TMI Blog2015 (7) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... ulting engineering service. There was no reason whatsoever not to charge, collect and pay the service tax in similar manner in respect of installation and commissioning service when separate consideration for that service was already available in each of these contracts, and installation and commissioning was the dominant service in these contracts. - this is a clear cut case of wilful statement as also suppression of facts. Submissions of some letters/contracts in the facts of this case will not make any difference. - Decided against Assessee. - Application No. ST/S/3022/12, Appeal No. ST/873/12 - - - Dated:- 12-6-2015 - P R Chandrasekharan, Member (T), Anil Choudhary, Member (J) And Third Member on Reference: P K Jain, Member (T),J. For the Appellant : Shri S Muthu Venkataraman, Sr. Adv. For the Respondent : Shri K M Mondal, Special Counsel ORDER Per: P K Jain: Two points referred in this difference of opinion between Member (Technical) and Member (Judicial) are already elaborated at page 52 and 53 and are not being repeated. The first issue is relating to whether works contract can be vivisected prior to 1.6.2007 and the service portion discernible in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order-in-Original No. 1/2004-05 dt. 18/01/2005 - para - 1 elaborates the date of audit is august 2003 3 18.10.2003 L T letter No. ST/MST/S.TAX (Audit)/L T/03/3795-09.10.2003 Addressed to Jt. Commissioner, services tax, Mumbai-II, informing legal stand of service tax not payable on turnkey lumpsum contracts and also informing an appeal relating CRL contract filed before CESTAT, Delhi as covered by unconditional stay. 4 20.11.2003 16.12.2003 12.01.2004 L T letter addressed to dept. Submitting contract copies and also invoices of sub-contractors 5 20.01.2004 CPCL letter No. 1027:4814:LSTK-II:237 - 20.01.2004 Addressed to L T, opining non-levy of service tax for turnkey contract. 6 31.12.2004 11.01.2005 20.01.2005 PH statement as recorded on different Mr. P.A. Pawar forwarded to L T by office of the Commissioner vide letter no. F.no.V.ST(HQ)/Adj/L T-709/08/6210-18.11.2008 PH record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submitted that this is contrary to fact. He further took us through various documents to support his contention. The learned senior counsel also submitted that the inference of suppression on the basis of self-assessment memorandum is incorrect. He further submitted that they have not stated anything wrong in the self assessment memorandum. The learned senior counsel further submitted that the present dispute is relating to six contracts and all the six contracts are indivisible works contracts comprising of both goods and services and he has further submitted that Member (Technical) has rendered a finding that the contracts are divisible on the basis of separate prices being identified. The above finding is erroneous for various reasons. It was further submitted that the appellant had their genuine and bona fide belief that the listed contracts were not exigible to levy of service tax and thus no mala fide intention or mens rea can be attributed from a perusal of index of date and events. It was further submitted that the relevance of knowledge while invoking the extended period is very much relevant in view of the various judgments. In support of his contention, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Secretary, Town Hall Committee vs. CCE, Mysore reported in 2007 (8) STR 170 (Tri-Bang) - para 5.4; (v) Afcons Pauling Joint Venture vs. CCE, Jalandhar reported in 2004 (166) ELT 207 (tri-Del) - para 7; (vi) Duke Sons Pvt. Ltd. vs. CCE, Mumbai II reported in 2004 (178) ELT 190 (Tri-Mumbai) - para 2; (vii) CCE, Mumbai-IV as Raptakos Brett Co. Ltd. reported in 2006 (194) ELT 101 (Tri-Mumbai) - para 7; (viii) Raunaq International Ltd. vs. CCE, Surat reported in 2001 (138) ELT 1009 (Tri-Del) - para 5; (ix) Nexcus Computers (P) Ltd. vs. CCE, Pondicherry reported in 2008 (9) STR 34 (Tri-Chennai) - para 2. The learned senior counsel submitted that in view of the above judgments, extended period cannot be invoked. 4. The learned special counsel on behalf of the Revenue submitted that the show cause notice dated 7.10.2008 sought to recover service tax from the appellant for the period 1.7.2003 to 12.9.2007 by invoking the extended period of limitation. The learned special counsel submitted that it is important to see first whether the appellant had any bona fide belief that indivisible works contract could not be split up and part of it could not be subjected to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the sales tax was leviable on the price of goods and materials supplied in a building contract which had been entered into in two distinct and separate parts. The learned special counsel also submitted that the Hon'ble Supreme Court in the case of Associated Cement Companies Ltd. vs. CCE reported in 2001 (128) ELT 21 (SC), in para 23 of its judgment, held that the 46 th amendment was made precisely with a view to empower the State to bifurcate the contract and to levy sales tax on the value of the material involved in the execution of the works contract. It was further held that even if the dominant intention of the contract is the rendering of a service after the 46 th amendment, the State would now be empowered to levy sales tax on the material used in such contract. It was further submitted by the learned special counsel that the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. vs. UOI reported in 2006 (2) STR 161 (SC), in para 47 of its judgment, has observed that after the 46 th amendment, the sale element of those contracts which are covered by the six sub-clauses of Clause (29A) of Article 366 are separable and may be subjected to sales tax by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/10/2003 5 ONGC-9WWLL Platforms Projects MR/OW/MM/9WPP/09/2003 02/04/2004 6 Mangalore Refinery Pvt. Ltd. MRPL/PMG/TENDER/2004/001/LOA 10/10/2004 A perusal of each of the contract would show price break up for supply of material and supply of services as detailed in para 5.2 of the order of Member (Technical). From the nature of the contracts, one can safely say that the appellant's contracts were divisible works contract. In the result, no fault can be found with the order made by Member (Technical). The learned special counsel further submitted that the six contracts involved in the present case were submitted only in 2005 and 2007 vide their letter dated 10/2/2005, 7.9.2007 and 8.8.2007 respectively and not in 2003. 4.2 It was further submitted that the appellant has taken service tax registration for consulting engineering service in 1998. From March 2004, the appellant has incorporated in the said certificate installation and commissioning service . It is, therefore, clear that the appellant was well aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 2010 (256) ELT 369 (Guj.), has held that merely because the department had acquired knowledge of the irregularities of the assessee, the suppression would not be obliterated. Similar view has been taken by the Tribunal in the case of Usha Rectifier Corporation (I) Ltd. vs. CCE reported in 2001 (130) ELT 485 (T). In the case of Positive Packaging Industries Ltd. vs. CCE, New Panvel reported in 2010 (249) ELT 57 (T), the Tribunal has held that acquiring knowledge by the Department does not take away the period of five years by law makers provided in the Central Excise Act, 1944 itself. In the case of Indian Oxygen Ltd. vs. CCE, Bhubaneswar reported in 1997 (89) ELT 557 (T), the Tribunal has held that acquisition of knowledge by the Department about the assessee's activity does not forfeit or reduce limitation of five years. In the case of Pure Drinks (P) Ltd. vs. CCE, New Delhi reported in 1997 (90) ELT 348 (T), it has been held that the date of knowledge is not one of the relevant dates under Section 11(3) of the Central Excise Act, 1944. Hence longer period of limitation is invokable. 4.3 The learned special counsel submitted that in view of the foregoing submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the installation and commissioning service. Most of the arguments extended are the ones which resulted in the incorrect judgment in the case of Daelim Industrial Co. Ltd. (supra) of this Tribunal, which was with reference to consulting engineering service. It is important to note that the appellant normally enters into a what is called as lump sum turnkey (LSTK) contracts, which implies that they take the contract from the basis designing, procurement of various capital goods and thereafter erection, commissioning and installation of such goods. Thus the lump sum turnkey contracts normally consist of three components viz. designing etc. which are covered by the consulting engineering service. The second component is procurement of various materials which are in the nature of capital goods. Excise or custom duty is paid on such goods. The third component is erection, commissioning of such capital goods and the appellant is required to ensure that such goods were properly installed and the performance is upto the satisfaction of their customer. The issue whether service tax would be chargeable on the first component under the category of consulting engineering service was not disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in laws and regulations and a scanned copy of the sheet is enclosed herewith:- It will be seen from the said document at Sr. No. 5 that the appellant is very clear that service tax is applicable and the rate is 5% which is to be increased to 8% from a date to be notified by the Government as far as design and engineering is concerned. For commissioning and installation service, existing rate is nil. It is also very clearly written at Note 3 that levy of service tax @8% would be applicable on commissioning and installation service. Further, as the effective date is to be notified by the Government in this regard, the appellant has not considered the levy of service tax. From the above notes, it is absolutely clear that the appellant was fully aware that 8% service tax is applicable on the consulting engineering services and also on commissioning and installation service from a date to be notified by the Government It is also clear that the appellant was aware that tax under consulting engineering service is to be paid on first part and under commissioning and installation service for third part of the lump sum turnkey contract. 6.3 The fourth contract is again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice of the Tribunal. Some of the important decisions in this category are Builders Association of India (supra) and Associated Cement Companies Ltd. (supra). After the judgment in the case of Daelim Industrial Co. Ltd. in 2003, the appellant started taking the stand that their lump sum turnkey projects are composite contracts and cannot be vivisected and, therefore, no service tax can be levied under the category of consulting engineering service and thereafter extended this to 'erection, commissioning and installation service'. It is also very important to note that in spite of the Hon'ble Supreme Court's judgment in the case of BSNL (supra) as also Larger Bench decision of this Tribunal in the case of Asian Techs Ltd. (supra) which discussed the 46 th amendment of the Constitution, the appellant continued to take the stand based upon the Daelim Industrial Co. decision. 7.1 In brief, the appellant refused to follow the decisions which take into account Constitutional amendment decided before or after Daelim case. There was no reason for them whatsoever to extend the reasoning of Daelim Industrial Co. decision and not to collect service tax in respect of erecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant was specifically required to indicate the details of the exempted service. Even if the appellant was having any belief that their activity is not taxable, the least that was expected was to indicate the details in the said column. I entirely agree with the contention of the special counsel for the Revenue that in the self-assessment regime, it is the responsibility of the assessee to correctly assess the duty and fill up the returns meticulously giving all the information. Leaving blanks the columns relating to exempted service does not indicate bona fide belief on the part of the appellant. The learned senior counsel for the appellant has submitted that the self-assessment memorandum were filled by them and they have not stated anything wrong. In my view, he is trying to shuttle the main issue that the ST-3 returns did not indicate the details relating to erection, commissioning and installation of the present contracts as also in the returns from 2005 onwards, they have not indicated the details of the exempted service which would include the present services. If the assessee-appellant has failed to furnish the correct particulars in the ST-3 returns, it will certainly am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consulting engineering service and not with reference to erection, commissioning and installation service. From December 2004 onwards that the department started investigation about the non-payment of service tax relating to erection, commissioning and installation service and letters written thereafter cannot help the appellant. Discussions and submissions of details are, therefore, of no consequence. It is to be noted that the service tax on the installation and commissioning service was introduced for the first time w.e.f 1.7.2003 only and generally the information relating to tax on such service etc. will come after some time say a year or two. The appellant has also stated that they have submitted IOCL/Mathura contract and ONGC/EIL contract in September/October 2003. The question is whether these contracts were submitted with reference to queries relating to consulting engineering service or with reference to the newly introduced service in 2003. As far as the contract of CPCL is concerned, I find that Member (Technical) has already observed that the tax cannot be collected in respect of the CPCL contract. I also note that special counsel has categorically stated the five co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the background that this was a case of self removal procedure in which there is obligation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain, which in other words would be conscious withholding of the information. Thus unhesitantly we conclude, on the facts of this case, proviso to Section 11 would be applicable, hence, show cause notice is held to be within time. Applying the above ratio to the facts of the case before us, the invocation of extended period of time to confirm the tax demand cannot be faulted at all and we hold accordingly. The hon'ble High Court of Gujarat in Salasar Dyeing Printing Mills (P) Ltd. Vs. C.C.E. C., Surat-I [2013 (290) E.L.T. 322 (Guj.)] has held that - 15. Upon reading the relevant provisions contained in Section 11A of the Act, it becomes clear that in case of duty which has not been levied or paid, or has been short-levied or short-paid or erroneously ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has to be ascertained from the circumstances of the case. In this case, since the fact of recovery of extra inventory cost from M/s Bajaj Auto under debit notes had not been disclosed in the ER-I returns, it has to be inferred that the short payment was on account of suppression of fact on the part of the assessee and, hence, the longer limitation period has been correctly invoked and penalty under section 11AC has been correctly imposed. 9.2 In the case of Kuttukaran Trading Ventures vs. CCE, CUS ST - 2014 (34) STR 74 (T), in para 15 of its order, the Tribunal has held as follows: 15. Coming to the limitation issue, we note that the show-cause notice was issued on 20.8.2008 demanding service tax for the period from 16.6.2005 to 30.9.2007 by invoking the extended period of limitation on the alleged ground of suppression of facts by the noticee. The appellant had allegedly suppressed material facts deliberately with intent to evade payment of service tax. The adjudicating authority found that the assessee had not furnished all material details in their ST-3 returns and that such details came to be disclosed only as a result of audit conducted by the department. On thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be heard to say that, on account of the exclusion clause contained in the definition, they bona fide believed that they were not liable to pay service tax on maintenance or repair of IC engines or other parts of motor vehicle. It is not in dispute that the activity of rebuilding, reconditioning, restoration and servicing of IC engines and other parts (of motor vehicles), received from authorised service stations and workshops were not disclosed by the appellant in their ST-3 returns. On these facts, it appears to us that there was suppression of relevant information by the appellant with intent to evade payment of service tax. Some of the relevant facts were first disclosed to the department only on 5.9.2007, the date on which the appellant submitted a letter to the Superintendent (Audit). Obviously, this disclosure of information was not voluntarily made as it was made in the face of audit objections. In the result, the invocation of extended period of limitation requires to be upheld . The above decision of the Tribunal has been upheld by the Hon'ble High Court of Kerala reported in 2014 (35) STR 481 (Ker.). 9.3 Above apart, I also find that in the case of CCE, Bhopa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppression of facts if subsequently, it is found that the condition of exemption notification had not been fulfilled. 9.4 In the case of Senor Metals P. Ltd. vs. CCE ST, Rajkot reported in 2014 (308) ELT 491(T), vide para 7, the Tribunal held as follows: 7. So far as time barred nature of the demand is concerned, Ld. Advocate appearing on behalf of the appellant argued that the required intimations / clarifications were filed by the suppliers of raw material with the jurisdictional central excise authorities. The inputs received and the specified goods were duly cleared under prescribed challans, therefore, extended period is not invokable when such clearances of job worker are also shown in the periodical returns filed with the department. It is observed from the declarations filed by the raw material suppliers that the column in such declarations, pertaining to manufacturing process of the job work, are either kept blank by the raw material supplier or the process simply says that raw materials are converted into specified goods of notification no.1/93-CE. Similarly the challans maintained by the appellants and the raw material suppliers also give no indication of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory records. The Tribunal held that the theory of universal knowledge cannot be attributed to the department in the absence of any declaration... The ratio of the above decision is also applicable to the present case inasmuch as the appellant did not disclose the details of value of taxable service, service tax payable and the gross amount charged in the ST-3 returns. Therefore, the extended period of limitation has been rightly invoked in the impugned order. 10. The learned senior counsel has provided a catena of judgments relating to invocation of extended period. First of all, it is to be noted that these judgments are mainly with reference to excise and customs administration and most of these cases pertain to the period prior to self-assessment procedure. In the case of excise administration, the factory is located in a particular jurisdiction and generally the activity of an assessee is known to the jurisdictional officer. This is particularly true for the era when assessment was done by the officers based upon copies of all records such as invoices, registers (eg. RG 23 Pt-I/Pt.-II, RG-1) etc. which were to accompany the return. However, after the introduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. The various views expressed after 2007, to my mind, are irrelevant to the issue in hand as the period involved in the present show cause notice is upto 2007 and appellant could not have known such judgments in 2003 onwards and in view of this position, in my considered view, the other judgments quoted by the senior counsel are not relevant to decided the issue here. I have also gone through various judgments. In the case of Modipon Fibre Company (supra), the issue was relating to two types of sales, viz. backward area sales and normal area sales. The appellant in that case had informed the department on 14.1.1997 about these categories of sales and different values. It is in these circumstances that this Tribunal has held that from 14.1.1997, the department cannot allege suppression which was upheld by the Hon'ble Supreme Court. In the case of Jaiprakash Industries Ltd. (supra), the issue was relating to the excisability relating to activity of crushing of boulders into bajari and on the said issue, there were different decisions of the different High Courts and keeping in view the nature of dispute, the Hon'ble Supreme Court had taken the view that the extended p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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