TMI Blog2017 (8) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... plication filed upto 9-10-2017 can be considered as filed before adjudication. The application is not maintainable in terms of Section 32E(1) of the Central Excise Act, 1944 and the same is liable to be rejected on this ground alone without going into the merits of the case. - Settlement Application F. No. 35/ST/KNA/2017-SC(MB)SA(ST) 102/2017 - Final Order No. 130/Final Order/ST/DRK/2017 - Dated:- 7-8-2017 - Shri D.P. Singh and Brojen Thamar, Members Shri Nitin Mehta, Consultant, for the Assessee. Shri S.B. Bhosle, Supdt., for the Department. ORDER This order disposes of the application filed by M/s. Vishal Security Force situated at 8A-3 Ashtavinayak Society Ltd., P.M.G.P. Colony, Mahakali Caves Road, Andheri (East), Mumbai (hereinafter referred to as applicant ), under Section 32E of the Central Excise Act, 1944 as made applicable to Service Tax matters vide Section 83 of Finance Act, 1994, for settlement of its case arising out of Show Cause Notice F. No. DGCEI/MZU/I IS D /12(4)16/2016, dated 22-4-2016 issued by the Deputy Director. DGCEI, Mumbai Zonal Unit, Mumbai, demanding Service Tax amounting to ₹ 2,96,69,047/- along with interest and proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able of ₹ 1,17,76,182/-. However, applicant submitted on 16-2-2016 that he has calculated his Service Tax liability for the period 2010-11 to 2014-15 on the basis of balance sheets for the relevant period as ₹ 3,73,54,189/-. While calculating Service Tax he has availed abatement of 75% of value from July, 2013 onwards as they have provided services to corporate only. They have also provided services to schools/educational institutions which are exempt. 2.5 It is evident that as per ST-3 returns submitted by M/s. VSF the Service Tax payable was ₹ 1,17,76,183/- and Service Tax paid was ₹ 64,50,356/-. Shri Chaturvedi claimed that he has paid ₹ 1,31,53,325/- towards his Service Tax liability of 2010-11 to 2014-15. From verification of challans on ACES, it was found that he applicant has paid ₹ 1,28,86,104/- towards the Service Tax liabilities. Thus for computation of Service Tax liabilities, the Service Tax paid is considered as ₹ 1,28,86,104/- 2.6 From the sample copies of invoices submitted, it is observed that M/s. VSF have issued the invoice and charged Service Tax and recovered the total amount inclusive of Service Tax. From the copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of service for the period of October, 2010 to March, 2011 was calculated from the 26AS statement for the year 2010-11, after identifying the transactions during the period of October, 2010 to March, 2011 from the date of transaction appearing in 26AS as detailed in Annexure E to the show cause notice. Gross receipts (including Service Tax) for the period of October 2010 to March, 2011 works out to be ₹ 3,57,03,310/-. (iv) While calculating Service Tax liability, Service Tax for the period prior to 1-7-2012 is calculated separately since Service Tax is to be paid on 100% value during the said period. The Service Tax from 1-7-2012 is calculated allowing 75% abatement to corporate clients (as per Notification No. 30/2012-Service Tax, dated 20th June, 2012 ) after identifying the Co-operative societies, individual service receivers and educational institutes on the basis of 26AS copies downloaded and submitted by M/s. VSF at the time of visit on 11-2-2016. The income for April 12 to Jun 12 is taken from the sales ledger submitted by Ms. VSF. (v) While calculating Service Tax liability, the amount of Bad Debt has not been reduced from the gross value as exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Service Tax from their customers. However, instead of paying the entire Service Tax to the Government they paid only a part of the amount. iii. M/s. VSF have suppressed the value of service by not filing Service Tax Returns properly and not declaring correct value of service in the Returns when filed. iv. M/s. VSF have filed Service Tax returns for April, 2010 to September, 2010, and October, 2010 to March, 2011, and April, 2011 to September, 2011 on 1-2-2012, but no Service Tax Return was filed for October 11 to March 12. v. During the period of October 13 to March 14 and October 14 to March 15, M/s. VSF have assessed and declared Service Tax liability as ₹ 33,75,221/- and ₹ 36,49,585/- respectively, however they have paid Service Tax of ₹ 16,35,777/- and ₹ 63,203/- only for the said period. 2.11 Thus, it is observed that M/s. VSF have short paid/not paid Service Tax (inclusive of Education Cess and Secondary Higher Education Cess) amounting to ₹ 2,96,69,047/- on the date of visit i.e. 11-2-2016 for the period of October, 2010 - March 11 to 2014-15. 2.12 On conclusion of the investigation, the applicant was called upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of Tax at Source under the Income Tax Act, 1961 has been taken into consideration, and higher of the value of service in the Balance Sheet and Form 26AS has been taken as the value of the service for a particular financial year. The Applicants submit that this method adopted for computation of value of service is not correct. Form 26AS reflects the amount of Tax deducted at source by the recipient of the service. This is issued and accounted by the recipient of the service, as and when the invoice issued by the Applicants is accounted in their books of accounts and when the amount of TDS is paid by the service recipient. There may be time gap between the issue of the invoices by the Applicants and their accounting of the same by the recipient of the service in their books of account and payment of TDS by the recipient of the services. Form 26AS is generated only when the invoice is accounted and TDS return is filed by the recipient of the service after making payment of Tax Deducted at source. Therefore, there is year to year difference, both in plus and minus side, in the value of services as reflected in the Balance Sheet and in the Form 26AS. However, since the Applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made on 11-7-2014, since these services were covered by the auxiliary educational services under the said notification, and the amendment in the notification was made only with a view to clarify the scope of the exemption with a view to avoid doubts regarding the same. It is submitted that in view of the above clarification it is established that these services were eligible for exemption even prior to amendment made on 10-7-2014 and the amending Notification No. 6/2014-S.T., dated 11-7-2014 was issued only with a view to clarify the scope of the exemption. Therefore, restricting the exemption to services provided to educational institutions only from 11-7-2014 in the show cause notice is also not correct. 3.5 Therefore, the Applicants have worked out their liability for the Service Tax for the disputed period, by taking correct figures of value of services provided to corporate, non-corporate clients, educational institutions and Bad Debts; and after taking into consideration the benefit of exemption admissible to services provided to educational institutions under notification No. 25/2012-S.T., dated 20-6-2012, effectively from 1st July, 2012. In this regard, detailed year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of Rs. 2,16,06,283/- accepted in this application 3,44,92,387/- 3.9 As far as interest amount is concerned, the same works out to ₹ 25,47,663/-, out of which some amount was already paid by the Applicants, as admitted in Para 3.7a of the show cause notice. However, the Applicants are arranging to make payment of the remaining amount of interest immediately and no sooner the same is paid copy of the challan for the same will be furnished by them. 3.10 The Applicants state that during the relevant period they were holding Service Tax registration No. AAFPC6236PST001 and have filed ST-3 returns from time to time. Wherever there was delay in filing of the returns, they have also paid late fees for filing of the returns. Copies of some of the returns, along with challans for payment of late fees, filed during the disputed period. 3.11 The Applicants prayed that the Applicants case, arising out of the impugned show cause notice dated 22-4-2016 issued by the Additional Director General, DGCEI, Zonal Unit, Mumbai, may be admitted and settled as a whole, once and for all. Immunity from imposition of penalty under various prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned below : - (i) Service tax demanded on bad debts. (i) Service Tax demand on services provided to Educational Institutions. (iii) 75% Service Tax liability is to be discharged by the corporate clients. (iv) Overlapping of value of Service due to mismatch in value figures of 26AS certificate and balance sheet. Applicant has not given reasons wise breakup of the Service Tax liability not admitted. Ld. Consultant had promised to give the same to Bench with a copy to DGCEI within 3 days. (c) As regards their letter dated 22-4-2016 addressed to Dy. Director DGCEI, Mumbai wherein an amount of ₹ 37,72,600/- was shown as voluntarily paid towards Service Tax demand for the period April, 2010 to September, 2010, it was clarified that they have withdrawn the said letter same day by issuing another letter dated 22-4-2016 duly acknowledged by the office of DGCEI, Mumbai on 22-4-2016. They have neither admitted nor paid the said time barred Service Tax. 6.2 Revenue representative reiterated the submissions made in their written reply dated 4-5-2017 sent to ADC ST-V Mumbai for filing before this Bench. It was pointed out that the Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese circumstances, the applicants most humbly pray that the amount of interest as worked out by them deserves to be accepted and pray for acceptance of the same for the settlement of case, the applicants further submit that they have already paid further amount of ₹ 29,98,285/- towards the differential interest, copies of challans for the same are enclosed, and will be make and furnish challans for deposit of the differential amount of interest to the Hon ble Commission within the stipulated time. Under these circumstances, the applicants most humbly pray that the case arising out of the show cause notice dated 22-4-2016, may kindly be settled once for all, for which the applicants shall ever remain obliged and grateful. 7.2 Applicant in his written reply dated 27-7-2017 has further submitted as under :- (a) The case arising out of the show cause notice deserves to be settled and the application filed by them deserves to be decided on merits of the case, since the order-in-original passed by the Commissioner was issued only on 10th March, 2017, i.e. on the day when the applicant had already filed the application for the settlement, and the same was received by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99) E.L.T. 292 (Bom.). Hon ble High Court has held that the settlement application which was filed by the assessee before date of dispatch of the order of adjudication is maintainable before the Settlement Commission. Hon ble Bombay High Court in the said judgment dated 15-3-2013, has concurred with the view of Delhi High Court in their Judgment in the case of Qualimax Electronics Pvt. Ltd. - 2010 (257) E.L.T. 42 (Del.). In Para 12 of Bombay High Court Order the observations of Delhi High Court are referred to as under : - 12 In Qualimax Electronics Private Limited (supra), a Division Bench of the Delhi High Court, after referring to the judgment of the Supreme Court on the subject, held that under Section 32E the adjudication of a case by adjudicating authority closes the window of opportunity which the assessee had for seeking a settlement of the case. The Delhi High Court held that the date of receipt of an order in original is not of any significance for the purpose of Section 32E since the Settlement Commission can only proceed to settle a case which is pending adjudication on the date the settlement application is received by it. In that context the Delhi High Court obser ..... 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