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TMI Blog2023 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... e SCN. If it was the appellants apprehension that the question of taxability had not being addressed correctly in the Show Cause Notice, they had an opportunity to put forward the facts and evidences, including the relevant ledger entries, available with them when asked to reconcile data during the dispute resolution process - While the question of taxability is to be decided according to the principles of law, what was the factual accountancy practice followed must be disclosed with evidence so as to examine the applicability of the principles of law involved to those facts. International inbound roaming Service is not liable to Service tax - HELD THAT:- Once the FTO is identified as the service recipient, it becomes evident that the international inbound roaming services are rendered to the FTO outside the territory of India and the transaction becomes an export of services as per Rule 3(iii) of the EoS Rules - It is seen that the Original Authority has held that the appellant has not furnished the required breakup for the financial year 2004-05 and 2005-06 for the Head 4027 General Roaming which includes National and International Inbound Revenue. The appellant has again not ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision in law which permits statutory authorities to set aside the impugned order based on delay, if any. In fact, the Act at the relevant time did not provide any period within which the adjudication proceedings should be completed. The following issues raised by the appellant remain to be examined - (A) The entire demand is barred by limitation. The extended period of limitation ought not to be invoked as none of the conditions in Proviso of Section 73(1) are invocable in the instant case - (B) No interest is payable. No penalty is imposable. Matter remanded back to the Original Authority for de novo adjudication - appeal disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... t have come to light. Hence Show Cause Notice dated 14.10.2009 was issued to the appellant proposing to demand service tax to the tune of Rs.8,71,60,499/- (inclusive of education cess) along with appropriate interest on a differential taxable value of Rs 77,59,83,198.06 and for imposing penalty. After due process of law, the adjudicating authority dropped portion of the demand and confirmed the balance demand amounting to Rs.6,59,55,769/- along with appropriate interest and imposed penalties under sec. 77 and 78 of the FA 1994. Hence this present appeal by the appellant. 3. No cross-objections have been filed by the respondent-department. 4. We have heard learned counsel Ms. Krithika Jaganathan for the appellant and Shri N. Satyanarayanan, learned Assistant Commissioner (AR) for the department. 5. The learned counsel Ms. Krithika Jaganathan submitted that the present demand is based entirely on the differential value arising out of the revenue figures furnished in the Trial Balance as compared to the value of taxable services as furnished in the ST-3 returns by the appellant. She submitted that the Trial Balance and Profit & Loss Account for the financial year is prepared on 'ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability was dependent on the receipt of payments prior to 01.04.2011 as is clear from Rule 6(1) of the STR 1994. 7.1.1 We are not in agreement with the appellants assertion that no demand can be raised on the basis of values reflected in financial statements, especially a Trial Balance which is the issue in this case. It is not denied by the appellant that the document relied upon by the department is a Trial Balance of the company itself. A Trial Balance lists the balances of all general ledger accounts of a company at a certain point in time. It is hence drawn based on the facts as available in the company's ledgers including the 'debtors ledger' which is so very crucial in determining the actual amount received for the output services and to assess the correctness of duty paid on receipt basis, following acceptable accounting standards. A look at the Trial Balance allows the department to scrutinize the accounts for a particular period of time which need not be the financial year as in a regular Annual Balance Sheet. Hence the Trial Balance to that extent contains valuable information, which may be relevant to the facts in issue and necessary to be scrutinized as a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. Hence the onus of establishing the truth of what is self-assessed and declared in a statutory Return is on the assessee (appellant). The legal principle is that he who asserts must prove. So once a query has been raised by Revenue on a self-assessed return, adverse inference could be drawn against the assessee if they are not able to provide a satisfactory reply. The initial burden of rebuttal is on the assessee because the basic facts are within their special knowledge. Even as per section 106 of the Indian Evidence Act, the fact within the knowledge of a person must be proved as the burden of proof is cast upon him. The Apex Court in A. Raghavamma v. A. Chenchamma [AIR 1964 S.C. 136] held "When sufficient evidence either direct or circumstantial in respect of its contention is disclosed by the Revenue, adverse inference could be drawn against the assessee, if he failed to put before the Department, material which, he was in exclusive possession. This process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to the other." When the appellant was confronted with two financial documents both prepared by them for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue heads appearing in the Trial Balance are part of the gross billings, they neither come up with any documentary evidence nor taken effort to reconcile the dfference between the value of taxable services billed as shown in the ST-3 Returns and the credit balance items in the nature of Subscriber Service Charges shown in the Trial Balance during the Financial Year 2004 - 05, 2005 - 06 and 2006 - 07." The appellant had not refuted the above charge. They have stated in their defence before us that they have responded to the query by the department stating that they prepare Trial Balance on accrual basis as per AS-1 and AS-9, whereas the ST-3 returns are prepared upon payment of service tax on receipts basis as per Rule 6 of the STR 1994. We find that the response of the appellant shorn of verifiable facts was not adequate. The differential taxable value for the impugned period worked out on the basis of the Trial Balance and ST-3 Return was to the tune of Rs.77,59,83,198.06 for which an explanation was called for. While addressing a mixed question of law and facts, they were well within their rights to state a legal position, but it alone was inadequate for the Original Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant case. H. No interest is payable. No penalty is imposable. We proceed to examine the issues sequentially. We shall also examine the judgements cited by the appellant on the accepted principle that it is neither desirable nor permissible to pick out a word or a sentence from a judgment divorced from the context of the question under consideration and treat it to be complete law. We are in agreement with the appellant's averment in the written submissions that it is settled law that a judgment is a precedent for what is held and not what could be inferred, as at paragraph 11 of CCE v. Alnoori Tobacco Products [2004 (170) E.L.T. 135 (S.C.)]. 9. It is a settled legal position that treatment in the books of account is not determinative of tax liability. 9.1 The appellant states that the demand has been confirmed solely based on the accounting treatment of money. It is submitted that the question of taxability must be decided according to the principles of law and not in accordance with accountancy practice. They have placed reliance in this regard on the following case laws; a. Tuticorin Alkali Chemicals & Fertilizers Ltd., Madras v. Commissioner of Income Tax, Madras [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services are not liable to service tax at all. As explained by them, an arrangement for international inbound roaming services is executed between a Foreign Telecommunication Operator ("FTO") and the Home Telecommunication Operator ("HTO") whereunder the HTO would provide connectivity services to the subscriber of the FTO for the duration that the inbound roamer is in India. Hence, the Service recipient in this transaction is the FTO and not the inbound roamer. The Inbound Roamer is merely a beneficiary of the arrangements between the FTO and HTO. Hence, they state, that it becomes important to ascertain the place where the services are rendered to determine if the activity is leviable to service tax. Once the FTO is identified as the service recipient, it becomes evident that the international inbound roaming services are rendered to the FTO outside the territory of India and the transaction becomes an export of services as per Rule 3(iii) of the EoS Rules. We find that the issue as described is a mixed question of fact and law and has not been examined in the impugned order. 10.2 From the impugned order it is seen that the appellant had only taken a stand before the Original Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stand in this era of self-assessment. We have perused the case laws relied upon by the appellant, though interesting, it is difficult to apply in the present context where the appellant has built up his legal arguments without divulging facts in their knowledge even for delineating the services, as stated by the impugned order and not denied by the appellant. The case laws are hence not applicable to the present set of facts. 11. Out-roamer charges which are also in the nature of interconnection usage charges are not taxable prior to 01.06.2007. 11.1 The appellant has stated that while the impugned Order has dropped the entire demand on interconnection usage charges ("IUC") vide paragraph 5.8.2, the impugned Order has erroneously included an amount pertaining to 'markup out-roamer revenue' home/ international, in interconnection usage charges in spite of the data provided by them in the reply to the SCN. Thus, having accepted that the interconnection usage charges is not taxable, the impugned Order ought to have set aside the demand in entirety and the demand of Rs.6,38,210/- also merits to be dropped. 11.2 We have examined the issue and find that the Original Authority has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the service provider 'for such service'. b. CST v. Bhayana Builders Ltd. [2018 (10) GSTL 118 (SC)] for the proposition that any amount charged that has no nexus with the service rendered is not exigible to service tax because it is not 'consideration'. The Apex Court's judgment in Intercontinental Consultants (supra) does not come in support of the appellant case since they have not demonstrated that the expenses were reimbursable etc. Secondly both the judgments were rendered in cases where the facts in issue were that amount charged had no nexus with the service rendered. In the present case the impugned order finds that the payment is so integrally connected with the ultimate provision of service, that, but for such payment of the charge provision of service would not have been made by the appellant, hence these service charges collected are part of the activation charges. The appellant, despite ample opportunity, has not pleaded or demonstrated through documents that the service would have been operationalized even if these charges were not paid. Hence the gross consideration that is shown to contribute in rendering the service will form a part of the gross value of the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the Original Authority has advanced the following reason for confirming the demand. The relevant portion of para 5.8.7 of the OIO is reproduced below:- "On perusal of the list of "services and charges accounted/charged on Post paid and Pre-paid service', furnished by the assessee, I find that the 'Trial Balance head - Interest on delayed payment' is listed under 'Other miscellaneous charges'. Also on perusal of the invoices furnished by the assessee, I find that 'Misc Credits / Charges' are included for computing the taxable value and service tax is charged on the same from the subscriber. The assessee has not produced any documentary evidence to prove that interest on delayed payment are not included for computing the service tax liability. Therefore, I conclude that service tax collected on the interest charges on delayed payment would form part of taxable value for the purpose of calculating service tax liability'. (emphasis added) As per Section 73A(2) of the Finance Act, 1994 monies collected as a tax, even if wrongly done, has to be deposited to Government. We find that once again while the appellant is strong on making inferences and assertions, they were w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at a decision. They are not directly comparable and are distinguishable. Further, powers of Tribunals are not concomitant with that of Constitutional Courts. Hence, we are not inclined to accept this submission made by the appellant. The Appellant submits that in Puneet Steels & Alloys Pvt. Ltd. [2017 (358) ELT 1253 (Tri. Del.)] the Order of the lower authority had been set aside by the Hon'ble CESTAT on account of an unexplained delay in adjudication of 9 years. We find that the order does not disclose the precise provision in law which permits statutory authorities to set aside the impugned order based on delay, if any. In fact, the Act at the relevant time did not provide any period within which the adjudication proceedings should be completed. The Hon'ble Supreme Court had an occasion to examine a similar action taken by the Tribunal in Collector of Central Excise Vs Bhagsons Paint Industry (India) [2003 (158) E.L.T. 129 (S.C.)]. The Court held: [Order]. - The Tribunal in an appeal arising under the Central Excise Act held that the adjudication made after a lapse of nearly nine years after the issue of show cause notice is not permissible and set aside the same. 2. There ..... X X X X Extracts X X X X X X X X Extracts X X X X
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