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TMI Blog2023 (10) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... sitting fee etc. Also, they have separate service tax registration for the activities carried out at Almatti Dam site and Bheemarayanagudi project within jurisdictional Central Excise/Service Tax authorities. On the basis of intelligence, investigation was initiated and on scrutiny of documents, recording of statements and analysing of evidences, it was noticed that though the Appellant paid guarantee commission to the Government of Karnataka for providing unconditional and irrevocable guarantee for raising funds from debt market however, they failed to discharge service tax on the said guarantee commission under reverse charge mechanism and also had not declared the said guarantee commission in the periodical ST-3 returns filed. Consequently, show cause notice was issued to the Appellant for recovery of service tax amount of Rs. 16,31,36,263/- for the period from 01.07.2012 to 30.06.2017 with interest and penalty. Also, an amount of Rs.8,43,87,602/- paid during the period 01.04.2016 to 30.6.2017 proposed to be appropriated. On adjudication, the demand was confirmed with interest and penalty; also, the amount paid was appropriated against the said demand. Hence, the present appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. For the second period the Appellant had discharged service tax. 3.6 The learned Advocate submits that from the definition of 'support service', it would be clear that finance guarantee does not fall within its scope, even the same cannot come within the definition of service. He submits that giving financial guarantee cannot be outsourced by anyone else. The lenders seek guarantees from third parties (other than the borrowers), whose name and credit worthiness are unimpeachable such as a bank or a government or an institution specializing in giving guarantees. 3.7 He further submits that the ld. Commissioner has not recorded a specific finding as to why giving financial guarantee is a "support service" but in a tangential finding held that providing guarantee by Government of Karnataka is a 'service' under Section 65B(44) of Finance Act, 1994. It is his contention that the adjudicating authority mis-classified the service provided by the Government of Karnataka. Further, he submits that for the period after the omission of Section 65B(49) w.e.f. 01.04.2016, the appellant has discharged service tax upto June, 2017. 3.8 Further, he submits that giving financial guarantee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty on the Appellant in the circumstances of the case is justified. 5. Heard both sides and perused the records. 6. We find that the appellant has commenced discharging service tax on commissions paid to the Government of Karnataka for providing guarantee in raising funds from the debt market from 01.04.2016. The present dispute is demand of service tax on the commissions paid by the appellant for the period prior to 01.04.2016. Thus, the issues need to be determined are whether: (i) service tax is payable under the commission paid by the appellant to the Government of Karnataka on reverse charge mechanism basis as per Rule 2(l)(d)(i)(E) of the Service Tax Rules, 1994 for the period from 01.07.2012 to 31.03.2016; (ii) Invoking of extended period and imposition of penalties is justified. 7. It is not in dispute that for the period from 01.07.2012 to 31.03.2016 and 01.04.2016 to 30.06.2017, the appellant have paid commissions for guarantee issued by the Government of Karnataka in raising funds by them from debt market. It is not in dispute that the appellant is a public sector undertaking and majority of shares are held by the Government of Karnataka. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract etc. Thus, raising of finance for day-to-day operations by the appellant is a 'service' in the ordinary course of business operation, squarely falls within the scope of the definition of 'support service'. Therefore, the appellant is liable to discharge service tax on the Guarantee commission paid to Government of Karnataka during the period 01.07.2012 to 31.03.2016 for providing unconditional and irrevocable guarantee in raising funds from the debt market. 11. On the issue of invoking extended period of limitation, we find that the ld. Commissioner in the impugned order has held that the returns filed by the appellant for the period April, 2016 to September, 2016 does not reflect the payment of service tax of Rs. 6,56,57,301/- and the payment of service tax for the period from April, 2016 to June, 2017 was made during the period March, 2017 to August, 2017 i.e. much after the investigation was conducted by the DGCEI between June and July of 2015. He has observed that though the payment of guarantee commissions to the Government of Karnataka is reflected in the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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