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2015 (8) TMI 157 - GUJARAT HIGH COURT

2015 (8) TMI 157 - GUJARAT HIGH COURT - 2015 (39) S.T.R. 711 (Guj.) , [2015] 85 VST 523 (Guj) - Clearing and Forwarding Services - evasion of service tax - whether the appellant is subcontractor - Settlement Commission rejected the the claim made on behalf of the petitioner that the petitioner is a subcontractor of M/s.MLL and that M/s.MLL was the main contractor of M/s.AMW Ltd. - Held that:- We are in complete agreement with the view taken by the learned Settlement Commission while confirming t .....

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dependent contract for providing transportation services / bus services, between the petitioner and M/s.MM / M/s.MLL and even between M/s.MM / M/s.MLL and M/s.AMW Ltd.

The petitioner cannot be said to be a sub-contractor with respect to the transportation services provided to M/s.AMW Ltd. and therefore, the contention on behalf of the petitioner that M/s.MM / M/s.MLL paid service tax on the transportation services rendered to M/s.AMW Ltd. and therefore, the petitioner is not liable to .....

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/ M/s.MLL is an independent contract for providing services of transportation and therefore, the petitioner is not a subcontractor and therefore, the petitioner is liable to pay service tax on the transportation services / bus services provided by the petitioner to the M/s.MM / M/s.MLL. Under the circumstances, the petitioner is not entitled to any of the reliefs sought in the present petition. - Decided against the assessee. - Special Civil Application No. 6358 of 2015 - Dated:- 21-4-2015 - M .....

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ettlement Commission, Bombay in so far as it relates to confirmation and fastening the tax liability of ₹ 31,01,599/- and interest thereon as regards the petitioner Company. 1.01. The petitioner has also prayed for appropriate writ, order and/or direction directing the respondent Nos.3, 4 and 5 to confirm whether liability of service tax on the obligations subcontracted to the petitioner Company by M/s.Mahindra Logistics Ltd. in respect of service provided by this main contractor to M/s. A .....

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ropriate writ, order holding and declaring that the amount due and payable by the petitioner Company for setting the false of Show Cause Notice No.V/ST/ST-AR-IIRajkot/ 204/Commr/2013 dated 7/10/2013 was ₹ 81,14,376/-, and upon payment of this amount with interest thereon, the case against the petitioner Company stands settled with all immunities allowed by the Customs, Central Excise and Service Tax Settlement Commission vide Order No.44/Final Order/ST/JL/2014 dated 23/3/2015 (Annexure &qu .....

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P), of Finance Act, 1994. 2.02. It appears that based upon the intelligence forwarded by DGCI that the petitioner is indulging in evasion of service tax on the services rendered under the category of "Clearing and Forwarding Services", an inquiry was initiated against them. That during the course of the investigation / inquiry, it appeared that the petitioner - noticee was providing services to different clients for contracted tour and providing bus services on contract basis. It also .....

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und that the petitioner - noticee had collected the amount of service tax from the service recipients. However, they have not paid the said amount to the department. 2.04. That during the course of the investigation / inquiry, it was also appeared that the petitioner noticee during the period from the financial year 2008-2009 (upto December, 2012) also provided service to M/s.Reliance Petrochemicals Limited (hereinafter referred to as "the RPL" for short) and M/s.Mahindra for the movem .....

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ner failed to pay and it was found that the petitioner noticee was liable to pay service tax under the category of "Tour Operator Service". It was also found that the petitioner noticee had rendered services to the value of ₹ 8,35,91,013/- to the SEZ unit during the period from financial year 2008-2009 to 2012- 2013 (upto December, 2012). It appeared during the course of the inquiry that the notices had not paid service tax of ₹ 9,19,19,223/-, education cess of ₹ 1,14 .....

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penalty under sections 76, 77 and 78 of the Finance Act. 2.06. Therefore, by show cause notice dated 7/10/2013, the petitioner noticee was called upon to show cause. as under :- "15. Now, therefore, M/s.Eagle Corporation Pvt. Ltd., "Eagle House" Eagle Chowk, Rajkot - the Noticee are hereby called upon to show cause to the Commissioner, Central Excise, Rajkot having office at 6th Floor, Central Excise Bhavan, Race Course Ring Road, Rajkot within 30 days from the receipt of this not .....

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ecovered from them under Section 75 of the Finance Act, 1994; (III)Interest on delayed paid service tax of ₹ 1,21,17,344/- should not be recovered from them under section 75 of the Finance Act, 1994. An amount of ₹ 1,11,032/- already paid should not be appropriated against such interest liability; (IV)Late fee should not be recovered from them under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax rules, 1994 for failure to file ST-3 returns in time; (V)Penalt .....

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se all evidences upon which they intend to rely in support of their defense. They are further directed to inform in writing, as to whether they desire to be heard in person, before the case is adjudicated. In absence of the same, it would be presumed that they do not desire a personal hearing. 17. If no cause is shown by the Noticee or they fail to appear before the adjudicating authority in the stipulated time, the case will be adjudicated on merit and on the basis of the evidences available on .....

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f ₹ 81,14,376/- towards Service Tax liability and a further amount of ₹ 33,62,429/- towards interest. The petitioner paid for setting such a demand of service tax aggregating ₹ 5,45,824/- as regards services provided to M/s.Reliance Petrochemicals Limited (hereinafter referred to as "M/s.RPL" for short) in SEZ area, as according to the petitioner, the services provided to any SEZ unit was exempted by virtue of notification No.4/4/ST has frustrated by notification No.9 .....

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ion, a report from the respondent No.3 was called as regards petitioner's submission in the application, more particularly demand of service tax with respect to the services provided to Ms.RPL as well as M/s.MLL (According to the petitioner, the services were provided to M/s.AMW.). 2.09. The third respondent - Commissioner of Central Excise, Rajkot submitted a report on the aforesaid. That thereafter, after considering the submissions made on behalf of the respective parties, the Settlement .....

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r of M/s.MLL and that M/s.MLL was the main contractor of M/s.AMW Ltd. Therefore, by the impugned order, the learned Settlement Commission has confirmed the demand of ₹ 31,01,599/- in respect of services provided to M/s.Mahindra Logistics Ltd. 2.10. Feeling aggrieved and dissatisfied with the impugned order passed by the Settlement Commission, the petitioner has preferred the present Special Civil Application under Article 226 of the Constitution of India. 3.00. Mr.Paresh Dave, learned advo .....

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ciating the fact that as such the petitioner was the sub-contractor to provide bus services to M/s.AMW Ltd. It is submitted that as such as per the agreement between the petitioner and M/s.MLL dated 16/3/2008, the petitioner was under an obligation to provide buses for transportation of employees of M/s.AMW Ltd., as a sub-contractor of M/s.MLL and for providing bus services for transportation of its employees and M/s.MLL has appointed the petitioner Company on back to back basis for carrying out .....

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Company was not to raise any bill to M/s.AMW Ltd., ultimate client receiving the services, but the bills on M/s.AMW Ltd. were to be raised by M/s.MLL as their contractor. It is submitted that in accordance with the said arrangement, the petitioner Company used to raise bills on M/s.MLL for the period in question. It is submitted that in turn M/s.MLL raised their bills to M/s.AMW Ltd. as regards the said business transaction, because M/s.MLL has been contractor for providing transportation servic .....

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heir client M/s.AMW Ltd. It is submitted that, therefore, the Settlement Commission has materially erred in confirming the demand notice with respect to service liability to the extent of ₹ 31,01,599/- with respect to transportation services provided to M/s.AMW Ltd. 3.02. Mr.Paresh Dave, learned advocate appearing on behalf of the petitioner has further submitted that as such the petitioner submitted application before the Settlement Commission under section 32F of the Central Excise Act ( .....

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hen the Settlement Commission has to decide the same in accordance with the procedure laid down under section 32F of the Act. It is submitted that the Settlement Commission has power to conclude any case involving any application before it and and order passed by the Settlement Commission on the case and any related matters, is final and conclusive. 3.03. Mr.Paresh Dave, learned advocate appearing on behalf of the petitioner has further submitted that such a procedure is an alternative provided .....

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The petitioner Company raised the issue with respect to the demand of ₹ 5,45,824/- with respect to the services provided to M/s.RPL and ₹ 31,01,599/- with respect to the services provided to M/s.AMW Ltd. It is submitted that as the M/s.Mahindra Logistics Ltd. paid service tax in respect of the transportation facilities provided to M/s.AMW Ltd. 3.04. Mr.Paresh Dave, learned advocate appearing on behalf of the petitioner has heavily relied upon the following Circulars issued by the CB .....

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eavily relied upon the decision of the Hon'ble Supreme Court in the case of Evergreen Suppliers Vs. Commissioner of Central Excise, Manglore, reported in 2008 (9) S.T.R. 191. 3.06. Mr.Paresh Dave, learned advocate appearing on behalf of the petitioner has heavily relied upon the following decisions of the various tribunals in support of his submission that if the service tax is paid by the main contractor, subcontractor is not liable to pay service tax :- (1) SEMAC Pvt. Ltd. Vs. Commissioner .....

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as well as the above Circulars issued by the CBDT (sic), Mr.Dave, learned advocate appearing on behalf of the petitioner has requested to admit/allow the present Special Civil Application. 4.00. Heard Mr.Paresh Dave, learned advocate appearing on behalf of the petitioner at length. 4.01. At the outset, it is required to be noted that the petitioner was served with show cause notice by the appropriate authority and the petitioner was directed to show cause as to why, Service Tax of ₹ 1,14, .....

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iate penalty under the provisions of the relevant provisions of the Finance Act, 1994, should not be imposed and levied. 4.02. On receipt of the show cause notice, immediately the petitioner approached the Settlement Commission by submitting the application under section 32E of the Act and deposited an amount of ₹ 81,14,376/- towards service tax liability and an amount of ₹ 33,62,429/- towards interest. However, disputed the tax liability of ₹ 5,45,824/- with respect to service .....

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the sub-contractor and M/s.Mahindra Logistics Ltd. was contractor to provide transportation services to Ms.AMW Ltd. and as M/s.MLL had paid service tax in respect of transportation services provided to Ms.AMW Ltd., the petitioner being sub-contractor, is not liable to pay service tax. However, it is required to be noted that there seem to be some misconception on the part of the petitioner that the petitioner is the sub-contractor with respect to transportation services provided to Ms.AMW Ltd. M .....

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an independent contract between the petitioner and M/s.MML to provide buses to M/s.MLL. In the said agreement, M/s.Mahindra & Mahindra Limited is referred to as "M&M-ML", the petitioner herein - M/s.Eagle Corporation Pvt. Ltd. is referred to as "BA" and Service Level Agreement is referred to as "SLA" for short. As per the said agreement / contract dated 16/3/2008, the petitioner is appointed as a transporter to transport the employees of customer from pick .....

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. Any increase in government RTO Tax will affect the rates agreed in Annexure-I and it will be increased in accordance with the revised RTO Tax rate. The current RTO rate as on date of agreement is ₹ 300/- per Seat. 5.2. BA shall raise its invoice on M&M-ML by 1st of every month for last month and M&M-ML shall make payment thereon within 45 days from the date of receipt of the said invoice by it. M&M-ML, shall make deductions from such bills, only after providing to BA the deta .....

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;M-ML, anytime for inspection and verification." 4.03. That pursuant to the aforesaid contract / agreement between the petitioner and M/s.MM and M/s.MLL, the petitioner has supplied buses for transportation to the clients of M/s.MM / M/s.MLL. That the petitioner has raised separate and individual Invoices for supply of such buses to M/s.MM / M/s.MLL and in turn M/s.MM / M/s.MLL used to make the payment to the petitioner. During the aforesaid process, M/s.AMW Ltd. does not come into picture .....

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another recipient. They had a written agreement with M/s.Mahindra Logistics Ltd. to supply buses directly to one M/s.Asia Motor Works Ltd. (M/s.AMW). The applicants have clarified at the time of hearing on 16/2/2015 that they had raised the bills for the services to M/s.Mahindra Logistics Ltd. and not on M/s.AMW. Hence, the service recipient in this case would be M/s. Mahindra Logistics Ltd. and not M/s.AMW. The applicants have further claimed that M/s.Mahindra Logistics Ltd. were the main cont .....

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r which they could be raising a consolidated bill to M/s.AMW and it would be virtually impossible to link each bill raise by M/s.Mahindra Logistics Ltd. to M/s.AMW with the bill raised by the applicant on M/s.Mahindra Logistics Ltd. Even otherwise, so far as the applicants are concerned, they have provided service to M/s. Mahindra Logistics Ltd. and not to M/s.AMW since the contract was with M/s.Mahindra Logistics Ltd., the bills were raised by the applicant on M/s.Mahindra Logistics Ltd. and pa .....

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t for the service reimbursed. The judgements cited by the applicants are of no help to them since the said judgements were discussed and distinguished in the case of Sunil Hi- Tech Engineers Vs. Commissioner of Central Excise, Nagpur [2014 (36) S.T.R. 408 (Tri. Mumbai)]. Thus, the Bench is of the view that the Service Tax amount of ₹ 31,01,599/- relating to the service provided by the applicant to M/s. Mahindra Logistics Ltd. is correctly payable by the applicant." 6.00. We are in com .....

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to be a subcontractor for providing transportation services to M/s.AMW Ltd. There is an independent contract for providing transportation services / bus services, between the petitioner and M/s.MM / M/s.MLL and even between M/s.MM / M/s.MLL and M/s.AMW Ltd. 7.00. In view of the above, once it is held that the petitioner cannot be said to be a sub-contractor for providing transportation services to M/s.AMW Ltd., none of the aforesaid decisions and the Circulars issued by the CBDT relied upon by .....

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aid to be an alternate to regular and normal adjudication proceedings is concerned, considering the provisions of the Act more particularly Section of Chapter V of the Act, by no stretch of imagination it can be said that the proceedings before the learned Settlement Commission is an alternate to adjudication proceedings. The proceedings before the Settlement Commission can be said to be in the form of conciliation and it gives an opportunity to the assessee to approach the Settlement Commission .....

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that case, the Settlement Commission is required to adjudicate the dispute with respect to the balance amount i.e. amount A-B (A minus B) and for which the Settlement Commission is required to follow the procedure as required under section 32F of the Act i.e. to call for the report from the Commissioner and/or Commissioner Vigilance and thereafter after giving an opportunity to the assessee, the entire amount of tax liability is required to be determined by the Settlement Commission. However, th .....

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ave their skin from prosecution provided in the Act for non-payment of the Tax which is due and payable by the assessee as per the Department. Under the circumstances, we are afraid to accept the submission of the petitioner that the Settlement Commission has jurisdiction to decide the dispute with respect to either applicability of the service tax and/or entering into the questions like the questions raised in the present petition. Therefore, we are of the opinion that with respect to such ques .....

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