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TMI Blog2024 (3) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... f ST 3 returns and Balance Sheets with all schedules, notes of accounts and annexures and income tax returns, etc. but the appellant had not provided the documents as required despite repeated letters and summons from the Department. Based on the available information, invoking best judgment under Section 72, SCN dated 21.10.2014 was issued to the appellant covering the period 2009-2010 to 2012-2013. Subsequently, a second SCN dated 13.4.2015 was issued covering the period 2013-2014. Both SCNs have been adjudicated by the impugned order, the operative part of which is as follows: FOR SCN No. 1 (i) I confirm the demand of service tax of Rs. 31,89,537/- (Rs. Thirty one lakhs, eighty nine thousands five hundred thirty seven only) and order to recover the same from M/s Insight India Pvt. Ltd. I order to drop the rest of demand of Rs. 2,18,09,355/- (Rs. Two crores, eighteen lakhs, nine thousand, three hundred and fifty five only) against the total amount of Rs. 2,49,98,892/- as raised in the Show Cause Notice (including E. Cess & SHE Cess) against M/s Insight India Pvt. Ltd. under sub-section (1) of Section 73, read with Sections 66/66B & 68 of the said Act. (ii) I also confirm the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire amount of service tax along with the interest within 30 days from the date of the communication of the order, then the penalty amount under Section 76 shall be reduced to 25% provided the reduced penalty is also paid within the same time frame as specified above. 3. The first SCN dated 21.10.2014 proposed recovery of service tax of Rs. 2,49,98,892/- based on best judgment assessment under section 72 of the Finance Act, but as the appellant had, in response to this SCN, provided actual figures, the Commissioner dropped the proposal to adopt best judgment assessment and determined service tax liability based on actual figures provided by the appellant. Consequently, of the demand of Rs. 2,49,98,892/- proposed in the SCN, she confirmed only Rs. 31,89,537/- and dropped the rest of the demand. She confirmed the demand made in the second SCN dated 13.4.2015. She also held that interest was payable on these demands under section 75 and imposed penalties under sections 77and 78 of the Finance Act. 4. We have heard learned consultant for the appellant and learned authorised representative for the Revenue and perused the records. First SCN dated 21.10.2014 5. Learned consultant su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. (emphasis supplied) 10. Thus, the SCN was issued based on the imperfect and incomplete information which was available. In reply, the appellant produced its records and the Commissioner has, correctly, considered them and dropped a substantial part of the demand and confirmed only a smaller amount as demand of Rs. 31,89,717 as service tax. 11. Learned consultant for the appellant submits that in the impugned order, the Commissioner had not considered some amounts which were paid before and after the issue of SCN, and confirmed demand on the amounts received for sale of goods. She has also charged service tax on the services rendered to the Mauritius High Commission which is exempted and also has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order the Commissioner held that 'even the contention of noticee that they are rendering 'cleaning activity' may be taken into consideration, the same would be taxable and no exemption from service tax will be available to the noticee'. However, in paragraph 15.3(i) of the impugned order the Commissioner noted that 'Thus, the noticee is not involved directly in cleaning activity; rather they are providing manpower for the activities which incudes cleaning also'. Thus, there is no clarity in the impugned order as to under which head the appellant has been charged service tax- security services or cleaning services or manpower supply services. This part of the demand, therefore, according to the learned consultant, needs to be set aside on the grounds of vagueness. 16. The relevant portion of the impugned order is reproduced below: 15.3 I am of the view that to specify any service in any particular category, the Agreement executed for the service between the service provider and recipient is the most efficient, essential and specific document. Noticee has submitted some of the agreements executed with their clients for 'Cleaning Activity Service'. Following facts have been obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 72 of the Act. Due to contention of Noticee, the actual values of balance sheet has been taken into consideration. I am of the view that if any liability is extracted out on the basis of actual value, the same cannot be denied. Thus, even if the service category of Noticee may be taken as 'Cleaning Activity Service' and the same has not been alleged in the SCN due to absence of actual documents, there is no element of classification dispute and the Noticee is still liable for service tax. Therefore, I am of the view that the service tax raised is liable to be recovered from them. (v) I observe that the Noticee have submitted total 14 (fourteen) copies of Agreements. The overall summary of each of the agreement with taxability remarks is as given below : S. No. Agreement Date Name of Client Purpose Shown by Noticee Remarks for taxability 1. 07-05-10 M/s Arglo Sanskrit Victoria Jubilee Sr. Sec School Security Service Taxable before negative list. 2. 16-04-10 M/s Asian Paints Ltd. Security Service Taxable being commercial and covers under definition of Security service 3. 31-01-13 M/s Asian Paints Ltd. Security Service Taxable being commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial definition of cleaning service, moreover, the agreement shows that the Noticee has provided manpower and machinery for doing house keeping jobs which includes cleaning activity. Agreement is without any stamp fees paper. Cleaning service Taxable being covered under commercial definition of cleaning service, moreover, the agreement shows that the Noticee has provided manpower and machinery for doing house keeping jobs which includes cleaning activity. Agreement is without any stamp fees paper. 3. 31-01-13 M/s Asian Paints Ltd. Security Service Taxable being commercial and covers under definition of Security service 17. We have considered the submissions with respect to this part of the demand. 18. It is true that at the time the SCN was issued, the appellant was registered with the service tax department for providing 'security agency service'. When information was called for, it had not supplied the complete information sought by the department. Hence, a notice was issued invoking section 72 (Best Judgment assessment). Therefore, at that stage, the Commissioner may not have had a clear idea of the exact nature of the services provided. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip, the amounts are usually credited based on the invoices issued by the recipient. Sometimes, after the invoices are issued, some adjustments have to be made with the result an additional amount has to be paid by either side to the other and these are settled by issuing credit notes by the payer to the payee. Conversely, the payee issues a debit note to the payer. To sum up, issue of a credit note means paying someone and issue of a debit note to someone means receiving from someone. 22. In this case, the appellant was the service provider and was liable to pay service tax on any amounts which it received as consideration. If it issues a debit note, it means it received some money and if it issues a credit note, it means it paid someone. The Commissioner has, clearly erred and mis-understood the credit notes as amounts which the appellant had received when, in fact, these are the amounts which the appellant had paid and therefore, service tax cannot be charged from the appellant on the amount which it had paid to other parties. Learned counsel for the appellant submits that some of the clients of the appellant had cancelled their orders and hence it had returned the amounts paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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