TMI Blog2016 (8) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers of the company which may have a hint of any such providing of service, would not enable the department to levy service tax without a show cause notice and adjudication on this aspect. Relegate the petitioner to appellate remedy – Held that: - Commissioner had no jurisdiction to levy tax in absence of any finding that the petitioner had provided a taxable service. When the issue rests only on admitted facts and when on the basis of such admitted facts, it is found that the Commissioner of Service Tax had no jurisdiction to levy service tax on the petitioner, relegating the petitioner to appellate remedy would be futile and would cause unnecessary hardship to the petitioner – impugned order set aside - petition allowed – decided in favor of petitioner. - SPECIAL CIVIL APPLICATION NO. 6579 of 2016 - - - Dated:- 9-8-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR DHAVAL SHAH, ADVOCATE FOR THE RESPONDENT : DS AFF.NOT FILED (N), MR DHAVAL D VYAS, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged an order dated 29.1.2016 at Annexure-A to the petition passed by the Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have made total expenses of ₹ 41,58,03,162/- during the F.Y.2007-08 to 2012-13 (upto June-2012) (as per Annexure-E submitted by Shri Banibrata Lahiry, Controller-Corporate Accounts, Tax Treasury of the assessee) towards Sales promotion expenses and they have not paid service tax on the same. These activities appear to be covered under the category of Business Auxiliary Service . Therefore, the assessee is liable topay service tax on the said expenses. Thus, the assessee is liable to pay service tax totally amounting to ₹ 4,51,68,519/- (service tax ₹ 4,38,52,930/- + Education cess ₹ 8,77,059/- + S.H. Education Cess ₹ 4,38,530/-) for the F.Y. 2007-08 to 2012-13 (upto June-2012), as detailed in the Annexure-A to this SCN. 8. Whereas it appears from the Service Tax Registration No.AAACU1627LST001 dated 26.4.2010 obtained by the assessee that they are not registered under the category of Business Auxiliary Service even though they were required to obtain registration for the said service under the provisions of Section 69 of the Finance Act,1994, read with Rule 4 of the Service Tax Rules,1994. Further, the assessee was required to furnish r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only during audit of the records of the assessee by the audit party. Thus, the service tax totally amounting to ₹ 4,51,68,519/- (Service Tax ₹ 4,38,52,930/- + Education Cess ₹ 8,77,059/- + S.H. Education Cess ₹ 4,38,530/-) for the F.Y. 2007-08 to 2012-13 (upto June-2012), as detailed in the Annexure-A to this SCN, has not been paid by reasons of suppression of facts and contravention of provisions of Chapter V VA of the Finance Act,1994, as discussed hereinabove, with an intent to evade payment of service tax and therefore, the proviso to Section 73(1) of the Finance Act,1994, is invokable for recovery of Service Tax not paid by the assessee. Consequently, the assessee is liable for penalty under the provisions of Section 78 of the Finance Act,1994. 11. It also appears that the assessee has contravened the provisions of Sections 69 and 70 of the Finance Act,1994, on account of their failure to obtain service tax Registration and file ST-3 returns in respect of Business Auxiliary Service and thereby, they are liable for penal action under provisions of Section 77 of the Finance Act,1994, for such contravention. 4. It was in background of such fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any person, in relation to Business Auxiliary Service. Thus, I find that the allegation raised under impugned Show Cause Notice are correct and the notice is liable to pay service tax for services provided under Business Auxiliary Service as defined under Section 65(19) of the Finance Act,1994. 18.10 Now, I turn to the their defence submission wherein it has been contended that the expenses were incurred in India as a part of business requirement towards purchase of promotion materials and availment of certain promotional services. The expenditure accounted under the Head Sales Promotion Expenses was towards purchase of various printing materials, gimmicks, samples etc. as well as for availing certain services and submitted break-up of sales promotion expenses and expenses as relied upon in the show cause notice by the department of Central Excise, Customs Service Tax pertain to goods as well as services. I have carefully gone through the case records and found that their contention does not hold any strength. This is very much clear from the discussions in foregone paras that they had provided services to promote their product and incidental or Auxiliary Support Service a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Roller Ball pen etc. and find that the material purchased by them have nothing to do with the Service provided by them and their contention that the Sales Promotion Expenses incurred by them are neither in the nature of Services provided by them under Section 66 of the Finance Act,1994 nor Services received by them from a Non Resident Service Provider under Section 66 A of the Finance Act,1994. Therefore, they cannot be construed as a person liable to pay Service Tax . Their contention is not acceptable as discussed in detail in foregone paras that services provided by them are aptly covered under the definition of Business Auxiliary Service and chargeable to Service Tax under Section 66 of the Finance Act,1994 and thus I find that the case law cited by them are not squarely applicable to instant case. 18.16 xxx xxx xxx 19.16.1xxx xxx xxx 18.17 xxx xxx xxx 18.17.1 I have gone through the case records and find that during the course of Audit of their unit on scrutiny of their Financial records, it came to the notice of the Department that they had been engaged in providing Business Auxiliary Service therefore, their contention that they had not been providing Busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner to pay service tax is not free from doubt. The petitioner company is a subsidiary of a foreign company based in Belgium. The petitioner also undertakes the task of providing sales promotion to said Belgium company on which the service tax would be leviable. 9. We have referred to at some length the contents of show cause notices as well as the impugned order in order to demonstrate that very foundation of the department s case has all throughout been that the petitioner has made expenditure for business promotion. At all stages, the case of the department has been that the petitioner has received such service which is in the nature of Business Auxiliary Service. The entire case of the department under the show cause notice rests on this single premise that the petitioner has made payments for various services in the nature of Business Auxiliary Service. The final order, as it cannot, does not travel beyond the show cause notice. It merely deals with the objections of the petitioner and rejects them by confirming prima facie assertions recorded in the show cause notice to finally come to the conclusion that the petitioner was required to pay service tax for the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. (2) Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1. - A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2. - Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted.] (3) The provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint.] 11.1 This provision therefore provides for a reverse charge mechanism where any service specified in clause (105) of Section 65 is provided or to be provided by a person who has established a business or has fixed establishment from which the service is provided or to be provided or has hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies. If the case of the department was, as is sought to be projected from the affidavit-in-reply, that the petitioner had provided services to its parent company situated in Belgium, no such foundation has been laid in the show cause notices, no elaboration made in the final order on adjudication. We therefore proceeded on undisputable fact that even as per the department, the petitioner had availed of Business Auxiliary Service for which expenditure was incurred. If that be so, the question of making the petitioner liable to pay service tax simply does not arise. The entire contents of both the show cause notices and the final order of adjudication thus proceeded on legally unsustainable premise of calling upon the service recipient to pay service tax in absence of reverse charge mechanism. 16. If it is a case of the department that the petitioner had received any taxable service which would fall under Section 66A of the Act or that the petitioner had provided a taxable service to any one, no such case has been set up by the department so far in the present proceedings. Mere reference to the statements of the officers of the company which may have a hint of any such providing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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