TMI Blog2014 (1) TMI 1760X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax returns have not been filed for the period in dispute in the present case of M/s. Kaysons Enterprises Private Limited, either before the 8th day of May, 2010, that is, the date of the retrospective amendment made vide Section 77 of the Finance Act, 2010, or afterwards. Shri Jagjit Singh, Director in his statement dated 10-1-2012 has stated that he would file the return for the period 2007-08 up to March, 2011 very shortly. However, before coming to the Settlement Commission, he has not filed the returns, which is admitted in the application for settlement. Under clause (a) of proviso to Section 32E(1) of the Central Excise Act, 1944, no application can be made unless the applicant has filed returns. Considering filing of returns as a requirement to be fulfilled by the applicant applying for settlement and which requirement has not been fulfilled in this case, the Bench finds that the applicant is not eligible to approach the Settlement Commission and accordingly the application is liable to rejection. - Decided against the applicant - Settlement Application No. 932/2013 in File No. C-440/ST/2013-SC(KB) - Final Order No. F-405/ST/2014-SC(KB)-Rej. - Dated:- 30-1-2014 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service tax registration certificate challans dated 22-12-2011. (iii) On verification it was found that the applicant had not filed ST-3 returns to the Department from 2007-2008 to 2010-2011 and had not paid the service tax on the taxable amount received towards renting of their premises for furtherance of business and commerce. (iv) The show cause notice has alleged that the noticee (applicant) deposited ₹ 20,08,817 only after investigation by the Directorate General Central Excise Intelligence. Shri Jagjit Singh, Director of the applicant-company, in his statement dated 10-1-2012 [recorded under Section 14 of the Central Excise Act, 1944 as made applicable to service tax matters under Section 83 of the Finance Act, 1994] stated that The status of the company is to rent its building to M/s. ICICI Bank Ltd., M/s. GEOZTT BNP Paribas Ltd., and SBI Life insurance, Rourkela and receiving the monthly rental amount from them. He submitted that the Service Tax was claimed from the Bank from time to time, though they did not pay that Service Tax amount, hence they could not pay the said service tax amount to the Department. That on the contrary, M/s. ICICI Bank has giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 23-12-2011 to the DGCEI. (viii) The show cause notice alleges at para 3.0 that as per the rent agreements, it is clearly written that the service tax liability paid by the owner in respect of the scheduled premises shall be reimbursed by the lessee as and when the same is claimed by the lessor and that from the above clause it is understood that KEPL (the applicant here before the Commission) have been receiving the monthly rental amount from time to time and the service tax liability arising thereon has not been paid by them. That Shri Jagjit Singh, Director of KEPL has not disputed the chargeability of service tax to be paid by them for the period from January, 2008 to November, 2011. That in the rent agreement it has been clearly mentioned that the lessor (applicant) should pay the service tax and submit the bill for reimbursement to the lessee, which implies that the service tax is to be paid on the whole monthly rental amount received and that, therefore, deposit of service tax by KEPL (the applicant) by deducting the amount (of service tax) from the whole taxable rental amount received by them, is not correct in the light of the agreement. That KEPL (the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m for the period from January, 2008 to November, 2011 should not be demanded and recovered under proviso to Section 73(1) of the Act for contravention of the provisions of Section 68 of the said Act, (ii) Penalty should not be imposed under Section 78 read with Section 76 of the Act as the service tax was not paid by reason of wilful misstatement and suppression of taxable value with intent to evade payment of service tax. (iii) Interest at appropriate rate liable under Section 75 of the Act should not be recovered, (iv) Penalty shall not be imposed under Section 77 of the Act for contravention of the provisions of Sections 68, 69 and 70 of the Act read with the related Rules. (v) the amount of Rs. 20,08,817 deposited under GAR-7, dated 22-12-2011 should not be appropriated towards service tax liabilities and interest. 2.2 APPLICATION FOR SETTLEMENT FILED BY THE APPLICANT ON 17-4-2013 - (i) In the application for Settlement filed by the applicant, the period of dispute has been mentioned as January, 2008 to November, 2011 and submitted that they have accepted the amount of Rs. 19,91,086 as payable for settlement and also the interest amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) That the Central Board of Excise and Customs, to give effect to the provision of the Finance Act, 2010 and to alleviate confusion prevailing in the trade, issued Circular dated 26-2-2010 bearing number D.O.F. Number 334/1/2010-TRU which also clarified this point. (ix) That the applicant filed ST-3 returns for the half year ending April, 2011 to September, 2011 and October, 2011 to March, 2012 belatedly on or about 24-12-2012 and 25-4-2012, respectively, disclosing the receipt of the rent charges along with penalty of Rs. 1.4 lakhs under Section 70 read with Rule 7C of the Service Tax Rules, 1994 for delayed filing of returns, even though the penalty was only Rs. 2,000 during the relevant period (January, 2008 to March, 2011). (x) That the entire service tax of Rs. 17,91,075 has been paid and the payment particulars disclosed in the ST-3 returns for the half year ending September, 2011 and ST-3 returns for the half year ending March, 2012. The applicant further paid the interest of Rs. 4,59,618. That the said service tax and interest have been paid much before the issuance of the show cause notice dated 21-11-2012. (xi) That thus the applicant, in the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant) neither paid the service tax leviable on the taxable amount received by them nor submitted any ST-3 return thereon. (iii) that from the above it appears that the applicant deposited service tax amount as per their own assessment only after investigation was initiated by DGCEI, Rourkela. That from the above it appears that, if DGCEI, Rourkela has (sic) not started investigation, the fact of non-payment of service tax could not be (not have been) detected. (iv) that though the applicant obtained service tax registration on 30-4-2009 they neither paid service tax nor submitted ST-3 returns. Hence, the applicant appeared to have wilfully suppressed the fact of not paying the service tax for the period from January, 2008 to November, 2011 with an apparent motive to evade Service Tax. Thus the extended period of limitation for demand for service tax under the proviso to Section 73(1) of the Finance Act, 1994 is applicable in this case. (v) that although the applicant s contention is correct that the monthly rent amount of Rs. 15,000 is inclusive of all taxes, but in the said agreement made with M/s. Geojit BNP Paribas, Rourkela, it is written in the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmovable property for use in the course of furtherance of business or commerce does not involve any value addition and therefore, cannot be regarded as service. Apart from revenue loss caused to the exchequer, the judgment has placed the landlords in a very precarious situation. In view of this judgment, the commercial tenants have stopped them reimbursing the tax element. However, the landlords are receiving regular demand notices from the department issued to protect Government s revenue for the interim period. 9.2.: In order to clarify the legislative intent and also bring in certainty in tax liability the relevant definition of taxable service is being amended to clarify that the activity of renting of immovable property per se would also constitute a taxable service under the relevant clause. This amendment is being given retrospective effect from 1-6-2007. Based on the amendment and the circular cited above, the Hon ble Delhi High Court dismissed the Writ Petition in Home Solution Retails Ltd. v. UOI - (2010) 26 STT 418 (Delhi) and ordered for levy of service tax against the services on renting of immovable property with retrospective effect. (viii) Regarding the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort) on 7-5-2013. In his report dated 7-11-2013 under Section 32F(3) of the C.E. Act, 1944 read with Section 83 of the Act the jurisdictional Commissioner inter alia submitted that the case of non-payment of service tax on Renting of immovable property service by the applicant of Rs. 17,91,075 was made by DGCEI, Rourkela and the SCN was issued and that the para-wise comments/report on the settlement application has been submitted by DGCEI, Rourkela. It has been confirmed that the applicant has paid the entire amount of Service Tax amounting to Rs. 17,91,075 as demanded in the abovementioned SCN along with interest of Rs. 4,59,618. 2.5 In the application for settlement dated 17-4-2013 read with letter dated 6-5-2013 of the ld. Advocate for the applicant, the applicant admitted the entire demanded amount as additional liability towards Service Tax Rs. 17,91,086 (which is higher than the demanded amount by Rs. 11 stated to be due to rounding off) as well as the interest payable thereon calculated as Rs. 4,59,618. As per the jurisdictional Commissioner s report dated 7-11-2013, the applicant deposited the aforesaid amounts of service tax and interest before approaching the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (105) of Section 65 of the Finance Act, 1994 - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable had this amendment not come into force. 4. The Bench has considered the above written and oral submissions of the applicant on their application and the submissions of the DGCEI. As per the Board s Circular, Renting of immovable property service was introduced in 2007 with a view to tax the commercial use of immovable property hired on rent. The Hon ble High Court of Delhi in its order dated 18-4-2009 in the case of Home Solution Retail India Ltd. v. Union of India - (2009) 20 STT 129 = 2009 (14) S.T.R. 433 (Del.) = 2009 (237) E.L.T. 209 (Del.) struck down this levy by observing that the renting of immovable property for use in the course of furtherance of business or commerce does not involve any value addition and therefore, cannot be regarded as service. In view of this judgment, the commercial tenants stopped reimbursing the tax element. However, the landlords were receiving regular demand notices from the department issued to protect Government s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement of his application made under Section 32E of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. Before considering the application for settlement regarding tax, penalty, etc. it has first to be examined whether the conditions of eligibility are fulfilled? In the application before us, the issue is whether the applicant is eligible for approaching the Settlement Commission for settlement of the case in the circumstances where no return was filed for the period in dispute and there was retrospective legislation regarding recovery of service tax. Whether his application can be entertained by the Commission? The pre-requisite conditions have been laid down under Section 32E of the Central Excise Act, 1944, which provides that no application for settlement shall be made unless the applicant has filed returns showing production, clearance and Central Excise duty in the prescribed manner . The above provisions have been made applicable to service tax matters under Section 83 of the Finance Act, 1994. Filing of returns is a pre-requisite for approaching the Settlement Commission. No return has been filed by the applicant, namely, M/s. Kaysons Enterpris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mentions that Though there is no specific bar against filing of belated returns relating to a particular month . (iii) The Hon ble Delhi High Court in the case of M/s. ICON Industries v. Union of India [W.P. (C) 15926/2006, dated 2nd August, 2011 [2011 (273) E.L.T. 487 (Del.)]] has held that certain riders have been added for entertaining applications for settlement, that clause (a) of Section 32E of the Central Excise Act, 1944, lays down that unless the applicant has filed returns for the period of dispute, no such application can be entertained. It was held in that case by the Hon ble High Court that the submission that filing of consolidated return covering all the past periods would subserve the purpose does not stand to reason. 7. As seen above, filing of returns is a pre-requisite and there is no provision for filing of returns in a consolidated manner. Service tax returns have not been filed for the period in dispute in the present case of M/s. Kaysons Enterprises Private Limited, either before the 8th day of May, 2010, that is, the date of the retrospective amendment made vide Section 77 of the Finance Act, 2010 (Act number 14 of 2010 enacted on 8th May, 2010) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
