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Quality Council of India Versus CC, New Delhi

2016 (3) TMI 404 - CESTAT NEW DELHI

Extended period of limitation - Bonafide belief - Not seeking registration - Technical Inspection and Certification Agency - wilful misstatement / suppression of facts - Held that:- Nothing has been brought out as to how the appellant was guilty of wilful misstatement / suppression of facts. An assessee who has a bonafide belief that it is not liable to tax would naturally not obtain registration, assess itself to tax or file returns. This by itself does not tantamount to wilful misstatement / t .....

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declare the service to the Department, did not obtain registration and did not pay tax. These grounds have been analysed above in the light of authoritative judicial pronouncements and held to be inadequate for the said purpose in the absence of any substantial evidence that all that was wilfull and to evade tax. - Demand set aside - Decided in favor of assessee. - Service Tax Appeal No. 669 of 2009 - Final Order No. 50931 / 2016 - Dated:- 3-3-2016 - MR. JUSTICE G. RAGHURAM, PRESIDENT AND M .....

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The adjudicating authority held that the service rendered by the appellant fell under Technical Inspection and Certification Agency service and passed the impugned order. 2. Ld. Counsel for the appellant has essentially contended that: (a) the adjudicating authority was not competent to adjudicate the case as it was assigned to it by the Chief Commissioner in terms of powers conferred in terms of Notification No. 6/2009 ST dated 30/01/2009 with authorised the Chief Commissioners to exercise the .....

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ently the impugned order is an order issued by a person not competent to issue the same and therefore is a nullity. (b) the appellant was not providing technical testing and certification agency service inasmuch as it merely accredited / certified various organisations for the purpose of certifying various entities and granting certifications like ISO certifications. (c) It was not providing any technical inspection and certification of any material, goods or immovable property. (d) The word pro .....

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eed, the appellant as early as in 10/08/2000 took registration under Management Consultant service, started paying tax and stopped doing so only after obtaining legal advice that it was not covered thereunder. Technical inspection and certification agency service was introduced in 2003. Thus extended period and mandatory equal penalty are not invocable. 3. Ld. authorised representative on the other hand, contended that the services rendered by the appellant are clearly covered within the scope o .....

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Commissioner in terms of Notification 6/2009 ST dated 30/01/2009 which is reproduced below: In exercise of the powers conferred by section 37A of the Central Excise Act, 1944 (1 of 1944) as made applicable to service tax b y section 83 of the Finance Act, 1994 (32 of 1994), the Central Government hereby directs that the powers exercisable by the Central Board of Excise and Customs under the provisions of Section 83A read with the notification of the Government of India in the Ministry of Finance .....

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s exercisable by CBEC, not merely under the provisions of Section 83A ibid but in terms of provisions of Section 83A read with the Notification No. 16/2007-ST as well. Thus, the contention of the appellants that only powers exercisable by CBEC under Section 83A were delegated to Chief Commissioner vide Notification No. 6/2009-ST is misconceived. Notification No. 16/2007-ST is reproduced below: In exercise of the powers conferred by section 83A of the Finance Act, 1994 (32 of 1994), read with rul .....

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poses (1) (2) (3) (4) (5) 1 All the Commissioners of Central Excise The Commissioner of Central Excise Throughout the territory of India Investigation and adjudication of such cases, as may be assigned by the Board 2 The Commissioners of Central Excise (Adjudication) The Commissioner of Central Excise Throughout the territory of India Investigation and adjudication of such cases, as may be assigned by the Board [Notification No. 16/2007-S.T., dated 19-4-2007] Perusal of Notification No. 16/2007 .....

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axable service in relation to which any such Central Excise officer shall exercise his powers . A fair and harmonious construction of Notification No. 6/2009 ST read with Notification No. 16/2007-ST leads to compelling conclusion that vide Notification No. 6/2009 the Chief Commissioner was empowered to exercise the powers of Central Board of Excise and Customs for the purpose of assigning adjudication of cases which did not merely involve penalty. Consequently the adjudicating authority having b .....

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guide. These are bodies who issue accreditation to the organisations engaged in issuing certificates to applicants to the effect that such applicants have quality management practices in conformity with ISO 9001, ISO 14000 and QS 9000, etc. Accreditation of such certifying bodies reduces risk for business and its customers by assuring that accredited bodies are competent to carry out the work they undertaken. Accreditation bodies, which are members of International Accreditation Forum (IAF) are .....

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the test results of various laboratories. M/s QCI is a member of IAF. As an accreditation body, it conducts assessment of organisations, seeking accreditation. It deploys a team of experts to find out how the certification body addresses various requirements for meeting the high standards of its responsibility. The purpose of such assessment is to find out whether the certification body possesses the wherewithal, for conducting study of the organisation whose management process it would certify .....

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fication. The National Registration Board for Personnel and Training (NRBPT) offers registration of personnel and training courses. National Accreditation Board for Hospitals & Healthcare Providers (NABH) offers accreditation to hospitals in accordance with the international standards ISO 17025. 29.1 M/s Quality Council of India is a governmental initiative and a nodal agency in India to give worldwide recognition to certification agencies for certificates like ISO. ISO certification plays a .....

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nagement system or an environment management system. ISO does not itself issue certificate in conformity to the standards. This work is carried out by certification bodies, which are authorised or accredited by National Standard Bodies in different countries and M/s Quality Council of India is one such body in India. These organisations are granted accreditation by M/s Quality council of India as a token of recognition of competency to carry out audit for providing certification. M/s QCI accredi .....

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bodies about quality management system and environmental management system. This accreditation is the formal recognition of competence of the organisation to assess and certify other bodies about quality management system and environment management systems. The Accreditation is provided after following a due process & procedure & is granted for three years. This certification is given only after the applicant meets the criteria of accreditation and all non-conformities found against the .....

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mation technology software] or immovable property qualifies or maintains the specified standards, including functionality or utility or quality or safety or any other characteristic or parameters, but does not include any service in relation to inspection and certification of pollution levels; Section 65 (109) states the technical inspection and certification agency means any agency or person engaged in providing service in addition to technical inspection and certification . The related service .....

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llant however was inspecting or examining the process employed by professional bodies which on being found competent were accredited by it to certify others. It was also contended that by virtue of the principle of noscitur a sociis / ejusdem generis, the meaning of the word process appearing in the definition given in Section 65(105) (108) ibid has to be understood in the context of the society of the words in which it appears, namely, goods, materials and immovable property and for that reason .....

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s which can be said to form a society inasmuch as goods and immovable property do not make a society at all; indeed they are mutually exclusive; whatever is goods cannot be immovable property and vice versa. Therefore the said principle cannot be called in aid for determining the scope and meaning of the word process , in the above quoted definition. However, this contention has been made with the support of CESTAT judgment in the case of American Quality Assessors (supra). We have perused the s .....

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accepted, there is no doubt that for assessment whether an organisation seeking accreditation/ certification by the appellant had the competence to assess and certify other bodies about quality management and environment management systems would at the very least require the appellant to undertake a physical verification processes to ascertain and assess the processes adopted, the efficacy of such processes, the ability of the organisation to properly carry out such processes and availability a .....

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. other bodies) processes, wherewithals and the equipments/ tools, if any, required for conducting such processes and of this actively clearly falls within the ambit of technical inspection and certification agency service, defined in Section 65(105)(108)/(109)(zzi) ibid. 6. As regards the contention that there was no wilful misstatement/ the suppression of facts, we find that this allegation has been sustained by the adjudicating authority by observing as under: 40.1 I find that M/s QCI failed .....

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a result of a bonafide belief that no tax is payable. Thus, I hold that M/s QCI have failed to pay the service tax within the prescribed period and are liable for penalty under section 76 of the Act. They have not paid the tax by suppressing the actual value of the taxable services with an intention to evade payment of service tax. Thus, they are liable for penalty under Section 78 of the Act. I find that the penalty under Section 76 is leviable for the tax not paid in time. The short levy unde .....

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s been brought out as to how the appellant was guilty of wilful misstatement / suppression of facts. An assessee who has a bonafide belief that it is not liable to tax would naturally not obtain registration, assess itself to tax or file returns. This by itself does not tantamount to wilful misstatement / the suppression of facts. Further the fact that the appellant initially took registration on 10.08.2000 thinking that it was providing management consultant service and even paid tax thereunder .....

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ion of facts, otherwise there would be no situation for which ordinary limitation period would apply. Inadvertent non-payment is to be met within the normal limitation period and the burden is on Revenue to prove allegations of wilful misstatement. The onus is not on the assessee to prove its bona fides. In the case of Chemphar Drugs 1989 (040) ELT 0276 (SC), the Supreme Court held that something positive other than mere inaction or failure on the part of the assessee or conscious or deliberate .....

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