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TMI Blog2024 (6) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... hat parties have bifurcated the amount for service of erection installation activity and separate amount for transportation/insurance separately. Therefore both the activities are defined separately in the impugned contract. Further the payments for the entire contract was not one composite fixed payment but it depends of each component individually. In the case of Jain carrying Corporation v. CCE [ 2014 (12) TMI 506 - CESTAT NEW DELHI ] the assessee entered into a contract for providing 3 different services - The Tribunal held that there is no justifiable reason to hold that the two services shall form part and parcel of 'cargo handling service' and the appeal was allowed. The demand of service tax confirmed on the facility of arranging for transportation/ insurance of goods offered by the appellant to their customer has been wrongly classified by the revenue as activity of incidental or ancillary to Installation Services . It is well settled position that in a transaction involving multiple supply of services, when an individual service is not merely a component ancillary to the overall supply but it is in itself distinct and independent supply, the same should not be cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch charges by claiming that said services fall under the category of services stipulated under the provisions of Section 66D(p) of the Finance Act, 1994. However the said amount has been charged in relation to the works contract. As the appellant failed to pay the service tax, a Show Cause Notice dated 22-04-2021 was issued to the appellant proposing recovery of Service Tax amount of Rs. 16,57,12,915/- for the period 01.10.2015 to 30.06.2017 under Section 73(1) read with Section 68 of the Finance Act, 1994, invoking extended period of five years, along with interest at applicable rate under Section 75 and also proposed penalties under Sections 76, 77 78 of the Finance Act, 1994. The said SCN was adjudicated by the adjudicating authority vide impugned Order-In-Original No. AHM-EXCUS-003-COM-003-23-24 dtd. 09.06.2023 and after allowing the benefit of cum tax value demand of Rs. 14,42,87,207/- was confirmed. Being aggrieved with the impugned order the appellant preferred the present appeal. 2. Shri Jigar Shah learned counsel with Shri Amber Kumrawat, and Shri Rinkal Patel, Learned Advocates appearing on behalf of the appellant submits that department in the show cause notice alleges t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (EDA s). However, the property in goods used to get transferred in name of EDA s at the Factory of the Appellant only. Further, as regard the installation service it has been clearly laid down in the contract that same would be undertaken by the appellant only after the goods reach the project site and are handed over to the EDA s who in turn at the time of erection activity would issue the said goods to the Appellant. Thus, the service by way of arrangement of transportation and/or insurance provided by the appellant to the EDAs following the ex-factory sale of goods, has no relation with the installation service provided by the appellant as the same activity get completed way before the installation service commences and consequently, the said service getting completed preceding to the installation service, cannot be said to be incidental or ancillary to the installation service provided by the appellant. Further, in the contract with EDA s it has been expressly intended that two separate transaction would be undertaken for both the services and separate charges have been defined for each of the services and as such the services of transportation and insurance are independent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) S.K. Samanta Co. (P) Ltd. Vs. Commissioner of Service tax, Kolkata -2012(28)STR481(Tri-Kolkata) 2.6 He also argued that the tax leviable in respect of works contract service should be charged only on the gross amount charged for the said services and not on the charges collected towards services by way of arrangement of transportation and/or insurance facility. The term gross amount charged cannot be construed to mean whatever amount is billed would become the value of taxable service. This is the precise error committed by the Ld. Commissioner in the present case, as it has overlooked the fact that a person can provide multiple services to a same recipient and bill them independently. This is what section 67 also says. Hence, the impugned order being contrary to the established legal provisions, is liable to be set aside. 2.7 He also submits that appellant was not given the opportunity of Pre- SCN consultation which is mandatory procedure to be taken up by the Department before issuance of the show cause notice in cases where the demand of tax is above Rs. 50 lakhs. The issuance of present SCN without providing the opportunity of pre-SCN consultation is violation of the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Act. He placed reliance on the Trade Notice No. 20/2002 dtd. 23.05.2002 and also decisions of Sri Chakra Tyres reported in 1999(108)ELT 361. 2.10 He further submits that the Ld. Commissioner in the impugned order has failed to appreciate that in any case the reimbursement of the expense incurred by the appellant on arranging the service of transportation and insurance received from EDA s does not qualify under the definition of Consideration for being exigible to levy of Service tax. As per the explanation appended to Section 67 of the Finance Act the term consideration has defined in a manner that the reimbursements which are attributable to expenses incurred by service provider and charged in the course of providing a taxable services shall fall within the scope of consideration and shall be included in the value of services for determination of service tax liability. However, the said explanation does not intend to cover a situation where the entire consideration itself is supposed to be in the nature of reimbursements. Therefore, reimbursement of expenses incurred by the appellant towards arrangement of transportation and insurance services shall not be leviable to Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant under the cover of the tax-invoices and property in goods used to get transferred to the customer (M/s PGCIL) at the factory gate. Under the service contract the appellant had undertaken erection/installation of the transmission line tower using the goods received from M/s PGCIL. At the same time, as per the terms of tender, the appellant had also arranged for transportation and insurance facility of towers/tower parts and accessories supplied to M/ PGCIL under the Ex-Works Supply Contract . We find that the scope of work under the service contract was divided in two parts for which two separate considerations one for installation charges and other for transportation/insurance charges. Accordingly, under the service contract, the appellant used to provide transportation and insurance facility of the goods supplied to M/s PGCIL and further, used to provide service of installation of the transmission towers. We find that the activities carried out by the Appellant under these agreements are different and independent, and accordingly, to be classified separately. From the service contract it clearly appeared that parties have bifurcated the amount for service of erec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous and mis-conceived as service tax has been demanded on the apparent gross value, as per contract/agreement, of Rs.25,71,96,000/-. The same is also in contrast to the findings of the ld. Commissioner. All the three contracts are independent contracts , there being no artificial bifurcation and supply of goods and supply of services. Ld. Commissioner has also observed in the impugned order that in relation to the works contract service, the value of transformers cannot be included. 13. In view of Section 66 D (p), we hold that the appellant is not liable to pay service tax on the transportation charges paid by them, as they are neither a GTA and have admittedly arranged transportation for the service receiver viz. PGCIL, as a pure agent. 4.2 In view of above, we find that the demand of service tax confirmed on the facility of arranging for transportation/ insurance of goods offered by the appellant to their customer has been wrongly classified by the revenue as activity of incidental or ancillary to Installation Services . It is well settled position that in a transaction involving multiple supply of services, when an individual service is not merely a component ancillary to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or erroneously refunded. The provisions of this section apply mutatis mutandis to irregularly availed CENVAT credit recoverable under Rule 14 of CCR. This section permits invoking extended period of limitation to raise a demand on the following grounds: a) Fraud; or b) Collusion; or c) Wilful misstatement; or d) Suppression of facts; or e) Violation of the Act or Rules with an intent to evade payment. 13. There is no other ground on which the extended period of limitation can be invoked. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In Pushpam pharmaceuticals company vs Collector of Central Excise Mumbai [1995 (78) E.L.T. 401 (S.C.)], the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994 and held as follows : 4. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law by which an inference of intent to evade can be drawn if the assessee does not agree with the audit. It also does not matter if the assessee deposited the disputed amount as service tax during audit and later disputed it. Often, during audit or investigation, the assessee deposits some or all of the disputed amounts and later, on consideration or after seeking legal opinion, disputes the liability and seeks a notice or an adjudication order. This does not prove any intent to evade or deliberate or wilful suppression of facts. 16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self- assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious. Therefore, there is no force in this ground also. 19. It has also been pointed out that but for the audit, the allegedly irregularly availed CENVAT credit would not have come to light. It is incorrect to say that but for the audit, the alleged irregular availment of CENVAT credit would not have come to light. It is undisputed that the appellant has been self-assessing service tax and filing ST-3 Returns. Unlike the officers, the assessee is not an expert in taxation and can only be expected to pay service tax and file returns as per its understanding of the law. The remedy against any potential wrong assessment of service tax by the assessee is the scrutiny of the Return and best judgment assessment by the Central Excise Officer under section 72. This section reads as follows: 72. Best judgment assessment. If any person, liable to pay service tax,- (a) fails to furnish the return under section 70; (b) having made a return, fails to assess the tax in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Dr. Kelkar in his report on Indirect Taxation [Report of the Task Force on Indirect Taxation 2002, Central Board of Excise and Service Tax, Government of India.]. The observation made in the context of Central Excise but also found to be relevant to Service Tax is reproduced below : It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt, audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers. ( emphasis supplied ) 22. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is neither legally correct nor is it consistent with the CBEC s own instructions to its officers. 23. For the sake of completeness, it needs to be pointed out that the aforesaid Manual provides for two levels of scrutiny- preliminary scrutiny of all Returns and Detailed S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o scrutinize returns on a regular basis. Details of the Board s guidelines on returns scrutiny are discussed in Chapter 2 of this Manual. 1.2.2B The guidelines clearly envisaged that returns scrutiny would become the core function of the Service Tax Group/Range, supervised by the Assistant Commissioner of the Service Tax Unit. 24. Thus, the CBEC took a conscious decision that detailed scrutiny of the Returns should be done only in some cases selected based on some criteria. In those Returns, where detailed scrutiny is not done by the officers some tax may escape assessment which may not be discovered within the normal period of limitation. As a matter of policy, the CBEC, took such risk and the loss of Revenue is a result of the policy. 25. To sum up: a) The appellant assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else. b) It is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 and issue an SCN under Section 73 within the time limit. If ..... X X X X Extracts X X X X X X X X Extracts X X X X
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