TMI Blog2014 (5) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... were informed, detailed investigation had taken place and another show cause notice invoking extended period was already issued, one cannot justify invocation of extended period on this ground. Commissioner is correct in holding that in view of Hon'ble Supreme Court's Decision in the case of Nizam Sugar Factory (supra), extended period of limitation cannot be invoked in the present facts and circumstances. We also note that Hon'ble Supreme Court decision in the case of Chemphar Drugs Liniments (supra) is fully applicable in the present circumstances. - Decided against the revenue. Demand for normal period of limitation - Held that:- adjudicating authority has found that the appellant has produced the requisite certificate in requirement of security agency services provided to SEZ unit or to developers of the SEZ and based on these certificates along with Chartered Accountant certificate, and hence adjudicating authority found that the demand does not survive except a small amount relating to one STEP unit (which was confirmed). - order of original authority is correct - Decided against the revenue. Appeal no. ST/85713, 86826, 86827/2013-Mum - valuation - security service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various services which includes Security services, House Keeping Services, Fire Fighting Services, Utility Services, Customer care Services, Liftmen Service, Attendants, gardening, receptionist, management facilities, Cleaning services etc. The issues involved in the appeal ST/275/2011-Mum. and the remaining six appeals are over lapping and have implication on the six appeals and are therefore being taken up together. 5. ST/275/2011-Mum. Revenue took up the investigation against the appellant/assessee. Investigation which were extended to around 422 clients/customers of the appellant. After recording statement of 22 customers and procuring various documents from the 422 customers, as also documents recovered during the searches at the appellant/assessee premises, a demand notice amounting to Rs.2,04,62,708/- was issued on 21.4.2006 covering the period 1.2.2001 to 30.9.2004. This demand notice invoked the extended period of limitation. The case was adjudicated by the Commissioner vide impugned order dt. 31.1.2011 wherein the adjudicating authority confirmed the entire demand and penalty of equivalent amount under Section 78 was also imposed. Appellant/assessee is before us aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inutes is of a nature which would be applicable even for the earlier period. The Learned Counsel further argued that keeping in view the fact that the appellant has not correctly indicated the value of the service provided to their clients or in some cases even though security services were provided but no tax was paid indicate clear cut suppression of facts with willful intention to evade payment of duty and extended period have been correctly invoked. On the valuation aspect Learned Counsel stated that the valuation of the security service is well settled by the decision of the Hon'ble Tribunal in the case of Punjab Ex-Servicemen Corporation Vs. CCE, Chandigarh reported in 2007 (5) STR 214 (Tri.-Del.) and the said decision of the Tribunal was based upon the Hon'ble Madras High Court decision in the case of GDA Security Pvt. Ltd. Vs. Union of India reported in 2006 (2) STR 542 (Mad.). Learned Counsel also argued the fact that the ONGC is not paying service tax to them cannot be a reason not to collect the tax from the appellant. Appellant/assessee cannot absolve itself of its liability to pay tax. In view of this position there is no merit in the contention of the appeal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were on the pay role of the appellant and various charges relating to provident fund, ESIC etc. were charged from their clients. We therefore find no merit in the said contention. As far as amounts received from ONGC is concerned, the fact that ONGC is not paying service tax to the appellant is of no consequence. As long as the appellant is providing the security service to ONGC, appellant is required to pay the said amount to the Government. Another contention is that some amount received from ONGC was relating to arrears. No details have been produced. The exact period to which the said amounts belongs and whether service tax has already been paid by the appellant on the said amount. Service tax is charged on receipt basis and security services were under tax net even before 2001. We also note that appellant was not declaring the value of the service tax correctly. It was based upon the painstaking exercise done by the Revenue covering 422 customers that the correct value of the services and the amount of service tax have been computed. This is a clear cut case of suppression of facts with willful intention to evade payment of duty. ST-3 returns field during the period did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly a part of the demands were confirmed. Remaining demands were set aside on various grounds as detailed in the order. The main reason is that the department has issued the demand notices without examining the nature of services provided by the appellant/assessee. Department has not even examined whether the activities/services provided by the appellant/assessee are taxable or non-taxable and in case some of these are taxable under which category the same would fall. Commissioner found that in the first show cause notice dt. 23.4.2010 the allegation in regarding non-payment of service tax on Security Agency Services', Manpower Recruitment or supply Agency Services', Business Support Services and Cleaning Activity services' in the second and third SCN, non-payment of service tax has been alleged in respect of the Security Agency Services provided by the notice to SEZ and ONGC and on the taxable services provided under the category of Manpower Recruitment or Supply Agency. The Commissioner also found that the security Agency Service finds mention in the demand notices only with reference to services provided to ONGC and SEZ and there is no allegation regarding non-pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- relating to cleaning service. Even though the demand raised in the show cause notice is not in respect of cleaning service but manpower supply service, Commissioner confirmed the demand relating to cleaning service as the appellant accepted that they were providing cleaning service and accepted the liability. Since the demand notice did not quantify about the said service the amount claimed by the appellant and duly certified by the Chartered Accountant was confirmed. Commissioner also accepted the appellants contention that the demand has been made on the gross turnover which is inclusive of service tax paid/payable which should have been excluded while computing the value of taxable service in respect of the amount relating to taxable activity. Commissioner also confirmed the interest liability in respect of the demand so confirmed. As far as penalties under different provisions of law are concerned no penalty was imposed under Section 78 penalty under Section 76 was not imposed in view of the section 80 of the Finance Act. No penalty under Section 77 was imposed as the only lapse of the notice is non-inclusion, by making an application in the category of cleaning service in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds they started showing the value of exempted services in the ST-3 returns, but failed to mention notification number in the ST-3 returns, but failed to mention notification number in the ST-3 returns against the exemption claimed. Noticee was asked to furnish the notification number under which they had claimed the exemption and the documentary evidence of the value claimed for exemption. However, inspite of repeated reminders, till date. Noticee has not made documentary evidence in support of the exemption claimed. As such, there is reason to believe that they have suppressed the facts from the department and wrongly claimed exemption, without furnishing notification number, or producing documentary evidence in support of the exemption claim, to evade ht payment of Service Tax. Therefore, the extended period of five years for demanding service tax under proviso to Sub-section (1) of the Section 73 of the said Act, read with Section 68 ibid and rule 6 of the said Rules is invokable in this case. 11.1 In this context, findings of the Commissioner, are as under: 4.19 The notice has merit in pointing out that the same set of facts were before the Department in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be issued as the facts were already in the knowledge of the department. It was observed in para 14 as follows: 14. We have indicated above the facts which make it clear that the question whether M/s. Pharmachem Distributors was a related person has been the subject-matter of consideration of the Excise authorities at different stages, when the classification was filed, when the first show cause notice was issued in 1985 and also at the stage when the second and the third show cause notices were issued in 1988. At all these stages, the necessary material was before the authorities. They had then taken the view that M/s. Pharmachem Distributors was not a related person. If the authorities came to the conclusion subsequently that it was a related person, the same fact could not be treated as a suppression of fact on the part of the assessee so as to saddle with the liability of duty for the larger period by invoking proviso to Section 11A of the Act. So far as the assessee is concerned, it has all along been contending that they were not related persons, so, it cannot be said to be guilty of not filling up the declaration in the prescribed proforma indicating re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the aforesaid judgments and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant. 10. For the reasons stated above, Civil Appeal Nos. 2747 of 2001 and Civil Appeal No.6261 of 2003 filed by the assessees are accepted and the impugned orders are set aside on the question of limitation only. The demands raised against them as well as the penalty, if any, are dropped. The ratio of the aforesaid decision is squarely applicable to the facts of the instant case. 4.21 In view of the material facts and the reasons adduced by the notice, I tend to agree with the plea of the noticee that there are no valid and sufficient grounds to sustain suppression of facts or will-full mis-declaration to evade payment of Service Tax and thereby invoking the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ST-3 returns, appellants contention is correct. We also note from para 4 of the demand notice dated 24.4.2010, assesse vide letter dated 15/2/2010, 16/2/2010, 22/2/2010, 23/2/2010. 24/2/2010. 25/2/2010. 26/2/2010 and 2/3/2010 produced photocopies of the invoices issued during the period October 2004 to March 2009 alongwith summary of the invoices for the period October 2004 to March 2005, 2005-06, 2006-07, 2007-08 and 2008-09. Hon'ble Supreme Court in the case of CCE vs. Chemphar Drugs and Liniments, Hyderabad reported 1989 (40) ELT 276 (S.C) has observed that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information which manufactures knew otherwise is required to invoke extended period. 11.4 In respect of invoking the extended period of limitation the main contention of the Revenue in the appeals before us is that the earlier show cause notice dated 21.4.2006 was on the ground of alleged evasion and non-payment of service tax in respect of security services provided by appellant to ONGC whereas the show cause notice dt. 23.4.2010 was for Manpower Recruitment and Supply Agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court decision in the case of Coaltar Chemicals Manufacturing Co. reported in 2003 (158) ELT 402 (S.C.). In the said case Hon'ble Supreme Court has upheld the decision of this Tribunal rejecting the plea that since information revealed in another proceeding being available to department, extended period cannot be invoked. In that said case, Hon'ble Supreme Court has observed: We do not think we should understand that decision in that manner at all. On the other hand, in a given case whether there is something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, is a question of fact to be established in each case. As observed by Hon'ble Supreme Court that in a given case whether there is something positive other than mere inaction or failure on the part of manufacturers or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required. In the present case we do not find in the demand notice anything of such a nature out. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or willful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful mis-statement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. We do not find anything in demand notices or the appeal before us which suggest that department has fulfilled its initial burden to prove that the situations visualized by the proviso existed. In our view, Commissioner is correct in holding that in view of Hon'ble Supreme Court's Decision in the case of Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped this Tribunal to appreciate if the findings of the adjudicating authority are indeed incorrect. Main plea of the respondent/assessee is that they are providing services like fire fighting services, housekeeping service, customer care service etc. and all these services are under the supervision and control of respondent/assessee and not their clients. The said assertion of the assessee has not been controverted by examination of documents or any other evidence. Similarly, we find that the adjudicating authority has found that the appellant has produced the requisite certificate in requirement of security agency services provided to SEZ unit or to developers of the SEZ and based on these certificates along with Chartered Accountant certificate, and hence adjudicating authority found that the demand does not survive except a small amount relating to one STEP unit (which was confirmed). In the appeal filed before us it is not clear why the said finding of the adjudicating authority is incorrect whether the certificate which were produced before the adjudicating authority during investigation were incorrect or the reasons for doubting the Chartered Accountant certificate has also n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant/assessee in these appeals. Further from the letter it appears that it is to provide Customs Care service . Copy of the agreement is not available. In the absence of the said agreement, it cannot be said that this is for Supply of Manpower Service. Third contract cited is dated 1.12.2006 entered into by the assessee with Shree Maheshwer Hydel Power Corporation Ltd. We have seen the said contract and we observe that this contract was entered on 1.12.2006. It is not clear whether services were provided within the normal period of limitation in pursuance of this contract. Moreover, from the agreement it is not clear whether the person supplied has to work under the superintendence and control of appellant/assessee or his Customers. Assessee's claim is that they have to work under his supervision and control. Revenue has not brought any evidence to contrary. Fourth Contract cited is dated 13.1.2005 entered into by the appellant/assessee and Suryamukhi Lok Surabhi Co-op Hsg. Society Ltd. We have gone through the said contract. It is seen that this was entered in Jan. 2005. It is not known whether any service was provided by them within the normal period of demand. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and the matter is pending before the Hon'ble Bombay High Court. Their contention is that as soon as matter will be sorted out and they receive the service tax amount from the ONGC, they undertake to pay the same to the department. In addition to above, the appellant/assessee has also contended that benefit like contribution to EPF, ESIC and the salary of the security personnel cannot form part of the assessable value as these charges are nothing but reimbursement of the actual expenditure done by them. They have also quoted certain judgments in support of their contention. The case laws are (i) Malabar Management Services Pvt. Ltd. Vs. Commissioner 2008 (9) STR 483 (Tri.) 2008 (9) STR 483 (Tri) (ii) S. Jayashree Vs. Commissioner 2007 (6) STR 389 (Tri.) 15. As far as appellant/assessee's appeal against the confirmation of demand on reimbursement of actual expenses/compensation is concerned. The argument advances are the same as in the case of security agency services provided to ONGC and their claim is that for the same reason no tax is payable on the said amount. It is also their contention that after the introduction of the Service Tax ( Determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they not agreed to pay the same during the personal hearing. Further, the appellants contention that they were forced to pay the said amount is not correct as they have paid the same amount voluntarily after the passing of the said adjudication order and there was no question of applying any force. Ld. Special Counsel also stated that the nature of voluntary payment is evident from the fact initially, they did not even file the appeal relating to the said payments. It is only later on through the route of miscellaneous application that they amended their appeal to include the tax paid relating to cleaning services and service tax on reimbursement of expenses. 19. We have considered the rival submissions, the first issue is relating to the salary of the security guards, payments relating to EPF, ESIC etc. Section 67 of the Finance Act provides that when service tax is chargeable on any taxable service with reference to value than such value shall be gross amount charged by the service provider for such service. The section also provides that where the consideration is not only in terms of money the additional consideration is to be added to arrive at the gross amount charged. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before adjudicating authority they have agreed to the same and also offered voluntarily to pay the same in respect of the Cleaning Activity services provided to commercial and industrial organization. Having volunteered to pay the service tax on the cleaning activity service which in any case they were liable to pay, we do not see any substance in the appeal filed by the appellant/assessee. It may be true that the demand notices did not speak of the cleaning service or demanded the service tax but same was demanded as Manpower Recruitment and Supply Service, but the fact remains the appellant/assessee was aware of the same, has provided the same service, is not disputing the taxability of the said service and therefore, at this stage appellant/assessee cannot be permitted to go back on his words. Even the payments made by the appellant/assessee were voluntarily and cannot be considered under duress as the payments were made after the adjudicating order was passed and before the appeals were filed before this Tribunal. We also note that initially they did not file appeals in respect of Cleaning Activity service and service tax relating to reimbursement/compensation of expenses. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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