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TMI Blog2015 (2) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. 3. The brief facts relating to the case are as follows: 3.1. The appellant entered into an agreement with M/s. MBT International Inc., USA on 03/01/2005 for development of their business of IT software mainly in the telecom sector. As per the agreement, the foreign entity was required to carry out sales promotion and marketing activities on behalf of the appellant, perform administrative support functions such as order processing, customer credit review, customer invoicing, etc., discuss and negotiate business proposals and contracts with clients in USA, facilitate communication between the appellant and its clients or prospective clients on various matter and so on. For the services rendered, the appellant was required to remunerate MBT International Inc., in a sum equal to 4% of the service charge billed on the foreign client. The said agreement and the payments made thereon were not intimated to the department by the appellant. However, the matter came to light when the audit of the records was conducted by the department in July 2010 and thereafter. During the course of the audit, it was noted that the appellant had made payments for the services received from abroad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made in foreign currency to their foreign group companies, who acted as commission agents. The only reason taken by the department in the show cause notice is that the assessee had not reported these payments made in the ST-3 returns for the corresponding period. It is their contention that in the ST-3 returns there is no column or provision for indicating the payments or considerations for services received from abroad during the material period and, therefore, there was no requirement on the part of the appellant to submit this information to the department. 4.1 Reliance is placed on the decision of the hon'ble apex Court in the case of Muthiah Chettiar vs. Commissioner of Income Tax (1969) 74 ITR 183 wherein it was held that if the returns do not provide for disclosure of information and the information is not provided, it cannot be held that the assessee has withheld material fact necessary for assessment and in such case, the extended period of time cannot be invoked. According to the counsel, the ratio of the above decision applies to the facts of the present case. 4.2 Lastly, it is submitted that there was lot of confusion about the liability to pay service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement nor the consideration paid therefore was intimated to the department at any point of time and the information in this regard was submitted to the department for the first time vide letters dated 05/01/2011 and 07/01/2011. 5.1 As regards the investigation conducted by the DGCEI and the show cause notice dated 10/03/2009, the said show cause notice pertained to services received from various vendors who are not related to the appellant or group companies. The payment of consideration for services received in respect of market promotion activities came to light only when the audit was conducted on the records of the company sometime in 2010 and immediately on receipt of the relevant information, show cause notice was issued in April, 2011, demanding service tax. In these circumstances, it cannot be said that the demand is time-barred. 6. We have carefully considered the submissions made by both the sides. 6.1 From the agreement dated 03/01/2008 with MBT International Inc., USA it is clear that the said agreement was for market promotion of the services rendered by the appellant who is situated in India. Such sales promotion and marketing activities fall within the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. Further, a deeming legal fiction has been created so as to treat the service-recipient as the service provider and for application of the provisions of Chapter V of the Finance Act, 1994. Therefore, in terms of the deeming fiction, the appellant was required to declare the transactions in the statutory returns filed under Section 70 of the said Finance Act as if he has provided the said service. In this view of the matter, the liability to service tax on the consideration paid for the services received for the period on or after 18/04/2006, is beyond challenge and if there is a delay in payment of such service tax, the appellant would be liable to pay interest thereon on the service tax liability. Consequently, the demand of service tax in respect of 'business auxiliary services' received for the period 2006-07 has to be upheld and this amounts to Rs. 2,69,94,321/- and interest liability therein works out to Rs. 1,48,95,196/-. The demand for the period prior to 18.04.2006 is not sustainable in law in view of the decision of the hon'ble Bombay high Court in the case of Indian National Shipowners' Association, cited supra. 6.3 As regards the argument that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other. It is on record that the appellant had not provided copy of the agreement to the department in respect of the services received from abroad and these were provided only in 2010 when the investigation commenced. Further, the exact details of the payments made in respect of the marketing promotion activities were given to the department for the first time only in January 2011 vide letters dated 05/01/2011 and 07/01/2011. The show cause notice has been issued on 24/04/2011 and, therefore, it cannot be said that the show cause notice is barred by limitation of time. 6.5 A similar case came up for consideration before the hon'ble apex Court in the case of Commissioner of Central Excise Vishakhapatnam vs. Mehta & Co. 2011 (264) E.L.T. 481 (S.C.) , and the question of time bar was also raised. The hon'ble apex Court held as follows: "The cause of action, i.e., date of knowledge could be attributed to the appellant in the year 1997 when in compliance of the memo issued by the appellant and also the summons issued, the hotel furnished its reply setting out the details of the work done by the appellant amounting to Rs. 991.66 lakhs and at that stage only the department came ..... X X X X Extracts X X X X X X X X Extracts X X X X
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