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TMI Blog2025 (1) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... 94C requires specific method and specific abatement. Onus lies on the Department to identify the nature of service provided on which demand of service tax is being raised. In the case of COMMR. OF C. EX., CHANDIGARH VERSUS ARPIT ADVERTISING [ 2011 (5) TMI 702 - CESTAT, NEW DELHI ], the Tribunal has held that without identifying the nature of the Service provided by way of proper investigation, demand of service tax cannot be raised on the basis of Balance Sheet and other financial statements. Similarly, Hon ble Madras High Court in the case of M SUGANTHI, THIRUMURTHY BUS TRANSPORT AND K MAHALINGAM VERSUS ASSTT COMMISSIONER OF CENTRAL EXCISE, POLLACHI [ 2011 (4) TMI 11 - HIGH COURT OF MADRAS ] held that the Department exercising power under fiscal statute while passing order bringing someone under taxing net, requires specific finding as to the liability. In this case, the Department failed to discharge the onus upon it to identify nature of service before confirming demand. The impugned order is not proper and justified. In accordance with provisions of Section 67 of the Finance Act, 1994 read with Rule 2A of the Service Tax (Determination of Value) Rules, 2006 no service tax was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,004/- (50% of Rs.1,22,008/-) which was already discharged vide challan No.22394 dated 30.03.2015 along with interest before issuance of the instant SCN. Thus, no demand of service tax is sustainable. Penalty - HELD THAT:- In case no demand is sustainable, no penalty is imposable. In the SCN, penalty under Section 78 of the Finance Act, 1994 was proposed and subsequently vide the impugned order penalty under the said Section was imposed - As in the present case, there is no short payment of Service Tax, no penalty is imposable under Section 78. Penalty imposed under Section 78 is, therefore, liable to be quashed. Penalty under Section 77(2) was also imposed which is a residuary penalty but in the SCN and subsequent order, nothing was discussed for imposition of residuary penalty. Hence, no penalty is imposable under Section 77(2). As regards, demand of late fee for filing ST-3 Return for the period from Oct, 2014 to Mar, 2015 belatedly, she submitted that as there was no tax liability during that period, non-filing or late filing of return was not chargeable to any late fee in view of Board s Circular No.97/08/07-ST dated 23.08.2007 which has clarified the requirement of filing ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the period on which no service tax was leviable but service tax was demanded thereon. The learned Commissioner (Appeals), however, upheld the order of the lower authority with partial modification in the amount of demand of late fees. Hence, the present appeal before the Tribunal. 4. Ms. Stuti Saggi, Advocate, appeared on behalf the Appellant and pleaded the case. She contended that the Appellant during the period 2014-15 provided Works Contract Service for fabrication and installation of boilers and ESP etc., in sugar and paper factories. She submitted copy of invoices issued by the Appellant during 2014-15 and claimed that except against one invoice, in all cases, only goods were sold without any service. She emphasized that service tax was not chargeable on the cost of goods. In support of the contention regarding sale of goods, she produced certificate duly issued by Chartered Accountant certifying therein sale of goods and consideration received on account of provision of services and sale of goods during 2014-15. She further submitted that demand of service tax has been raised on the consideration shown in Balance Sheet or Statement/ 26AS without any investigation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand of late fee was also justified. 8. Heard both the sides and perused the appeal records. 9. The main issue in this appeal is whether the amount reflecting in Income Tax return for the year 2014-15 is taxable value of services or it includes non-taxable amount also. I find that the learned Commissioner (Appeals) in the impugned order has placed reliance on the Statement/ 26AS to hold that services rendered by the Appellant were taxable services and service tax was chargeable on whole consideration received during impugned period 2014-15. As per Statement/ 26AS, TDS was deducted under Section 194C of the Income Tax Act. As per the learned Commissioner (Appeals), under Section 194C of the Income Tax Act, TDS is deductible when services namely Works Contract Service, Construction of Commercial Complex Service, Construction of Residential Complex Service, Repair Maintenance, Erection, Commissioning Installation Services are provided. I find that for charging service tax, valuation of every service specified in Section 194C requires specific method and specific abatement. Onus lies on the Department to identify the nature of service provided on which demand of service tax is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that service tax would be levied at the rate of fourteen percent on the value of services only. It shows that service tax was chargeable only on services, not on goods. Term service is defined under Section 65B(44) of the Finance Act, 1994 as:- 44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include (a) an activity which constitutes merely, (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) -----------------; From the above definition, it is apparent that transfer of title in goods or sale of goods would not be covered under service . It further shows that service tax would not be charged on the value representing sale of goods. Further, under Section 66B of the Finance Act, 1994, service tax was chargeable on the value of services other than services listed in negative list . Services of negative list were shown in Section 66D. As per Section 66D(e), trading of goods was under the catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilders Pvt. Ltd. [2018 (10) G.S.T.L. 118 (S.C.)] where the Apex Court has observed that a plain meaning of the expression gross amount charged used in Section 67 of the Finance Act, 1994 for charging service tax by the service provider would lead to obvious conclusion that value of goods even if provided free of cost would not be included for arriving at gross amount . It shows that value of goods even if there is no sale would not be part of value of service. It also shows that there would be no VAT/ sale tax as no sale element exists, even then no service tax would be payable on value of material. I, therefore, hold that no service tax would be demanded on the value of goods sold in this case as discussed in foregoing para. 16. I find that out of total consideration of Rs.57,68,440/- for 2014-15, an amount of Rs.33,00,650/- pertains to sale of goods and the remaining amount of Rs.24,67,790/- pertains to provision of services of erection, assembling and installation against the works contracts as certified by the Chartered Accountant and submitted by the Appellant. I find that the Appellant raised Invoice No.13 dated 19.08.2014 to M/s Par Techno Heat Pvt. Ltd., for fabrication, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory; (B) . ; (II) The extent of service tax payable thereon by the person who provides the service and the person who receives the service for the taxable services specified in (I) shall be as specified in the following Table, namely:- Sl. No. Description of service Percentage of service tax payable by person providing service Percentage of service tax payable by person receiving service 9 in respect of services provided or agreed to be provided in service portion in execution of works contract 50% 50% 18. In accordance with above Notification, service tax liability on the Appellant comes to Rs.61,004/- (50% of Rs.1,22,008/-) which was already discharged vide challan No.22394 dated 30.03.2015 along with interest before issuance of the instant SCN. I find that no demand of service tax is sustainable. 19. As regards penalty, I find that in case no demand is sustainable, no penalty is imposable. In the SCN, penalty under Section 78 of the Finance Act, 1994 was proposed and subsequently vide the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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