TMI Blog2020 (6) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... s. There are no merits in the submissions made by the learned Chartered Accountant to effect that since the value of services received by the Appellant from the overseas suppliers was included in the value of the goods imported by them, these services could not be subjected to service tax leviable under Finance Act, 1994. Time Limitation - HELD THAT:- By not making proper and complete declaration in respect of the services received from overseas service provider, before the jurisdiction Service Tax Authorities and in their ST-3 return, on which service tax was to be discharged by the Appellant s as per section 68 of Finance Act, 1994, Appellant have suppressed the necessary information and for the said suppression service tax demand invoking extended period limitation as per proviso to Section 73(1) is justified - the demand made in this Show Cause Notice by invoking the extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994 is upheld. Interest - HELD THAT:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndred and fifty only) i.e. equal to the amount of service tax short paid by NPCIL, under section 78 ibid is hereby imposed. Having imposed penalty under section 78/FA, 1994, imposition of penalty under section 76 ibid is refrained. 5.06 I impose a penalty for ₹ 10,000/- (Rupees Ten thousand only) under Section 77 of the Chapter V of the Finance Act, 1994 for the contravention of the provisions of section 69 and section 70 of the Finance Act, 1994 for failure to take registration within specified timeline and for not having properly self assessed their service tax liabilities in respect of the above said services. 5.07 This order is issued without prejudice to any other action that may be initiated against the noticee under the provisions of the Finance Act, 1994 or rules framed thereunder or any other law for the time being in force in India. 2.1 Appellant had received certain document, design and engineering drawings in respect of the various projects being implemented by them. They had entered into a service agreement with their overseas service provider to prepare technical specifications, drawing and designs in respect of the projects being implemented by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Fifty nine lakh sixty three thousand and four hundred and eighty two only) paid by them as detailed in para 5 above should not be appropriated against the above demand of ₹ 18,11,23,250/- payable by them; v. interest at the appropriate rate should not be demanded from them in terms of Section 75 of the Act. vi. the amount of ₹ 1,15,19,550/- (Rupees One crore fifteen lakh nineteen thousand five hundred and fifty only) paid by them towards interest for delayed payment of service tax as detailed in para 5 above should not be appropriated against the above demand of interest payable by them; vii. a penalty should not be imposed on them under Section 78 of the Act, for reasons detailed at paragraph 8 of the Notice in as much as, they have not paid the Service Tax payable on the above services received by them by suppressing the fact of providing the said Services with intention to evade payment of the Service Tax. viii. a penalty should not be imposed on them under Section 76 of the Act for contravention of the provisions of Section 68 of the Act and Rule 6 of the Rules. ix. a penalty should not be imposed on them under clause (a) of sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as per proviso to subsection (1) of Section 73 cannot be invoked for demanding the Service Tax. ➢ There is no case for imposition of penalty. 3.3 Arguing contra, learned Authorized Representative while reiterating the findings recorded in the impugned order submitted that- ➢ It is quite evident from the contracts entered between the appellant and overseas providers that the contracts are for the provision of services and not the goods. Since the contracting parties themselves term the agreement to be the one for supply of services, they cannot have any contrary stand in these proceedings. ➢ It is not in dispute that the services received by the appellants from their overseas supplier are classifiable under the category of Consulting Engineer Services as defined by Section 65(105)(g) of the Finance Act, 1994 at the relevant time. Since these are taxable services and the foreign service provider does not have any fixed establishment in India in view of provisions contained in Section 68 of Finance Act, 1994, appellant i.e. service recipient, was required to discharge the service tax liability. ➢ The issue decided by the Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,4 and 9 the value of the goods which are imported is deemed to be the price at which they are ordinarily sold. Sub-section (1A) provides that the price referred to in sub- section (1) of Section 14 shall be determined in accordance with the rules made in this behalf. As per Rules 3 and 4 the transaction value of the imported goods, subject to adjustment under Rule 9, is to be the price actually paid or payable for the goods when sold for export to India. Rule 9 (1) (b) (iv) is important for that shows that engineering, development, artwork, design work and plans and sketches would form part of the price of goods for the purpose of determining its value for levy of duty. In this connection, it will be useful to refer to the following passage from a decision of this Court in the case of Collector of Customs (Prev.), Ahmedabad vs. Essar Gujarat Ltd. 1996 (88) E.L.T. 609 (S.C.) at page 616 para 17: The entire purpose of Section 14 is to find out the value of the goods which are being imported. The EGL in this case was purchasing a Midrex Reduction Plant in order to produce sponge iron. In order to produce sponge iron, it was essential to have technical know-how from Midrex. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b Anr. vs. State of M. P. Ors., reported in (2000) 2 SCC 385, held that contracts of the type entered into by persons like the Petitioner are nothing else but service contracts pure and simple. It is held that in such contracts there is no element of sale of goods. This Judgment is binding on this Court. In view of this Judgment, the question of directing the Respondent to bifurcate the receipts into an element of goods and the element of service cannot and does not arise. We see no substance in the contention that facts in Rainbow Colour Labs case were different inasmuch as in that case the Court was dealing with a case where photographers take photographs, develop them and then give the photos to the customer. In our view, the ratio of Rainbow Colour Lab's case also applies to cases like the present. Faced with this situation, Mr. Venugopal submitted that the correctness of Rainbow Colour Lab's case has been doubted by a Bench of three Judges in the case of Associated Cement Companies Ltd. vs. Commissioner of Customs, reported in (2001) 4 SCC 593. He relied upon the following observations of this Judgment: 26. In arriving at the aforesaid conclusion the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Company Supra) whereupon strong reliance has been placed by the Tribunal as also by the High Court seeks to make a distinction between cases arising out of works contract wherefor sales tax is liable to be paid and the cases under the Customs Act. 22. Our attention has furthermore been drawn to the decision of this Court in Bharat Sanchar Nigam Ltd. (supra) wherein referring to Tata Consultancy (supra) it was observed that the approach of this Court in the said decision as to what would be goods for the purpose of sales tax is correct. 23. What, however, did not fall for consideration in any of the aforementioned decisions is the concept of works contract involving both service as also supply of goods constituting a sale. Both, in Tata Consultancy (supra) as also in Associated Cement Company (supra), what was in issue was the value of the goods and only for the said purpose, this Court went by the definition thereof both under the Customs Act as also the Sales Tax Act to hold that the same must have the attributes of its utility, capability of being bought and sold and capability of being transmitted, transferred, delivered, stored and possessed. As a software was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided. The approach of the assessing authority, to us, thus, appears to be correct. 34. We may notice that the concept of aspects theory which had found echoes in State of U.P. Another v. Union of India Anr. [(2003) 3 SCC 239] has expressly been overruled by a Three Judge Bench in Bharat Sanchar Nigam Ltd. (supra) stating : 78. But if there are no deliverable goods in existence as in this case, there is no transfer of user at all. Providing access or telephone connection does not put the subscriber in possession of the electromagnetic waves any more than a toll collector puts a road or bridge into the possession of the toll payer by lifting a toll gate. Of course the toll payer will use the road or bridge in one sense. But the distinction with a sale of goods is that the user would be of the thing or goods delivered. The delivery may not be simultaneous with the transfer of the right to use. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of the Customs Act, 1962 and the rules made there under and Service Tax is levied in terms of provisions of Finance Act, 1994. Even the authorities administering the respective statue have been separately defined in the statute itself. There is no overlap or unification envisaged in either of the statues for any purpose. That being so, declarations made in terms of one statue cannot be deemed to be the declaration made under the other statue, nor the declaration made to one authority can be considered as a declaration made before the other and all authorities. It is a settled principle in law that when a statute provides a method of performance, then that alone is correct and all other methods are necessarily barred. It is also a settled principle that, nobody should be allowed the benefit of his own wrongs { Nullus commodum capere potest de injuria sua propria (Co. Litt. 148 b.), S.B. International Ltd. And Ors. [1996 (82) ELT 164 (SC)]}. Thus by not making proper and complete declaration in respect of the services received from overseas service provider, before the jurisdiction Service Tax Authorities and in their ST-3 return, on which service tax was to be discharged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a case where circumstances mentioned in the proviso to section 11A(1) stands proved by the department for invoking larger period of limitation. The burden to prove the defence of bonafides was on the assessee and the assessee in this case has failed to prove its bonafides. Under modvat, excisable finished products made out of duty-paid inputs are given relief of excise duty to the extent of duty paid on inputs. In the circumstances, we are satisfied that the department was justified in invoking the extended period of limitation under the proviso to Section 11A(1). Thus we uphold the demand made in this Show Cause Notice by invoking the extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994. 4.9 Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. In view of the decisions as follows ➢ P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] ➢ Kanhai Ram Thakedar [2005 (185) ELT 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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