9911796707
TMI Blog2018 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of "Assignment of Debts". As per the assignment agreement dated 30.01.2008 executed between the respondents and M/s Mahimna Mercantile Credits Ltd (Mahimna) and M/s Traitrya Construction Finance Ltd (Traitrya) [collectively called as assignees], respondents have for a consideration of Rs. 297,00,00,000/- on 28.12.2007, unconditionally and irrevocably sold, transferred and assigned, the title, the right and interest in their Receivables amounting to Rs. 12,12,11,93,106/- in favour of assignees. Term receivable as defined by the agreement meant the receivables due and payable to respondents by its customers, net of claims, if any payable by them, and arising out of sale of services to its customers, for a total amount thereof specifically mentioned in the clause 2.1 of the agreement and including but not limited to (a) Overdue amount against the charges for services rendered, (b) Receivables on handsets issue till date 9c) Overdue installments of amount of receivables under Dhirubhai Ambani Pioneer Offer (DPAO) Scheme. From the said clause in agreement, it was observed that these amounts were to be received by respondents from their customer for the services provided by them. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for payment of service tax on such recovery to the appropriate authority and/ or reimburse the same to respondent in the event RCIL is called upon to pay the same by the appropriate authority. iii. As per the order, Receivables of Rs. 1212.12 Crores assigned by the respondent comprised of following: a. Charges for services rendered: Rs. 3,55,57,358/- b. Amount for sale of Hand Sets: Rs. 1208,56,35,748/- Total: Rs. 1212,11,93,106/- As per the order of Bombay High Court dated 11.06.2007, SESPL (Smart Entrepreneurs Solutions Private Limited), wef 01.09.2007 got merged with RCIL, as a result overdue amount Receivables of Rs. 3426 Crore became the asset of M/s RCIL. After partial write off as bad debts & other adjustments, out of the remaining outstanding as Factoring Receivables, a sum of Rs. 1212.12 Crores came to be assigned/ sold to the Assignees. Adjudicating authority has failed to verify whether other adjustments included part considerations of Rs. 3901 Crore (outstanding amount in Financial Year 2004-05, comprising of Rs. 2379 Crores towards sale of handsets and Rs. 1522 Crores towards amount received under DPAO scheme which included sale of Handset) received by the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h'. The certificate thus appears to be dubious. viii. Thus the order of adjudicating authority dropping the demand under section 73, along with interest under section 75 and penalties under Section 76, 77 & 78 is erroneous and needs to be set aside and matter remanded back to the adjudicating authority. 3.1 We have heard Shri Rishi Goel Additional Commissioner, Authorized Representative for the revenue and Shri Gopal Mundra CA for the respondents. 3.2 Learned Authorized Representative argued in favour of the appeal, reiterating the submissions made in appeal. 3.3 Learned CA argued and supported the order of Commissioner dropping the demands. 4.1 As per para 2 of the Show Cause Notice the issue has arisen in respect of Rs. 297 Crores, shown in balance sheet of year 2007-08, under the head of other operating income. This income is termed as assignment of debts and has been received from on account of assignment of debts as per agreement date 30.01.2008 with the assignee. The right, title and interest in the receivables amounting to Rs. 1212.12 Crores of respondent have been assigned to the assignee under the said agreement for a consideration of Rs. 297 Crores. Further the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Group, reliance Communications (RCOM) {Formerly known as Reliance Infocom) was providing telecommunication services to the customers. 8.3 Reliance Industries Limited (RIL) the flag ship company of erstwhile unified Reliance Group, was providing following services to RCOM and its customers: (a) Business marketing services to RCO as per agreement dated 26.12.2002. (b) Collection Services to RCOM, that is, the collection and accounting of the charges receivable by RCOM from its customers. (c) Supply of handsets on direct sales basis to the Customers of RCOM. (d) Supply of handsets and membership services to the customers of RCOM under the Dhirubhai Ambani Pioneer Offer (DAPO) Scheme, under two schemes known as DAPO Regular Scheme and DAPO Finance Scheme, introduced in February 2003. 8.4 Though the details of the above two DAPO Schemes are not germane to the issue at present, yet, we have appended the same to this reply as Exhibit B. It is in respect of the sale of handsets on direct sale basis & under the DPAO Scheme, huge amounts were overdue from the customers of RCOM. 8.5 Thus in respect of the services provided and handsets sold to the customers of RCOM/ Infocom, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Mahimna Mercantile Credits Ltd ii. M/s Traitrya Construction Finance Ltd 8.11 from the above discussions made above, it may be seen that the major portion of Rs. 1212.12 Crores, transferred to the companies M/s Mahimna Mercantile Credits Ltd and M/s Traitrya Construction Finance Ltd, related to the sale of handsets as stated in earlier Para. 8.12 Hence a sum of rest 1208.56 Crores representing the amount of Receivables towards sale of handsets, as certified by the Statutory Auditors, Exhibit F should be excluded from the amount of Receivables of Rs. 1212.12 Crores. 8.13 And since the amount of Rs. 297 Crores is less than the value of receivables of Rs. 1208.56 Crores in respect of the sale of handsets, the entire Rs. 297 Crores would be nothing but the realization of sale prices of handsets on which no service tax is leviable. 8.14 We are submitting the certificates obtained from the Statutory Auditors of the respective companies in support of the above factual figures in the books of accounts of the respective companies, as exhibit G. 8.15 Coming to the portion relating to service charges of Rs. 3.56 Crores (!212.12 minus 1208.56), it is also not relatable to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner on the ground that Commissioner has failed to cause the verification of the documents, and have sought the matter to be remanded back to the adjudicating authority for causing the verification of the documents. In our view the said ground of verification is not sustainable as all the documents relating to said transaction Rs. 297 Crores were before the Commissioner and only after consideration of the said documents he has arrived at the findings. 4.8 In their appeal revenue has sought to point to the definition of "receivables" in the agreement dated 31.01.2008, to argue that the receivables have arisen on account of provision of taxable services by the respondents to its customers. Even if for a moment contrary to the arguments made by the respondents that consideration received in respect of these agreements is in respect of sale of handsets, it is admitted that the entire receivables were in respect of the services provided, then also the cause of case put forth by the revenue cannot be advanced as the transaction under consideration is not in respect of the taxable services in respect of the taxable services provided by the respondents to its customer. 4.9 Decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
