TMI Blog2015 (4) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Section 67 of the Finance Act, 1994 refers to gross service charges paid or payable for the services rendered or to be rendered has to be read as it is. In our view, the entire sum of ₹ 1,493/- crores does not qualify as an advance towards the services to be rendered by the appellant to RCM. - Decided in favour of assessee. - Appeal No.ST/86072/2013 - Final Order No. A/579/2015-WZB/STB - Dated:- 4-3-2015 - M V Ravindran, Member (J) And P R Chnadrasekharan, Member (T),JJ. For the Appellants : Shri V S Nankani, Sr. Adv. with Mr Gopal Mundhra, Adv. For the Respondent : Shri D K Acharya, Sp. Counsel ORDER Per: M V Ravindran: This appeal is directed against Order-in-Original No. 38/ST-II/RS/2012 dated 30/11/2012 passed by the Commissioner of Service Tax, Mumbai-II. 2. The relevant facts that arise for consideration are that the appellant herein is a subsidiary of Reliance Communications Limited (hereinafter referred to as RCM). The appellant are providing taxable service falling under Business Support Services' as defined in Section 65(124C) read with Section 65(105) of the Finance Act, 1994. The officers of DGCEI received an intellig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame would have been adjusted against the service charges, but there is no provision for such adjustment in clause 11 or any other clauses of the said agreement. He would rely upon the half yearly balance sheets for the appellant as well as RCM for the half-year ended 30 th September 2007; which is before the start of the investigation on 26/11/2007. He would draw our attention to the fact that the appellant as well as the said RCM had shown in the half yearly balance sheet that that amounts have been repaid and received. He would then take us through the correspondence with the Department during the investigation and the statements of Shri R.K. Bansal to show that the details of loan amounts and that the payment thereof by the appellant have been furnished and that the finding of the Commissioner that some portion of the loan amount has not been repaid is factually incorrect. He contends that the entire amount of loan of ₹ 1,493/- crores has been repaid by 31/12/2007. It is his further submission that although Clause 4.3 of the Master Service Agreement provides that the amount of ₹ 283/- crores shall be adjusted against dues by RCM, in reality the parties always treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld submit that the officials of RCM initially stated that they were unsecured loans but subsequently it was stated as an advance from RCM. It is his submission that the invoices which were raised by the appellant from June 2007 but no payment was made by RCM except the amount of ₹ 1,483/- crores from June, 2007 to September, 2007 presumably for adjustment towards the due which are for services rendered. It is also his submission that in business it is unusual to provide interest-free loans and that too of huge amounts as is in this case. He would submit that for raising such a loan both appellant as well as RCM need to pass a Board resolution. It is his further submission that the repayment started after investigation commenced on 26/11/2007 and the repayment is an afterthought to show that the amount is a loan. He would then dwell upon the auditor's report of the appellant and submit that the auditor has specifically qualified that the appellant had not taken any loans secured or unsecured from companies, firms or other parties as recorded in the register maintained under Section 301 of the Companies Act. He would submit that this itself is a blatant lie as on records am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956. On perusal of provisions of Section 301 of the Companies Act, we find that the said section refers to Section 297 and 299 of the Companies Act which deals with loans, contracts with the companies in which Directors are interested. These provisions of the Companies Act are not applicable in the present case and therefore the auditor's note is aligned with the reference to unsecured loans received by the appellant from RCM. We also find strong force in the submissions made that the repayment of the amount of 1,493/- crores is not an afterthought as even prior to the investigations, on 20 th September, 2007 the appellant had recorded and treated the amount a I.C.D. in the half yearly balance sheet. The finding of the adjudicating authority in paragraph 46 of the impugned order that some of the ₹ 283/- crores has not been repaid is factually incorrect as can be ascertained from the correspondence during the investigations and more particularly by the letter dated 30 th March 2008, in which appellant had submitted the details of the payment of the amount so that ultimately this amount was also returned/repaid by the appellant notwithstanding the fact that this amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 22.59 crore to Campion Properties Limited, ₹ 545.64 crore to Reliance Infocomm Infrastructure Private Limited, ₹ 1,210.00 crore to Reliance Infratel Limited, ₹ 81.11 crore to Reliance Big TV Limited and repaid during period of ₹ 871.65 crore by Reliance Communications Infrastructure Limited, ₹ 981.18 crore by Reliance Telecom Limited, ₹ 531.03 crore by Reliance Webstore Limited, ₹ 1,210.00 crore by Reliance Infrastel Limited, ₹ 3.00 crore by Reliance Big TV Limited. (Previous period - Loans and Advances include loan granted during the period of ₹ 175.30 crore to Reliance Internet Services Limited, ₹ 1,283.49 crore to Reliance Telecom Limited, ₹ 933.99 crore to Reliance Webstore Limited, ₹ 36.78 crore to Campion Properties Limited, ₹ 630.00 crore to Reliance Infocomm Infrastructure Private Limited, ₹ 6,342.95 crore to Reliance Communications Infrastructure Limited and loans repaid during the period of ₹ 5,834.37 crore by Reliance Communications Infrastructure Limited, ₹ 190.70 crore by Reliance Telecom Limited, ₹ 0.06 crore by Reliance Infocomm Solutions Limited) 13.1. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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