TMI Blog2021 (7) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... .06.2012. It cannot, therefore, be said that the appellant had suppressed facts relating to collection of convenience fee from the Department and, therefore, the confirmation of demand by the Commissioner for the period 01.04.2007 to 31.03.2011 is clearly not warranted. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax - It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil Gas Exploration Services Ltd.[ 2016 (10) TMI 878 - CESTAT NEW DELHI] , wherein the Tribunal after making reference to the decision of the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay [ 1994 (9) TMI 86 - SUPREME COURT] , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression is shown to be wilful with intent to evade the payment of service tax - even suppression of facts has to be wilful and in any case, suppression has also to be with an inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on convenience fees under the negative list regime after July 1, 2012 under the category of other taxable services - the confirmation of demand of service tax of ₹ 1.27 crores for the period 01.04.2007 to 31.03.2011 out of the total demand of ₹ 2,02,31,146/- covered under the two show cause notices dated 14.06.2012 and 15.03.2014 cannot also be sustained for the reason that it is for a period beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and the extended period of limitation could not have been invoked. Demand of interest and penalty - HELD THAT:- As the confirmation of demand under the two notices cannot be sustained, the imposition of penalty and interest under sections 78 and 75 of the Finance Act cannot also be sustained. The impugned order confirming the demand of service tax under the two show cause notices dated 14.06.2012 and 15.03.3013 is liable to be set aside and is set aside - Appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL NO. 55438-55439 OF 2014 - FINAL ORDER NO. 51625-51626/2021 - Dated:- 5-7-2021 - MR. DILIP GUPTA, PRESIDENT AND MR. P V SUBBA RAO, MEMBER (TECHNICAL) Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,70,93,379/- with penalty and interest. 5. The appellant filed a reply on 13.09.2012 refuting the allegations made in the show cause notice. The appellant submitted that service tax cannot be levied on convenience fee under OIDAR as the information provided on the website is available and freely accessible to all; that nothing is charged from the customers when it comes to giving access to the information; that the information available on the website is also available through newspaper advertisements or pamphlets; that the convenience fees is charged for the convenience provided to the customers for booking the tickets online rather than physically standing in the queue; and that the fees charged is only to recover the cost of infrastructure and bank charges. 6. The appellant also received a second show cause notice dated 15.03.2013 for the subsequent period from 01.01.2012 to 30.06.2012. This show cause notice created a demand of ₹ 31,37,767/- with penalty and interest. A reply dated 18.04.2013 was filed by the appellant to this show cause notice. 7. Both the aforesaid show cause notices were adjudicated upon by a common order dated 25.07.2014. The Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, as per Terms and Conditions printed from the website once the booking has been processed, the user will receive a confirmation e-mail to their e-mail address with all the relevant dates of their booking . to collect the tickets the user must present the credit/debit card that was used to book the tickets in that particular cinema. The user has to carry the printout of the confirmation mail. From the above it is clear that not only all sort of information required for booking of tickets were made available on the said website by M/s PVR Ltd., but the choices/options given by the customer online were also processed online. The payments for the tickets were also made through debit/credit card and after processing the same, booking number in respect of the booked tickets was allotted to the customers/emails sent to the customers through computer network. Therefore, there was two way transfer of data/information . All the transactions were processed online and for providing the said services, an amount termed by M/s PVR Ltd. as Convenience fee is charged by M/s PVR Ltd. from the customers. 5.2.13. In view of the above definitions, I find that the assessee has pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no requirement that there should be suppression with intention to evade. Mere suppression is adequate for the recovery of tax for the extended period as well as for imposing penalty. In any case, the assessee, in this case, has willfully contravened the provisions of the Service Tax Rules, 1994. ******** 5.3.6 All these facts narrated above go to show that the assessee suppressed the facts, by non-compliance of the obligations cast upon them by the statutory provisions. The suppression of the facts clearly gives one conclusion that the assessee had intention to evade the tax, and nothing else . It was imperative to mention here that suppression with intent to evade payment of tax need not require to be proved with mathematical precision in the regime of self-assessment, where assessment has to be made by the assessee himself without any control of the Department. Therefore, for the purpose of invoking the extended period, there was no need to establish the intention of the assessee. (emphasis supplied) 9. These two appeals have been filed to assail the order dated 25.07.2014 passed by the Commissioner. 10. Shri Sujit Ghosh learned counsel for the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted the impugned order and submitted that it does not suffer from any legality so as to call for an interference in the appeals. It is his submission that the consideration charged for convenience fee is clearly a charge for the information provided for online sale of cinema tickets. Learned Representative submitted that data/ information is provided online to the customers and convenience fees is charged only after the necessary information is obtained by the customers. It is his submission that the idea behind charging convenience fee is to charge for the privilege a customer gets for using the alternate service option. Learned Representative also submitted that the extended period of limitation contemplated under the proviso to section 73(1) Finance Act was rightly invoked in the facts and circumstances of the case as the appellant clearly suppressed information from the Department by not including the component of convenience fee in the taxable value. 12. The submissions advanced by the leaned Counsel for the appellant and the learned Authorized Representative appearing for the Department have been considered. 13. Section 65 (75) of the Finance Act defines on-line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue relating to extended period of limitation shall be first dealt. Extended Period of Limitation 18. In the present case, two show cause notices were issued to the appellant. The first show cause notice dated 14.06.2012 was issued for the period 01.04.2007 to 31.12.2011 and the second show cause notice dated 15.03.2013 was issued for the period 01.01.2012 to 30.06.2012. The issue relating to wrong invocation of the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act has been raised by learned counsel for the appellant only in respect of the first show cause notice dated 14.06.2012 and that too for the period 01.04.2007 to 31.03.2011 only, as according to the learned counsel for the appellant the remaining period from 01.04.2011 to 31.12.2011 covered under the first this show cause notice is within the prescribed period of one year contemplated under section 73(1) of the Finance Act. Learned Counsel for the appellant has also stated that the entire period covered under the second show cause notice dated 15.03.2013 from 01.01.2012 to 30.06.2012 is within limitation. 19. It needs to be noted that the impugned order dated 25.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s if, for the words one year , the words five years had been substituted. 22. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice. 23. The relevant date has been defined in section 73 (6) of the Finance Act as follows; 73(6) For the purpose of this section, relevant date means,- (i) In the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short paid- (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted a letter dated 23.07.2009 in reply to the aforesaid summons and in connection with convenience fee submitted a note which is reproduced below: 2. Note on Convenience fees: PVR undertakes the sale of tickets from theatres as well via the internet and interactive voice response ( IVR ). For the sale of tickets through internet or IVR, PVR charges additional amount known as Convenience Fee . To book tickets via internet, the user has to register himself at the PVR website and obtains a user id and a password. On accessing the website the user identifies the movie and the show. Payment for the tickets is made via credit card and a transaction number is generated. The tickets are provided at theatre premies on quotation of the transaction number. 28. It is, therefore, clear that the appellant had described in detail in the Note the purpose for charging convenience fees. 29. Thereafter, a demand cum show cause notice dated 23.10.2009 was issued by the Commissioner of Service Tax proposing to levy service tax on advertisement services provided to clients. What, therefore, needs to be noted is that even though all facts relating to convenience fees had been placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the facts stated above that as far back as on 27.07.2009 the Department was aware that the appellant had been collecting convenience fees from customers and by 11.08.2010 the Department was also aware of the quantum of convenience fees collected, which amount has also been mentioned in the show cause notice dated 14.06.2012. It is, therefore, more than apparent that the Department was aware of the collection of convenience fees by the appellant much before one year from the date of issue of the first show cause notice dated 14.06.2012. It cannot, therefore, be said that the appellant had suppressed facts relating to collection of convenience fee from the Department and, therefore, the confirmation of demand by the Commissioner for the period 01.04.2007 to 31.03.2011 is clearly not warranted. 36. This brings us to the further submission made by learned counsel for the appellant that even otherwise there was no wilful suppression of facts nor was there any intention to evade payment of service tax on convenience fees. 37. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful since wilful precedes only misstateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of duty. The observations are as follows; 4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts . The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty . Where facts are known to both the parties the omission by one to do what he might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11A of the Central Excise Act, 1944. 42. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I [2007 (216) E.L.T. 177 (SC)] also held: 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty . When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. (emphasis supplied) 43. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Service Tax, will show that the ingredient of mala fide is a pre-requisite to invoke both the legal provisions (proviso to Section 73 and Section 78). The Original Authority recorded that it may be true that the assessee has not contravened any provisions with intend to evade payment of service tax, however, he proceeded to confirm the demand for extended period and to impose penalty of an equal amount under Section 78. We find that Hon ble Supreme Court in Cosmic Dye Chemical v. CCE, Bombay reported in 1995 (75) E.L.T. 721 (S.C.) held as below :- Now so far as fraud and collusion are concerned, it is evident 6. that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word wilful preceding the words mis-statement or suppression of facts which means with intent to evade duty. The next set of words contravention of any of the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty . It is, therefore, not correct to say that there can be a suppression or mis-statement of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tickets online Cinema tickets are sold by PVR and can be purchased by the user via the online booking system using credit/debit cards. A nominal convenience fee shall be charged from each user over and above the prescribed value of the ticket. This convenience fee shall be in lieu of the convenience given to the user by PVR and shall not form a part of the value of the ticket. Booking of Tickets The user must provide PVR with the correct information pertaining to the cardholders name, card type, the card number, the card expiry date and the security code on the back of the card (if any) in order to make payment to PVR Cinemas. The user shall be responsible for the correctness of the information provided and shall not be indemnified if the information is wrongly entered whether intentional or unintentional. The user must ensure the correctness of all details of the booking before finally booking their tickets as PVR will accept no responsibility and will not issue a refund for wrong booking that are the fault of the user. If the user experiences problems with the booking process, they are to call the helpline number of PVR speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Conditions also show that when a user accesses and uses the website he agrees to be bound by the terms and conditions. A user has been defined to mean a person who accesses the website and avails the online booking facility. The Terms and Conditions also indicate that convenience fee is collected over and above the value of the ticket in lieu of the convenience given to a user by PVR Cinema. Convenience is a facility offered to a user. A conjoint reading of the clauses of the Terms Conditions of the contract would indicate that the purpose for charging convenience fee is to receive a consideration for offering a facility of online booking and in the facts of the present case would relate to online booking of tickets. It needs to be noted that the purpose of the transaction is to book and procure a ticket online by a user, though the website may provide for various other information like the current movie being exhibited, the upcoming movies and the timing of the movies. These information are even otherwise available through newspaper advertisements or other advertisements and no charge is leviable for the same. 53. It cannot be doubted that the dominant intention of a user ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is clearly of e-commerce in respect of steel products (emphasis supplied) 56. The Board Circular dated 09.07.2001 also clarifies that e-commerce transactions do not fall within the ambit of OIDAR service. It also clarifies that when information is supplied free of charge by the website, no service tax is payable and if such website charges a fee for providing information, only then such a website will be liable to tax under OIDAR. This clarification makes it abundantly clear that fees must be charged for providing information and consequentially liable to service tax under the category of OIDAR. The said Circular dated 09.07.2001 is reproduced below: Government of India Ministry of Finance Department of Revenue 9th July, 2001 Subject: Tax on 15 New Services to be effective from 16.7.2001- Instructions regarding. 2. Extension of service tax to fifteen more services: In regard to the new services, which will be subject to service tax from 16th July, 2001, certain issues have been brought to notice during the course of discussion with the concerned Association. These have been discussed and clarified in the Annexures appended as per details be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontain a term that on payment of fee, the user shall have limited or unlimited rights to retrieve or access data/information making it abundantly clear as to what the dominant intention of the contract is. As against this, the Terms and Conditions of the contract involved in the present appeals relating to online booking arrangement make no such averments or declarations and instead are restricted to the grant of online booking facility and nothing more. 58. Where fees is not charged for information and is instead charged for other services like convenience/facility of online booking, even though such fees would be for a provision of service, it would not mean that such fees is charged for providing information/data. Thus, unless the fees is for provision of information/data, the arrangement cannot fall under OIDAR. In the present case the dominant intention for charging fees, as noticed above, is to grant facility of online booking and not for access/retrieval of any data or information. 59. The submission of learned Authorized Representative of the Department that since a booking code is provided to a user when online booking facility is availed and the user has go to a mov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.08.2008 The contention that a single composite service should not be broken into its components and classified as separate services is a well-accepted principle of classification. As clarified earlier vide F.No. 334/4/2006-TRU, dated 28-2-2006 (para 3.2 and 3.3) [2006 (4) S.T.R. C30] and F. No. 334/1/2008-TRU, dated 29-2-2008 (para 3.2 and 3.3) [2008 (9) S.T.R. C61], a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction . The method of invoicing does not alter the single composite nature of the service and classification in such cases are based on essential character by applying the principle of classification enumerated in section 65A. Thus, if any ancillary/intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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