9911796707
TMI Blog2024 (10) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... Transport Agency (GTA) or a courier agency. Whether the services were falling within the scope of exception carved out to clause (p) or not and for which it is necessary to examine as to whether the revenue established the applicability of exception to clause (p) with the help of contemporaneous evidences while issuing show cause notice? - HELD THAT:- There are no hesitation in appreciating the legal position as it emanated from the plain reading of clause (p) of section 66D with section 66B that the activity in the nature of transportation of goods by road would not attract levy if it could not be specifically and undisputedly proved to fall within the scope of exception carved out to clause (p). Since the rate of abatement taken by the revenue implied that the services were treated as taxable services of transportation of goods by road by GTA, it is the definition of GTA given in section 65B which is relevant at this stage and not the definition of courier agency. As per the definition of GTA provided in Section 65B(26), presence of a consignment note issued by the person who shall be deemed as GTA was mandatory. Therefore, it was necessary in the case before us to examine as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed as defective returns liable to loose the sight of law. Accordingly, the returns as well as facts stated therein became non estfor the purpose of investigation as well as adjudication and therefore nothing can be based upon the facts stated in the said defective returns. Since the demand of CENVAT credits was solely based on the returns, it is liable to be held baseless. Time Limitation - suppression of facts or not - HELD THAT:- It is unclear why the appellant would have suppressed information from the revenue, especially when there was no significant tax liability involved. Therefore, the extended period of limitation was not applicable to the appellant's case. Since the show cause notice was issued based on the extended period and the entire liability falls outside the normal limitation period, the entire demand proposed in the show cause notice and confirmed in the impugned Order is invalid - the demand for the longer period is hit by the limitation also. Validity of SCN - appellant had challenged the validity of the show cause notice on a ground that the opportunity of pre-show cause notice consultation was not afforded as per mandatory requirement of the board - HELD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by way of utilization of CENVAT Credits in service tax returns furnished after commencement of inquiry. Show cause notice also proposed to demand the service tax of Rs. 62858/- and Rs. 14247/- under reverse charge mechanism in respect of legal services and security services on the basis of ledger accounts furnished by the appellant during the course of inquiry. 2. Shri Rahul Patel, learned Chartered Accountant appearing on behalf of the appellant submits that the service tax of Rs. 2,77,83,558/- was not recoverable in hands of the appellant. In the present matter revenue has classified the services of the appellant as transportation of goods by road and demanded the service tax by determining the value on the basis of turnover reported in balance sheet and after deducting therefrom the amount reported in service tax returns filed after commencement of the inquiry against the appellant. He also explained with the help of tables incorporated in the show cause notice as well as impugned order that the value of taxable service was determined after allowing abatement of 70% as per Notification No. 26/2012-ST and service tax was demanded under forward charge mechanism. 2.1 He vehementl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 4. We have carefully considered the submissions made by both sides and perused the case records. The primary and significant issue arising from the appeal and the arguments presented by the learned Chartered Accountant on behalf of the appellant and the grounds taken in appeal memorandum and synopsis, is whether the tax was leviable and recoverable from the appellant in respect of the turnover reported in balance sheet and which exceeded the amount reported in Form ST-3 returns filed belatedly and after initiation of the inquiry. Based on the facts and findings outlined in the show cause notice, particularly paragraph 15 read in conjunction with Table A incorporated in paragraph 23 of the notice, it is evident that the disputed demand was proposed against the appellant under the classification of transportation of goods by road . This said classification is emanating from the fact that the revenue applied a rate of 70% in computing the tax liability as reflected in Table A for which was available under Entry No. 7 of Notification No. 26/2012-ST dated 20.06.2012 for services of goods transport agency in relation to transportation of goods other than used household goods . It ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f legal as well as factual matrix. Section 66D(p) of the Finance Act, 1994 treated the all the services by way of transportation of goods by road to be negative list activities except when they were provided by GTA or courier agency. Section 66D (p) of section 66D of the Act had declared the services by way of transportation of goods by road to be negative list activities except when provided by the Goods Transportation Agency and Courier Agency . 4.4 Section 66B of the Act imposed a tax on the value of all services, except for those specifically listed in the negative list under Section 66D. Activities detailed in Section 66D were thus outside the levy of service tax. Therefore, it was crucial to establish that any given activity falls outside the scope of Section 66D to subject it to taxation under Section 66B. On the contrary, Clause (p) of Section 66D, as designed by Parliament, excluded the entire gamut of transportation services provided by road for goods from the scope of taxation, except when such services are rendered by a Goods Transport Agency (GTA) or a courier agency. 4.5 Consequently, it is important to examine as to whether the services were falling within the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the turnover taken from the balance sheet cannot be attributed towards the services by way of GTA. Consequently, we find that the revenue has not made out a case in the show cause notice as well as in adjudication to bring the amount of turnover reported in balance sheet within the scope of exception carved out to clause (p). Consequently, we find that the clause (p) of section 66D cannot be taken out from the taxation of the turnover in dispute and accordingly the tax cannot be levied under section 66B of the Act. 4.6 We find the issue covered by the decision taken by the Tribunal in case of Chartered Logistics Limited v. CCE 2023 (7) TMI 883 CESTAT AHMEDABAD wherein it was laid down that : 6.7 Now it is a settled law that even if a person has provided Goods Transport Service but not issued consignment note/LR, Service Tax from that person under GTA cannot be recovered. Some of the Judgments on this issue are given below: Narendra Road Lines Pvt. Ltd Vs. Commissioner Of Customs, Central Excise CGST, Agra, 2022 (64) G.S.T.L. 354 (Tri. - All.) Mahanadi Coalfields Ltd Vs. Commissioner Of Central Excise Service Tax, BBSR-I, 2022 (57) G.S.T.L. 242 (Tri. - Kolkata) East India Minerals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by appellant during the course of investigation due to white ant . We find that excuses taken by the adjudicating authority in guise of white ant facts are irrelevant for determining taxation under the applicable statutory scheme for transportation of goods services. What is pertinent is that certain of evidences existed and they were provided by the appellant to substantiate their claim of non-taxability. Such evidence should be considered regardless of the reasons or circumstances under which it was presented, provided it is not found to be fraudulent or falsified. From the show cause notice and the impugned order, there is no positive and corroborated finding from the revenue regarding the authenticity of such evidences. The existence of a consignment note is a critical factor in determining tax liability, and its absence would negate the entire tax levy. Therefore, it was indispensable on part of the adjudicating authority to decide the case based on the given evidences or to deprecate them with the help of incriminating and contemporaneous counter evidences. We cannot take out of our sight that the revenue could have furthered its investigation so as to bring more evidences s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider. 4.12 Sub-section (2) of Section 68 of the Act incorporated a non-obstante provision, stipulating that the liability for tax must be discharged by the person specified and notified by the government, rather than by the service provider. In the present case, where it is undisputed that the services provided were for the transportation of goods by road, it was crucial to identify the recipient of these services, as they are listed under Entry No. 2 of Notification No. 30/2012-ST in accordance with Sub-section (2) of Section 68. Therefore, it was incumbent upon the revenue, during their investigation and before issuing the show cause notice, to ascertain both the recipient and the nature of the recipient for each service provided by the appellant and which they intended to bring within the taxation in hands of the appellant, given that these services fall under Rule 2(1)(d) and Notification No. 30/2012-ST. We find that the show cause notice and the impugned Order lacked any evidence or factual details regarding the identification of the recipients and the det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solely based upon the turnover reflected in balance sheet. It is well-established in law that a tax demand cannot be based solely on financial statements or income tax returns. It was the responsibility of the revenue to conduct a thorough investigation and present incriminating evidence to accurately determine the nature, extent, scope, value, and recipient of the services provided by the appellant. The scheme of taxation for services related to the transportation of goods by road is multi-faceted and excluded from the very levy of tax, except in specific circumstances which were also subjected to certain exemptions and reverse charge mechanism. In such cases, particularly when the revenue has not disputed the classification of services as transportation of goods by road, it was imperative to provide proof through contemporaneous evidence that the revenue could have collected during the investigation and used in the show cause notice. Therefore, while the turnover reported in the balance sheet may hold persuasive value, it is not conclusive and cannot replace the contemporaneous evidence required by statute. This position is consistent with the Tribunal's ruling in Rajputana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are not sufficient for confirmation of demand and allegation of clandestine removal. Evidence in the form of receipt of raw material, shortages thereof, excess use of electricity excess/shortage of inputs in stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods etc. is necessary. CESTAT in the case of CCE v. Supreme Fire Works factory [2004 (163) E.L.T. 510 (Tri.) dealt with the allegation of clandestine manufacture and removal and observed that mere suspicion can not take place of proof. Proof and evidences of purchase of raw materials, sale of final goods clandestinely is necessary. The allegations are not sustainable in absence of evidences. CESTAT in case of CCE v. Shree NarottamUdyog (P) Ltd. [2004 (158) E.L.T. 40 (Tri.)] has dealt with the allegation of clandestine manufacture and removal of goods and held that settled law is that the charge of clandestine removal being a serious charge required to be proved beyond doubt on the basis of affirmative evidences. CESTAT in case of JagatpalPremchand Ltd. v. CCE [2004 (178) E.L.T. 792 (Tri.) held that it is settled law whenever charge of clandestine removal made revenue has to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I 1487 CESTAT Allahabad, Deltax Enterprises v. CCE 2017 (12) TMI 966 CESTAT New Delhi, similar stand has been taken. Thus, we find no hesitation in holding that the demand of tax made by the revenue in the show cause notice and impugned Order on the basis of turnover difference is illegal and unsustainable. 4.17 Furthermore, we also find that the demand made in the impugned Order on the basis of comparative difference of ST-3 with balance sheet is unsustainable for the another reason that ST-3 returns filed by the appellant were not admissible evidences in the instant case. We find from the records as well as the show cause notice that the ST-3 returns were filed by the appellant after initiation of the inquiry on 05.04.2016 and that too without payment of late fees prescribed in rule 7C. ST-3 returns would have become the basis for analysis and investigation vis- -vis financial statements when they were filed within the prescribed time limit or before commencement of the investigation. When the returns were filed after commencement of investigation they do not carry evidentiary value and cannot be taken into consideration for ascertainment of the tax liability arising on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said defective returns. Since the demand of CENVAT credits was solely based on the returns, it is liable to be held baseless. 4.19 Since we hold that the demand is unsustainable, we do not find necessary to go into submissions of the appellant as regards eligibility of the CENVAT credits. For the various reasons elucidated hereinbefore, we find that the other demands with respect to legal services and security services are liable to be dropped. 4.20 We also find that the appellant had forcefully challenged the issue of limitation and strongly argued that the allegations made against them cannot be attributed under the proviso to sub-section (1) of Section 73 of the Act. They further contended that the revenue failed to present any substantive evidence to justify the invocation of the extended period. We find that the invocation of the extended period in the show cause notice was mechanical, arbitrary, and unsupported by any cogent evidence or facts. It is unclear why the appellant would have suppressed information from the revenue, especially when there was no significant tax liability involved. Therefore, the extended period of limitation was not applicable to the appellant' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to declare does not amount to wilful mis-declaration or wilful suppression and there must be some positive act on the part of the party to establish either wilful mis-declaration or wilful suppression. The Apex Court further held that when the facts are before the department and the party is in the belief that affixing of label makes no difference, does not make a declaration, there would be no wilful mis declaration or wilful suppression. If the department felt that the party was not entitled to the benefit of the notification it was for the department to immediately take up the contention that the benefit of the notification was lost. (b) In the case of Continental Foundation Joint Venture Vs. Commissioner of Central Excise Chandigarh I reported in 2007 (216) ELT 177 (SC) the Apex Court held as under: 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
