2018 (9) TMI 1147 – CESTAT MUMBAI – TMI – Demand of Interest and penalty – extended period of limitation – Reverse charge mechanism – business auxiliary service – payment made to overseas commission agent – non-payment of service tax – sub-section (3) of Section 73 – Held that:- it is up to the respondent department to establish that the appellant had practised any kind of act contemplated under sub-rue (4) so that penalty can be imposed on it. Going by the adjudication order and also the order passed by the Commissioner (Appeals), it cannot be said to have been established by the department that such practice of fraud collusion etc., were established before those authorities.
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In view of the fact that parameters of proviso to Section 73 and ingredients constituting suppression of fact by the appellant has not been made out and the same had not been established by the respondent department before the authorities adjudicating the matter, it can safely be concluded that Section 4 w
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everse charge mechanism, appellant company is deemed to be regarded as service provider, though a service recipient in the ordinary course of business. On the basis of intelligence gathered by the officer of preventive branch, Head office, Nagpur enquiry was conducted, documents of appellant were verified, tax demand was made and the same was paid by the appellant in due course along with applicable interest but about a month thereafter it was noticed to submit show cause for such non-payment and suppression. Upon reply by the appellant, matter was adjudicated by the Jt. Commissioner, CST Vardha, Nagpur who confirmed the duty liability penalty for the extended period also and the same attained finality upon rejection of appeal filed by the present appellant before the Commissioner (Appeals). 3. During the course of hearing of appeal, ld. Counsel for the appellant submitted that the duty liability under reverse charge mechanism involves interpretation of various provisions of the Act an
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of his argument several case laws are cited by the ld. Counsel for the appellant. They are as follows:- a) CCE Vishakhapatnam vs. Tirupathi Fuels Pvt. Ltd. 2017 (7) GSTL 142 (AP) b) CCE Pune vs. Wings Travels 2017 (47) STR 225 c) Thyssekrupp Electrical Steel India Pvt. Ltd. 2016 (45) STR 99 d) Krishna Security & Detective Services 2011 (24) STR 574 e) CCE Pune vs. Ranjit Builders 2015-TIOL-793-CESTATMUM Additionally reliance was placed on the Circular no. 137/167/2006/cx-4 dated 03.10.2007 in which clarification was made by the CBEC to the question raised as to whether the conclusion of proceeding in cases where service tax in full together with interest and penalty has been paid and notice was served under sub-section(1) is deemed to have been concluded, it was held in the affirmative in holding that it is not merely a conclusion under sub-section (1) but conclusion of all proceedings against such person, that implies conclusion of entire proceeding under the Finance Act, 1994 and
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ow-cause, Order-in-Appeal and order-in-original for which the appellants contention regarding bonafide belief of nontaxability or innocence should not be taken on its face value. Reiterating the order passed by the first adjudicating authority and the Commissioner (Appeals), the ld. AR submitted that as those orders are based on reasoned findings, interference by the Tribunal in the said order is uncalled for. 5. Heard from both sides and perused the case law, relevant provision contained in Section 66A of the Finance Act, 1994, the provisions of service tax Rules and the case laws cited by the adversaries. Admittedly, Section 66A provides to charge service tax on services received from outside India and received in India under Reverse Charge Mechanism but the contention of appellant, as found from the Order-in-Appeal, is that services provided by the overseas party as broker or agent was in respect of goods which were exported outside India to the parties located outside India and hen
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the periodic returns. 6. These above discussed aspects are being noted by the Commissioner (Appeals) in his order but he had not given any finding on the same on the assumption that appellant during personal hearing withdrawn itself from contesting the tax liability and expressed its intention to contest penalty only. Penalties covered under Section 78, as imposed is equal to the tax liability which was discharged by the appellant much before issue of show-causes and the same found reflected in the order of the Commissioner (Appeals) passed under para 26. The order-in-original also reveals that the records produced before him clearly establish that commission paid has been duly and fully reflected in the appellant s books of accounts (para 30) but he did not agree with the contention of the appellant that it was inadvertently not paid due to improper interpretation and confirmed the extended period invoked in the showcause notice though set aside penalty imposed under Section 77 on the
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any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words [Eighteen months] , the words five years had been substituted. Therefore for reason of fraud/collusion/wilful mis-statement/ suppression of fact or contravention of the provisions and rules intended to evade tax would entail the departmental officer to go beyond the normal period of 18 months and in such an eventuality as contemplated under Rule 4 that provides an exclusion clause to non-imposition of penalty in respect of payment of service tax and interest under sub-Section 3 before issue of show-cause notice, penalty can be imposed. Contradictory decisions are cited, divergent views are put forth by both the parties on this point. But a close reading of the Rule would clearly indicate that explanation 2 has been inserted to sub-rule 3 o
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d as per rule of evidence, burden lies on the person who asserts in the affirmative. Therefore, it is up to the respondent department to establish that the appellant had practised any kind of act contemplated under sub-rue (4) so that penalty can be imposed on it. Going by the adjudication order and also the order passed by the Commissioner (Appeals), it cannot be said to have been established by the department that such practice of fraud collusion etc., were established before those authorities. Since there is a difference between acceptance of executive instruction in paying tax without or with protest and the leviability of such tax as contemplated under Section 265 of the Constitution of India and in the instant case, taxability issue was not discussed by the Commissioner on attainment of the claim by the appellant and the same is beyond the purview of this single bench jurisdiction, having regard to the fact that place of receipt of service was the issue raised by the appellant wh
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r any distinction is carved out between proviso to Section 73(3) and Section 73(4) to cover extended period etc. and read the same into section 73(3) proviso. In view of foregoing discussion, it cannot be said that respondent department has produced cogent evidence to establish that such act of the appellant was with ulterior motive to evade tax. It would also be desirable and befitting to reproduce a relevant portion of the judgment pronounced by the Hon'ble Apex Court in the case of M/s. Uniworth Textiles Ltd. (2013) TIOL 13, though pronounced in reference to Section 28 of the Customs Act. It was held in the said judgment – The conclusion that mere non-payment of duties is equivalent to collusion or wilful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no s
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