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TMI Blog2022 (3) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessee in respect of fixed facility are outside the preview of the Business Support Services. To fall within the ambit of Business Support Services it is essential that activity should be supportive to the main activity undertaken by the client. Where as in the present case, the activity of installing and maintaining fixed facility undertaken by the Appellantassessee for supplying oxygen gas manufactured by it to the buyer/client. Thus, in this case the fixed facility installed by the Appellant-assessee is used by the Appellant-assessee itself and it is in no way construed as supporting activity for the buyer/client of the Appellant-assessee. Given this, fixed charges received by the Appellant-assessee from the buyer/client cease to fall within the ambit of business support services. Therefore, demand of service tax confirmed by the Ld. Adjudicating Authority is not sustainable and is liable to be set aside. In the present case it is admitted by the Department that the Appellant assessee has not charged service tax separately from the client. Given this, the service tax should have been computed backward by treating the total receipts as inclusive of service tax. Exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ygen, the contract stipulates that the Appellant would install fixed facilities on Build-Own- Operate basis in the factory which were being used by the Appellant to ensure uninterrupted supply of Oxygen to M/s.SAIL, ISP. Copy of the contract dated 17.03.2004 has been filed along with the written submissions. As per the contract, the Appellant in addition to the price of gas, was entitled for fixed facility charges for creation of appropriate facilities to ensure uninterrupted supply of Oxygen of the specified parameters. The Appellant was paying excise duty on the fixed facility charges by considering the same as part of the transaction value of gas for the period prior to August 2009. The Department entertained a view that the fixed facility charges shall not be added to the value of the gas cleared to SAIL, ISP and no excise duty is payable on the same and accordingly no Cenvat credit on this value is available to SAIL, ISP. Accordingly, SAIL, ISP stopped reimbursing the excise duty to the Appellants. Therefore, from August 2009, the Appellant is not discharging any excise duty on fixed facility charges under the bona fide belief that no excise duty is payable on the same. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 78 holding that the fixed facility charges fall within the ambit of Business Support Service and the same is liable to Service Tax. However, the Ld. Adjudicating authority dropped the penalty proposed under Section 76 and reduced the penalty under Section 78 of the Act up to 50% of the total demand. The Department is in Appeal, being Service Tax Appeal No.75463 of 2015, against the impugned order imposing reduced penalty (50%) under Section 78. 3. Being aggrieved by the impugned order, the Appellant/Assessee has also preferred Appeal being Service Tax Appeal No.75492 of 2015. 4. Shri Pawan Kumar Pahwa, Ld. Advocate appearing on behalf of the Appellant/Assessee filed a compilation containing Written Submissions, copy of the contract, copy of Show Cause Notice, copy of Order-in- Original and relied upon Circulars, case laws, etc. and submitted that the main activity of the Appellant is manufacture and supply of gas to the client and in furtherance of the same the Appellant had installed fixed facilities in terms of specific contracts with the buyer/client for continuous supply of gas. He argued that this cannot be considered as providing Infrastructure Support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.' Explanation. - For the purposes of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; 10. On perusal of the above statutory definition, it is clear that provision of supply of gas manufactured by the Appellant is not categorized in any of the activities itemized therein. With regard to the infrastructural support services and other transaction processes, the explanation appended to the definition clause provides that infrastructural support service should include the office utilities and other facilities provided for smooth running of the office establishment. 11. In the present case, the main activity of the appellant is manufacture and supply of gas to the customer/buyer and in furtherance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity on its own account shall not to be considered as 'Support Services'. Relevant extract of the circular is reproduced below: The matter has been examined. By definition 'Business Support Service' is a generic service of providing 'support to the business or commerce of the service receiver'. In other words the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider. In the instant case the theatre owner screens/ exhibits a movie that has been provided by the distributor. Such an exhibition is not a support or assistance activity but is an activity on its own accord. That being the case such an activity cannot fall under 'Business Support Service'. 15. We find that to fall within the ambit of Business Support Services it is essential that activity should be supportive to the main activity undertaken by the client. Where as in the present case, the activity of installing and maintaining fixed facility undertaken by the Appellantassessee for supplying oxygen gas manufactured by it to the buyer/client. Thus, in this case the fixed facility installed by the Appellant-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facility provided by the Appellant falls within the ambit of Business Support Services and demanded service tax from the Appellant. The Tribunal in the said case has held that the amount received towards facility fee etc. is not to be regarded as consideration for providing business support to client and dropped the demand of service tax in respect of the same. 19. The said decision of the Tribunal has been affirmed by the Hon'ble High Court of Rajasthan and the same is reported as 2019 (27) G.S.T.L. 194 (Raj.) 20. Further, in the case of Mundra Port 86 Special Economic Zone Ltd., 2012 (27) S.T.R. 171 (Tri. Ahd), the Tribunal has held that providing railway lines inside the port area for the railways to move the wagons cannot be considered as providing infrastructural facilities to the railways. It is a beneficial arrangement for both the parties and there is no service of business support by one to another. 21. It is also submitted that the fixed facility installed by the Appellant in the present case is for supply of Oxygen gas at the premises of the client. In terms of clause 9 of the Agreement entered with the client, the Appellant is responsible for continuou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denying the input tax credit availed by them on the fixed facility invoices received from the Appellant contending that the fixed facility charges paid by the them are not part of the transaction value of gas supplied by the Appellant and therefore no excise duty was payable on the same and consequently, they are not entitled for the input tax credit. 24. It is submitted that after issuance of show cause notice, the client of the Appellant stopped reimbursing excise duty. Given this, Appellant stopped paying excise duty on the fixed facility charges. Further the Appellant has not paid service tax on the fixed facility charges, as the Appellant is of the belief that the same does not fall in any of the category of the services specified in the Finance Act, 1994 prior to 01.07.2012. 25. The Tribunal in the case of BOC India Ltd. Vs. Commissioner Of Central Excise, Jaipur 2018 (10) G.S.T.L. 309 (Tri. - Del.) has held that the Fixed Facility charged received from the client in respect of fixed facility installed in the premises for storage and supply of gas to the client is part of transaction values of gas and by relying on the circular No. F. No. 6/03/2013/ CX.1 dated 10.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged by the service provider for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. 34. It has been clarified by Booklet namely Service Tax Frequently Asked Question (FAQ) on Service Tax 6TH Edition of Service Tax (FAQ) issued by Director General of Service Tax vide para 7.3 that service tax shall be payable by amount realized and amount so realized would be treated as gross amount inclusive of service tax. 35. In the present case it is admitted by the Department that the Appellant assessee has not charged service tax separately from the client. Given this, the service tax should have been computed backward by treating the total receipts as inclusive of service tax. Reliance in this regard is placed on the following precedents: Service Tax, Bangalore Vs Prompt 85 Smart Security 2008 (9) S.T.R. 237 (Tri. Bang.) Srichakra Tyres 1999 (108) ELT 0361 (Tri.-LB) CCE Vs Maruti Udyog Limited 2002 (141) ELT 0003 (S.C.) Panther Detective Services Vs. CCE, Kanpur, 2006(07) LCX0147Eq 2006 (004) STR 0116 (Tri. -Del. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppression of fact cannot be alleged when facts were within the knowledge of the department. Relevant extract of the judgment is reproduced below for ready reference: 5. A perusal of the records makes it clear that the method of valuation adopted by the appellants and the elements of cost of processes included in the assessable value were known to the jurisdictional Central Excise authorities through price lists and cost working sheet made available. It is well settled that when the same facts are known to both sides, it is not open for one side to allege that suppression of facts have been made by the other side. The appellant's case will be covered by this principle. That the appellant was working out assessable value only up to the spindle stage and the element of cost included by the appellant were known to the jurisdictional Central Excise authorities. In these circumstances, we are of the view that the demand made by taking resort to proviso to Section 11A is not sustainable. 40. Similar view has been taken by the Tribunal in case of Kayem Food Industries Pvt. Ltd. Vs. Commissioner Of C. Ex., Delhi-III 2018 (10) G.S.T.L. 394 (Tri. - Chan.) and in the case of Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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