by them under the categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs of the company during the impugned period, appeared to be liable to penalty under section 78A of the Finance Act, 1994. 2.9 Smt. Gadde Viiaya Sree, Managing Director of the appellant company is in office during period when service tax was apparently evaded, provisions of Finance Act, 1994 and the rules made thereunder were contravened and offences were seemingly committed. In her voluntary statement, she deposed that she takes care of day-to-day financial and banking transactions of the company and she is also authorized signatory for Service Tax and GST matters. Thus, it appeared that she was in charge of the company during the impugned period and appeared to be responsible for conduct of business of the appellant company. Therefore, it appeared that she was knowingly concerned with non-filing of statutory returns with intent to evade service tax. Therefore, Smt. Gadde Vijaya Sree, Managing Director of the appellant company, by virtue of being in charge and responsible for the affairs of the company during the impugned period, is liable to penalty under Section 78A of the Finance Act, 1994. 2.10 Shri Kuchi Nageswararao, Chief Accounts Manager of the appellant company and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove during the period from October 2014 to June 2017 should not be demanded and recovered from them under proviso to section 73(1) of the Finance Act, 1994; (iv) an amount of 50,00,000/- paid towards part of their Service Tax liability during investigation should not be appropriated/adjusted against the amount demanded at SI. No (iii) above; (v) interest at applicable rates on the demand as mentioned at (iii) above should not be demanded and recovered from them under Section 75 of the Finance Act, 1994; (vi) penalty equivalent to the amount of service tax demanded at (iii) above, should not be imposed on them under Section 78 of the Finance Act, 1994 for suppression of the relevant facts and for contravention of various provisions of Chapter V of the Finance Act, 1994 and Rules made thereunder with intend to evade payment of service tax. (vii) penalty should not be imposed on them under Section 76 of the Finance Act, 1994 for failure to pay Service tax as explained in this notice; (viii) penalty should not be imposed on them under Section 77(1)(d) and Section 77(2) of the Finance Act, 1994 for not paying the appropriate amount of Service tax on the gross value of taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 21.04.2020 under proviso to section 73(1) of the Act read with section 174(2) of the GST Act and alleged that the appellant is not eligible to file a declaration under the SVLDRS scheme. * Appellant is eligible to make declaration under the scheme. Section 125(I)(f)(i) is not applicable in the present case as appellant did not make any disclosure beyond the accounted and audited service tax liability in books of account even after visit is made by the Investigation team. In the facts and circumstances of the present case, the visit made by investigating team is merely ironical. * The enquiry/investigation/audit must be pending as on 30.06.2019 as well as the amounts must have been quantified in order for the respondents to justify their stand. In other cases, the designated committee is empowered to verify the eligibility in light of the facts and circumstances of the case. This position has been clarified by CBIC vide its circular number 1074/07/2019-CX dated 12th December 2019 which reads as under: "v) For the purpose of eligibility under the Scheme in some of the categories such as litigation, audit/enquiry/investigation etc., the relevant date is 30.06.2019. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, appellant had time till 31st December 2019 to file the application in Form SVLDRS-1. This time limit was further extended to 15th January 2020 by way of NN 07/2019-CE(NT) dated 31.12.2019. * In the meanwhile, the Investigating team conducted inspection and visited the premises of the appellant on 20th December 2019 wherein they took a note of accounted liabilities. * Appellant disclosed that they wish to avail the SVLDRS and are in the process of preparing documentation and arranging funds to opt for the scheme. * As undertaken to pay, appellant paid Rs. 50,00,000/- on 21st December 2019 to ensure smooth conduct of investigation proceedings and under a belief that this amount would be adjusted at the time of making application under SVLDRS scheme. * Appellant accounted for entire service tax liability in his books of account and nothing has been declared beyond that. Therefore, impugned application in Form SVLDRS has not been filed pursuant to conduct of enquiry of audit or investigation. * The inspection by Investigation team was merely ironical and has no relation with filing of application under the SVLDRS scheme. * Since the discharge certificate in Form SVLDRS- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of service tax dues, after appropriating the amount of Rs. 50,00,000/- paid during investigation, it was observed that said challan could be generated with full amount of Rs. 73,54,987/- and the amount paid by appellant before filing of declaration in Form SVLDRS-1 is not being appropriated. Therefore, appellant made several visits to the office of designated committee to allow them to pay net liability for Rs. 23,54,987/- but to no avail. The grievance of the appellant left unanswered despite the fact that this position has also been made clear by CBIC vide its circular number 1074/07/2019-CX dated 12th December 2019 which reads as under: "Section 124(2) provides for adjustment of any amount paid as pre deposit at any stage of appellate proceedings or as deposit during enquiry, investigation or audit. However, an amount paid after issuance of show cause notice but before adjudication is not mentioned therein. Further, these amounts get appropriated/adjusted at the time of adjudication. There may be situations where such deposits may have been made but could not be appropriated due to pendency of adjudication proceedings. With a view to facilitate the tax payer as well as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, they have not enclosed any proof of filing thereof. * CENVAT credit claimed in the books of account is considered as valid compliance with the provisions related to availment of credit. Reporting of these figures in ST-3 form is merely a reporting requirement. Therefore, CENVAT credit of the appellant shall not be disallowed. * Appellant is engaged in provisioning of output services in the nature of sale of time for advertisement in TV and 'supply of content' for which it utilizes various input services on which he is entitled to avail the CENVAT Credit. * The eligibility of credit is based on receipt of input services. In the present case, since the appellant received the input services at material point of time, the eligibility of CENVAT Credit cannot be disputed at all. * Rule 4 of CCR Rules provides the conditions for allowing CENVAT Credit. As per this rule, CENVAT credit in respect of inputs may be taken immediately on receipt of inputs in the premises of service provider and when such inputs are delivered, subject to maintenance of documentary evidence of delivery and location of inputs. The CENVAT credit in respect of input services is available on or after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit shall submit a half yearly return in Form ST-3. Therefore, Form ST-3 is merely a furnishing of information related to CENVAT Credit availed by the provider of output service and it is not a Form wherein the CENVAT Credit is availed by the assessee. * Attention is invited to the decision of CESTAT Bangalore in case of Target Corporation India Private Limited versus commissioner of Central Tax, Bangalore East reported as 2019 (10) TMI 1148 wherein Id. Bench observed it has not been categorically provided that non-disclosure of cenvat credit in the ST-3 return will disentitle the assessee from claiming the cenvat credit which he is otherwise entitled to. * The judgment of Target Corporation (supra) has been followed by the division bench of Hon'ble CESTAT, Chennai in the case of M/s Temenos India Private Limited Versus Commissioner of Service Tax, Chennai reported as 2020 (2) TMI 354. * However, the Adjudicating authority has completely deviated from the above settled legislative provision and has preferred filing of return above the fact of receipt of input services as well as invoices to authenticate the availability of CENVAT Credit. * The tribunal decision cited supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices Tax Act, 2017 and in the present case, there was nil closing balance in the CENVAT Credit account as on 30th June 2017. * On the basis submissions made above, appellant submits that demand for the period October 2014 to June 2017 which is covered by CENVAT Credit is liable to be set aside and hence, full demand of interest liable to set aside. As SVLDRS Scheme specifically provides for waiver of interest or penalty on the amount paid under the scheme, demand for interest on late payment of service tax in cash shall be set aside. * Payment of challan for Rs. 23,54,987/- is enclosed which may be taken on record for appropriation. Adjudication officer in para 20 of the impugned order has not taken cognizance of the payment challan for Rs. 23,54,987/-and therefore did not appropriate the same at the time of issuing impugned order. * As per the facts made clear, entire demanded amount was accounted for in the books of account and nothing new has been identified by the DGGI. Therefore, it can succinctly be construed that intention of the appellant has never been to evade payment of tax. Hence, section relating to penalty is not invokable in the instant case. * The present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellants. 5.1 Referring to their appeal memorandum, the learned consultant has explained the issue in detail. 5.2 Referring to the show cause notice, copy of the Order-In-Original and SVLDRS declaration filed by the appellant in this case, the learned Consultant has informed that subsequent to the impugned order, they have filed a writ petition on this issue in the Hon'ble High Court of Telangana and the Hon'ble High Court has passed interim order in this regard. Since these were not part of the appeal paper books already filed, he has sought time to file these documents along with a synopsis of the subsequent development. Accordingly, he was asked to file these documents immediately and he was informed that all the four appeals will be heard again on 22.6.2021 at 11.30 hours. 5.3 On 22.06.2021 personal hearing was held in virtual mode and Sri Kashish Gupta, Chartered Accountant appeared for personal hearing on behalf of all the appellants. 5.4 The learned consultant has brought to my notice that subsequent to the initial hearing held in this appeals office on 09.6.2021, he has filed further written submissions dated 10.6.2021 wherein he has given synopsis of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice has proposed as to why their SVLDRS declaration should not be rejected and why the service tax should not be demanded from them, the original authority in the impugned order has not given categorical finding on this and simply side stepped the issue. 5.10 It was also contended by them that though they have not filed the tax returns during the disputed period, they have recorded their tax liability as well as cenvat credit eligible to them in their books of accounts. It was only because of the financial constraints, they could not file the returns and pay the required service tax. As a result, it was contended that the Directors of the company had no intention to evade payment of service tax and accordingly, penalty imposed on them under Section 78(A) of the Finance Act, 1994 merits to be set aside. 5.11 In view of the various arguments raised in their appear memorandum, it was contended that since the impugned order is not a speaking order, the same merits to be set aside and the matter merits to be remanded back to the original authority so that the correct tax liability is arrived by the original authority. 5.12 It was contended that they have all the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f)(i) of the Finance (No 2) Act, 2019, which bars a person from making voluntary disclosure under the Scheme after being subjected to any enquiry or investigation or audit. The appellant company, however, contended that in all cases where enquiry / investigation / audit is not pending as on 30.06.2019 and where tax liability is not quantified, the designated committee is empowered to verify the eligibility in the light of facts of the case. In this connection, they referred to clarification given by CBIC vide Circular No.1074/07/2019-CX dated 12.12.2019. As seen from the Circular the CBIC clarified that for the purpose of eligibility under the Scheme in some of the categories such as litigation, audit / enquiry / investigation etc., the relevant date is 30.06.2019. I find that as per Section 121(m) of the Finance (No.2) Act, 2019, "enquiry or investigation", under any of the indirect tax enactment, shall include search of premises. Therefore, if premises of any person is subjected to search, it amounts to initiation of enquiry or investigation against such person. However, as per the clarification given by CBIC vide Circular dated 12.12.2019, a person gets barred from making a volu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Limited versus commissioner of central Tax, Bangalore East [2019 (10) TMI 1148] wherein the Hon'ble CESTAT observed that it has not been categorically provided in law that non-disclosure of cenvat credit in the ST-3 return will disentitle the assessee from claiming the cenvat credit which he is otherwise entitled to. It was further held that CENVAT Credit is a beneficial legislation and it should be construed liberally so as to uphold the letter and spirit of such beneficial piece of legislation and narrow interpretation would read down the benefit given by the legislature and defeat the very purpose of enacting such beneficial legislation. I find merit in the appellant company's contention. It is pertinent to note that in the case of Pawan Engineering Works Vs. Commissioner of C.Ex., Chandigarh-I [2003 (160) E.L.T. 497 (Tri. - Del.)], wherein appellants therein are engaged in the manufacture of agricultural discs for agricultural harrows and clearing the same under exemption notification without payment of duty. A show cause notice was issued to the appellants for demand of duty on flat rolled product of alloy steel, which is an intermediate product on the ground that as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on receipt of inputs in the factory / premises of the provider of output service and the right to CENVAT on input services is accrued on receipt of the invoice, bill or challan. Therefore, as long as the appellant company is in a position to prove their entitlement to CENVAT with necessary documentary evidence, such benefit cannot be denied on the ground that ST-3 returns were not filed for the impugned period. In this connection, the ratio of the case law i.e., Target Corporation India Private Limited (supra) relied on by the appellant company is squarely applicable to the facts of the instant case. The appellant company also relied on the case of Sambhaji and others v. Gangabai and others, 2009 (240) E.L.T. 161 (S.C.), wherein the Hon'ble Supreme Court held that procedure cannot be a tyrant but only a servant and that any interpretation which eludes or frustrates the recipient of justice is not to be followed. Further, there are catena of judgments which laid down that substantial benefit cannot be denied for procedural infraction. In the case of Union of India v. Suksha International & Nutan Gems & Anr, [1989 (39) E.L.T. 503 (S.C.)], the Honble Supreme Court has observed that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 73(1) of the Finance Act, 1994 for recovery of service tax payable by the appellant company and imposing consequential penalty on them. The case laws relied on by the appellant company against invoking proviso to Section 73(1) do not help them in support of their contention as this aspect needs to be examined based on facts and circumstances of each case and cannot be generalized. 11. Shri Narne Apparao, Chairman-cum-Director, Smt. Gadde Vijaya Sree, Managing Director and Shri Kuchi Nageswararao, Chief Accounts Manager of appellant company filed the appeals contesting the penalty imposed on them under Section 78A of the Finance Act, 1994. They mostly reiterated the contentions raised by the appellant company. As per clause (d) of Section 78A of the Act, failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contrave ..... X X X X Extracts X X X X X X X X Extracts X X X X
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