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TMI Blog2022 (8) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... o buyers at their side is amount to provision of service and the appellant has provided the taxable service of 'site formation, clearance, excavation, earth moving and demolition' services without obtaining Service Tax registration and not paid Service Tax. During initial statements of Shri Milesh D. Joshi, partner of appellant recorded under Section 14 of the Central Excise Act, 1994. On the basis of the said statements the Revenue's allegation is that appellant was providing blasting material such as Nitrate Mixtures, Detonators, Fuses, etc., to various clients on site through their certified vehicles for transport of explosives, along with trained and certified employees who were termed as 'shot- firer' who performed blasts at the site, by using the said explosives. The adjudicating Authority passed order in original wherein it was held that the appellant has provided services of 'site formation, clearance, excavation, earth moving and demolition' and consequently confirmed the demand of Service Tax, imposed penalty and demand of interest. Being aggrieved by the orders in original appellant filed the present appeals. 2. Shri P PJadeja, Learned Consultant appearing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med sale, hence in terms of Section 65B(44) (a)(ii), the activities of the appellant is not service and the same is not liable for Service Tax. He further submits that as per Rule 2A of Service Tax (Determination of Value)Rules 2006 before or after 01.07.2012, value of goods was not to be included in the value of taxable service. In this case the entire amount collected to the appellant from their buyers of explosives is against sale of goods which has been considered for demand of Service Tax and as such entire amount was to be deducted for calculating value for Service Tax. Receipt of sale proceeds of goods from buyers was not taxable, which is decided in the case of Intercontinental Consultants And Techno crafts Pvt. Ltd by the Hon'ble Supreme Court as reported in 2018 (10)G.S.T.L 401(S.C). In case of the appellant, the entire value is for sale of the goods and not for any taxable services. He submits that the entire case was made on the basis of statements of one partner. He submits that the statement dated 02.06.2015 is not correctly or factually recorded and the same is not corroborated by any clinching positive evidences. He submits that the statements of partner was also re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal of law settled by the Hon'ble Supreme Court in case of Larsen and Tourbo as reported in 2014 (303) ELT 3 (SC). Show Cause Notice suffer from incurable deficiency on taxability of service and computation of Service Tax. Therefore, the impugned orders are liable to be set aside, in the facts of these appeals. In support he placed reliance on the following judgments: * United Telecom 2011 (22) STR 571 (Tri. Bang) * Swapnil Asnodkar 2018 (10) GSTL 479 (Tri. Mumbai) * Balaji Enterprises 2020 (33) GSTL 97 (Tri. Del) * ITC Ltd. 2014 (33) STR 67 (Tri. Del) * Kafila Hospitality & Travels Pvt. Ltd. Vs. CST- 2021 (47) G.S.T.L. 140 (Tri. LB) 2.2 He submits that the demand of Service Tax is based on the definition of service existed prior to 01.07.2012. However, period of dispute in present case is also falling on or after 01.07.2012. The demand of Service Tax on definition based in erstwhile regime cannot be confirmed. Show Cause Notice has failed to analyse transactions properly and mechanically raised demand of Service Tax. Without prejudice, he further submits that the order is beyond the scope of Show Cause Notice. Demand of Service Tax confirmed is under specific head i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 2(51) of Explosive Rules, 2008; that such "Shot firers" were separately recognised and certified persons under the Explosive Rules, 2008. Thus, appellant was not providing any service to its clients/customers after carrying Explosive in its vehicle.Sales invoices/evidences support this fact.He submits that the activity in Trading of Explosive are under Section 66D (e) of the Finance Act,1994 not attracting Services Tax liability after July, 2012. Therefore, the question of demand of Service Tax in sale of explosive is not in accordance with law and deserves to be set aside. He further submits that this Tribunal being a final fact finding authority can very well admit fresh evidence and argument. In this regard he take support from Hon'ble Supreme Court judgment in the case of National Thermal Power Co. Ltd. Vs. Commissioner of Income Tax reported in 1998 (99) ELT 200 (S.C). He also relied upon the following judgments: * Devangere Cotton Mills Ltd. Vs. Commissioner- 2006 (198) ELT482 (S.C) * Utkarsh Corporate Service Vs. CCE, 2014- (34) STR (35)(Guj) 2.3 He also submits that Show Cause Notice is not sustainable on the ground of time limitation. Without prejudice he submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) VAT registration issued by Government of Gujarat. (7) VAT payment challanfor sales (8) VAT returns for period upto 30.06.2017. On going through the above documents, it is absolutely clear that the entire activity of the appellant is sale of Explosives. we observed that the revenue has demanded the Service Tax on the total invoice value which is of sale invoice and it is issued against sale of the explosives. No bifurcation was provided in the invoice such as sale of goods and service charge. With this undisputed fact it is clear that the appellant have raised the invoices for the entire value only for sale of goods on the total sale value. The appellant have discharged the VAT on actual sale value of goods and not even on composition scheme like Works Contract Tax (WCT). The appellant have paid the entire VAT to the State Government. They have also booked the transaction in their profit loss account as sale of goods only. Accordingly it is clear that the appellant have sold the explosives and no any additional consideration was recovered towards any service. The revenue's case is that the appellant have provided the service of 'site formation, clearance, excavation, ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtra consideration towards the service was recovered the entire value recovered by the appellant from their client is indeed a sale value. Hence, no amount towards the service charge was recovered, therefore even if some incidental activity was carried out by the appellant, the overall transaction cannot be taken away from the transaction of sales in terms of sale or goods act. We further find that the revenue has heavily relied upon the involvement of "Shot Firers". The "Shot Firers" are the technically qualified persons who actually carries out the blasting with the explosive supplied by the appellant. It is the contention of the revenue that the "Shot Firers" were acting on behalf of the appellant. Hence, the blasting activity was carried out on behalf of the appellant therefore, the activities amount to service of 'site formation, clearance, excavation, earth moving and demolition'.We find from the fact on record that the "Shot Firers" are independent and technical expert to carry out the blasting, they are licensed with the Government's Department of explosives. The revenue has not adduced any evidence to show that the "Shot Firers" were acting as an agent of the appellant. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant's activity which is undoubtedly falling into the activity of trading is not liable to Service Tax. Without prejudice, we also find that even if it is assumed that the appellant's activity is a composite works contract service but the facts remains, the appellant have paid VAT on the entire value, the same should be treated as a deemed sale. In terms of Section 65B(44) (a)( ii) an activity which constitutes such transfer/delivering or supply of any goods, which is deemed to be a sale within the meaning of Clause (29 A) of Article 366 of Constitution. Therefore, even if these activities considered as service but there is no dispute that the appellant have raised the sale invoice and paid the VAT in such case as per the above Section 65B (44) (a)(ii). the activity being a sale is also excluded from the definition of service, for this reason also the activity of the appellant shall not be chargeable to Service Tax. 4.1 As regard the dispute that whether the activity is of sale or service, the Hon,ble Supreme Court in a recent judgment of Commissioner of Service Tax Delhi Vs. Quick Heal Technologies Ltd Civil Appeal Nos. 5168-5169 of 2022 vide order dated 5th August,2022 has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity of the assessee is of sale and not amount to service. Applying the ration of the above decision of the Hon'ble Madras High Court, the present case is on better footing as the pre-dominant portion is the sale of explosives and very minuscule activity such as placing the explosive in the holes and blasting(even though the same was not carried out by the appellant) and entire value of the activity subjected to payment of VAT, the appellant's activity is clearly fall under sale of goods. 4.2 We further find that the appellant alternatively submitted that as per Rule 2A of Service Tax (Determination of value) Rules 2006, before or after 01.07.2012, value of goods was not to be included in the value of taxable service. 4.3 We find that as per Rule 2Aof Rules, 2006, it is clear that in any composite service, the value of goods is not to be included in the value of taxable service and in case of appellant, there is no dispute that the entire amount collected by the appellant from the buyers of Explosives is against sale of goods, which was considered by the revenue for the purpose of demand of Service Tax. Since, admittedly the entire amount is towards sale of goods, the same need t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.] From the above Section 9D it is statutory provision in law that for admitting any statement as evidence of the witness, the witness needs to be examined by the Adjudicating Authority and then only the same can be admitted as evidence. 4.4 Section 9D Ibid expressly deals with the circumstances in which a statement recorded before an officer of the Central Excise (under Section 14 of CE Act 1944) can be treated as relevant for the purposes of proving the truth of contents thereof. Ruling of the Hon'ble Punjab & Haryana High Court in case of Jindal Drugs ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen Adjudicating Authority has neither examined partner Milesh Joshi u/s 9D ibid nor allowed his cross examination, then, all such statements need not be considered as valid evidences and consequently, Service Tax demands based thereon deserves to be dropped in facts of the cases. 4.5 This Hon'ble Tribunal at Ahmedabad in case of M/s Sakeen Alloys Pvt. Ltd. [2013 (296) ELT-392(Tri-Ahmd)] Affirmed in 2014 (308) ELT 655 (Gujarat High Court) and Maintained in 2015 (119) ELT A117 (Supreme Court) has held that there needs to be positive evidence for establishing the evasion, and that confessional statement in absence of any cogent positive evidence cannot make the foundation for levying the excise duty on the ground of evasion of tax. The above settled views are followed by the Hon'ble CESTAT, Ahmedabad in case of M/s. Mahesh Silk Mills Vs CCE reported at 2014 (304) ELT 703 (Tri Ahmd). Positive evidences are required for establishing evasion, and on facts, there is no material reflecting evasion of Service Tax. On Considering the factual matrix when there is no clinching, cogent positive evidence to sustain the allegation of evasion of Service Tax, the demands of Service Tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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