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TMI Blog2021 (4) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 21.12.2015 bearing F. No. 1080/09DLA/MISC/15/757 [in short "2015 instruction"] and the Master Circular dated 10.03.2017 [in short "2017 Master Circular"], issued by Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Government of India [presently, known as "Central Board of Indirect Taxes & Customs"] 1.1. According to Mr. Puneet Agrawal, the impugned show cause notice cannot survive given the provision contained in paragraph 5 of the 2017 Master Circular [and the pari materia provision made in the 2015 instruction] for mandatory consultation with the assessee before issuance of a show cause notice. 2. It is, thus, Mr. Puneet Agrawal's submission that in terms of paragraph 5 of the 2017 Master Circular, the contesting respondents were mandatorily required to have a pre-show cause notice consultation with the petitioner-company. 2.1. It is submitted that since a pre-show cause notice consultation was not held, in terms of the judgment of the coordinate bench of this court, rendered in Amadeus India Pvt. Ltd. vs. Principal Commissioner, Central Excise, Service Tax and Central Tax Commissionerate, 2019 SCC Online Del 8437, the impugned show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that M/s. Back Office IT Solutions Private Limited, F-220-225, EPIP IT PARK Sitapura, Jaipur - 302022 ('M/s. BOISPL' in short) has indulged in non-payment of Service Tax on services provided to their associated concerns, in relation to online information and database access or retrieval in electronic form delivered through computer network over the internet from taxable territory to non-taxable territory, by considering their service as export, whereas the place of provision of said service is the place of service provider i.e. Jaipur (in taxable territory) in terms of provisions of clause (b) of Rule 9 of the Place of Provisions of Service Rules, 2012 read with clauses (d) & (f) of sub-rule (1) of Rule 6A of the Service Tax Rules, 1994 and they were required to pay Service Tax. M/s BOISPL had neither filed any Service Tax Returns nor paid applicable Service Tax thereon. Subsequently, search operations were carried out at various office premises of M/s BOISPL situated in Jaipur on 05.06.2018 under section 67(2) of the CGST Act, 2017 read with section 12F of the Central Excise Act, 1944 read with section 82 of the Finance Act, 1994 also read with Section 174 of the CGST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2. According to Mr. Puneet Agrawal, the reliance placed by the contesting respondents, on the provisions of Section 65B (44) Explanation3(b) of Chapter V, Finance Act, 1994 [in short "Finance Act"] is misplaced as that provision applies where the services are provided by a person who has one establishment in the taxable territory and another establishment in a non-taxable territory. 4.3. Mr. Puneet Agrawal goes on to contend that the petitioner-company has been providing services, as indicated above, to two separate legal entities, i.e., NAV Consulting and NAV Fund, which are not the establishments of the petitioner-company. It is also Mr. Puneet Agrawal's submission that these two entities cannot be treated as "associate concerns" of the petitioner-company merely because the two persons who are directors in the petitioner-company, i.e., Shri Navratan Gupta and Mrs. Sudha Gupta are also the president/founder and the vice-president/co-founder, respectively, of NAV Consulting and NAV Fund. 4.4. Likewise, according to Mr. Puneet Agrawal, the relationship between the managing director of the petitioner-company one, Mr. Anil Agarwal and Shri Navratan Gupta and Mrs. Sudha Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices rendered by the petitioner-company within the ambit of the Finance Act. By its very construct, the impugned show cause notice is not preventive; it seeks to progress the case set up by the contesting respondents that the services rendered by the petitioner-company to NAV Fund and NAV Consulting are exigible to tax. 6. The moot point over which the petitioner-company and the contesting respondents are at cross purposes is: as to whether the services offered by the petitioner-company to two entities located outside India fall within the ambit of Section 65B (44) Explanation-3(b) of the Finance Act. According to the contesting respondents, the recipients of the services are associate concerns and the aforementioned services are provided through a computer network, i.e., the internet from a taxable territory to a non-taxable territory. 6.1 The contesting respondents contend that the service provider is located in a taxable territory, i.e., Jaipur and, the recipients of service are its associate concerns, therefore, it is liable to pay service tax. In this context, the contesting respondents seek to place reliance on Rule 9(b) of the Place of Provisioning of Services Rules, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent to engage in a pre-SCN consultation. The first is that the SCN is preventive and the second is that it is related to an offence in terms of the Finance Act, 1994. 13. In the present case, as is evident from the impugned SCN, the alleged non-payment of service tax pertains to period between 2012-2013 to 20162017. Consequently, there is no 'preventive' aspect involved in the SCN and this is not even disputed by learned counsel for the Respondent. However, what is urged before the Court by the Respondent is that since the SCN was preceded by a search that was conducted in the business premises of the Petitioner, and the Petitioner also rendered itself liable for penal action 'for suppression of facts and contravention of various statutory provisions with intent to evade payment of due service tax' and other incidental levies, the SCN partakes of the character of an 'offence related' SCN and therefore falls within the exceptions carved out under para 5.0 of the Master Circular. 14. The above submission runs contrary to the very object of para 5.0 which is to narrow down the scope of the dispute by engaging the Assessee on specific areas where the Respondent may require infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n hereinabove the stand taken by the contesting respondents cannot be accepted. 6.6 We may note that the contesting respondents have preferred an appeal against the judgment of the coordinate bench of this Court rendered in Amadeus India Pvt. Ltd. 6.7. The Supreme Court, via order dated 04.11.2019, passed in S.L.P (Civil) Diary No. 35886/2019, has issued a limited notice in the matter. For the sake of convenience, the order passed by the Supreme Court is extracted hereafter: "Delay condoned. Learned Additional Solicitor General submits that if a fresh show cause notice is to be issued as directed by the High Court after pre-consultation, the Department may be given liberty to revive the earlier show cause notice to obviate any objection in regard to limitation. Issue notice confined to the above issue, returnable in eight weeks." [Emphasis is ours] 7. Thus, having regard to the foregoing, we are of the view that the contesting respondents were mandatorily required to have a pre-show cause notice consultation with the petitioner-company and that having not being done in the instant matter, the proceedings initiated by the contesting respondents via the impugned show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irculars issued by the CBDT under section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. The question which arose in Navnit Lal C Jhaveri's case (supra) was in regard to the constitutional validity of sections 2(6A)(e)and 12(1B) which were introduced in the Indian Income-tax Act, 1922 (hereinafter referred to as "the 1922 Act") by the Finance Act, 1955 with effect from 1-4-1955. These two sections provided that any payment made by a closely-held company to its shareholder by way of advance or loan to the extent to which the company possesses accumulated profit shall be treated as dividend taxable under the Act and this would include any loan or advance made in any previous year relevant to any assessment year prior to the assessment year 1955-56, if such loan or advance remained outstanding on the first day of the previous year relevant to the assessment year 1955-56. The constitutional validity of these two sections was assailed on the ground that they imposed unreasonable restrictions on the fundamental right of the assessee under article 19(1)(f) and (g)of the Constitution by ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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