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TMI Blog2025 (3) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract, which is also accepted in paragraph 16.6 of the impugned order. Therefore, the Appellant has rightly paid service tax and VAT on respective components, which is in consonance with the law laid down in Imagic Creative (P) Ltd. v. CCT [2008 (1) TMI 2 - SUPREME COURT] where while considering the composite contract relating to advertisement services, the Hon'ble Supreme Court held 'Payments of service tax as also VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract, irrespective of the element of service provided. The approach of the assessing authority, to us, thus, appears to be correct.' Once the amounts representing sale of goods i.e. Rs 13,35,68,175/- and amounts representing value of services falling under negative list i.e. Rs 30,42,96,081/- are adjusted and dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 8 of reply dated 13.02.2020, the Appellant has clearly stated that delay in submission of ST-3 return was on account of delayed collection of dues and the Appellant has filed the service tax returns by paying tax from his own pocket. The delayed submission of return on account of delayed collection of tax and payment of service tax from own pocket, which otherwise is to be charged and deposited, is a reasonable ground for belated submission of ST-3 returns and therefore the late fee imposed cannot be sustained.
Conclusion - i) The demand of service tax and denial of CENVAT credit were not sustainable. ii) Once the amounts representing the sale of goods and services under the negative list were adjusted, there was no discrepancy between the Balance Sheet and ST-3 returns, rendering the service tax demand unsustainable. iii) The denial of credit was unwarranted, as the Appellant had demonstrated compliance with relevant provisions and maintained proper accounts. iv) Imposition of penalties are upheld. Late fees not sustained.
The appeal is liable to be allowed and the impugned order, to the extent challenged, is set-aside, with consequential reliefs to the Appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... to show cause as to why :- (i) Service tax amounting to Rs 10,08,22,158/- should not be demanded and recovered under Section 73(1) of the Act along with due interest thereon as per Section 75 of the Act; (ii) Service tax amounting to Rs 96,96,785/- should not be demanded and recovered under Section 73(1) of the Act along with due interest thereon as per Section 75 of the Act; (iii) Service tax amounting to Rs 1,54,88,847/- should not be demanded and recovered under Section 73(1) of the Act along with due interest thereon as per Section 75 of the Act; (iv) Service tax amounting to Rs 47,02,934/- should not be demanded and recovered under Section 73(A) of the Act along with due interest thereon as per Section 73B r/w Section 75 of the Act; (v) Cenvat credit availed and utilised amounting to Rs 9,06,89,426/- should not be demanded and recovered along with due interest at the applicable rate under Rule 14 of the CCR read with Section 73 & 75 of the Act; (vi) The party should not be asked to reverse/pay an amount equal to 7% of exempted service i.e. Rs 5,24,74,842/- as availed and utilised by them under Rule 6 of CCE along with due interest at the applicable rate under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngwith interest from the noticee under the proviso to Rule 14 of the CCR read with Rule 6 of the Rules; (vi) I drop the demand of service tax amounting to Rs 5,24,74,842/- on the noticee under the proviso to Rule 6 of the CCR; (vii) I confirm the demand of interest at the appropriate rate on the service tax amount confirmed in point (i) above under Section 75 of the Act on the noticee; (viii) I impose penalty of Rs 5,94,38,654/- upon the noticee under Section 78 of the Act. The noticee has an option to pay penalty @ 25% of the amount of service tax as determined above, if the confirmed service tax alongwith interest and reduced penalty is paid within a period of 30 days of the date of receipt of this order; (ix) I impose penalty of Rs 97,36,884/- upon the noticee under Rule 15 of the CCR. The noticee has an option to pay penalty @ 25% of the amount of service tax as determined above, if the confirmed service tax alongwith interest and reduced penalty is paid within a period of 30 days of the date of receipt of this order; (x) I also impose late fee of Rs 2,05,100/- upon the noticee for late filing of ST-3 returns under Section 70 of the Act read with Rule 7(C) of the Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative for the Revenue has reiterated the findings recorded in the impugned order and has submitted that the appeal lack merits and is liable to be rejected. 11. Heard both the sides and perused the appeal records. We find that the following issues arise for determination in the present appeal:- A- Demand of service tax of Rs 5,98,38,654/- based on difference in figures of P & L A/c and ST-3 returns and whether the Appellant has correctly disclosed the value of taxable services in ST-3 returns; B- Denial of cenvat credit of Rs 97,36,884/- is sustainable on the grounds stated in the impugned order? C- Whether late fees can be demanded and penalties u/s 78, 77(1)(c), 77(1)(d) & 77(2) can be imposed? 12. Issue A: Demand of Service Tax of Rs 5,94,38,654/- : 12.1 From perusal of records, we find that in paragraph 15 of the show cause notice, demand of Rs 10,08,22,158/- was proposed based on the ground that there is difference in figures disclosed in ST-3 returns and Balance Sheet and out of the said proposed demand of Rs 10,08,22,158/-, the impugned order confirms demand of Rs 5,94,38,654/- by extending benefit of deduction in terms of Circular No. 341/43/96 TRU dated 31.10.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while considering the composite contract relating to advertisement services, the Hon'ble Supreme Court held as under :- 29. If the submission of Mr Hegde is accepted in its entirety, whereas on the one hand, the Central Government would be deprived of obtaining any tax whatsoever under the Finance Act, 1994, it is possible to arrive at a conclusion that no tax at all would be payable as the tax has been held to be an indivisible one. A distinction must be borne in mind between an indivisible contract and a composite contract. If in a contract, an element to provide service is contained, the purport and object for which the Constitution had to be amended and Clause (29-A) had to be inserted in Article 366, must be kept in mind. 32. Payments of service tax as also VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representing sale of goods i.e. Rs 13,35,68,175/- and amounts representing value of services falling under negative list i.e. Rs 30,42,96,081/- are adjusted and deduction in terms of Circular No. 341/43/96 dated 31.10.1996 is applied which has also been allowed in the impugned order, there is no difference in figures appearing in Balance Sheet and ST-3 returns and therefore, the demand of service tax of Rs. 5,94,38,654/- cannot be sustained. 13. Issue B : Denial of CENVAT credit of Rs 97,36,884/- : 13.1 We find that in paragraph 20 of the show cause notice, CENVAT credit of Rs 9,06,89,426/- was proposed to be denied on the following grounds:- (i) The Appellant has taken cenvat credit on subscriptions to Lucknow Golf Club, Indian Industries Association etc., which is not an input service; (ii) The Appellant is providing services using the materials which fall under the category of Transfer of Property in Goods, leviable to tax as Sale of Goods and Rule 2A of the Service Tax (Determination of Value) Rules, 2006 prescribes the manner of valuation of such transactions; (iii) The Appellant has not produced invoices of CENVAT credit and in absence of cenvatable invoices, admissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. We find this completely unacceptable as the adjudicating authority is expected to give reasons in support of the order, so as to enable this Tribunal to understand the reasons for denial of credit. In these circumstances, we have no option but to accept the submission of Ld. A.R that the credit has been denied on the reasons stated in the show cause notice, as in any case the order cannot travel beyond the show cause notice and consequently credit cannot be denied on grounds, not alleged in the show cause notice. 13.5 Having considered the allegations in the show cause notice and the reply of the Appellant, we find that the impugned order does not dispute the explanation that the Appellant has taken space on lease from institutions including Lucknow Golf Club, India Industries Association and others for installation of bill boards, LED signage etc. and used such space for providing advertisement services through such bill boards, LED signage etc.. This activity of taking space on lease is clearly an input service used for providing output service and therefore the Appellant is entitled to credit of service tax charged on lease rentals and hence credit cannot be denied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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