TMI Blog2021 (7) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... s not pending as on 30.06.2019 and where tax liability is not quantified, the designated committee is empowered to verify the eligibility in the light of facts of the case. In the instant case, the premises of the appellant company was searched by DGGI, HZU for alleged evasion of service tax on 20.12.2019 i.e., much after the relevant date i.e., 30.06.2019. Therefore, the appellant company s case does not fall under the category of cases who have been barred from filing a declaration in terms of Section 125(1)(f)(i) of the Finance (No 2) Act, 2019. It is not the case of the appellant company that they have been barred from filing such declaration under SVLDRS by the department. Indeed they have filed such declaration and the designated committee as per evidence available on record, has also determined t e amount to be paid under the Scheme in the prescribed form called SVLDRS-3. Such Form SVLDRS-3 was issued by the Designated Committee concerned on 09.01.2020. However, since the appellant company failed to pay the tax dues indicated in From SVLDRS-3 within 30 days after its issue, as per the Scheme announced by the Government, the discharge certificate SVLDRS-4 was not issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 30-6-2021 - (A.R.S. KUMAR) PRINCIPLE COMMISSIONER CUSTOMES CENTRAL TAX APPEALS 1. This copy is granted free of cost for the private use of the person to whom it is issued. 2. (a) Any assessee aggrieved by this order may file an appeal under Section 86 of the Finance Act, 1994 to the Customs, Excise Service Tax Appellate Tribunal, Regional Bench 1st Floor, HMWSSB Building (Rear Portion), Khairatabad, Hyderabad, T.S.-500004. 2. (b) As per clause (iii) of Section 35F of the CEA, 1944, the appeal against the decision or order referred to in sub-section (5) of section 85, the appellant has to deposit ten per cent of the tax, in case where tax or tax and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Section 35F of the Act is applicable to service tax case by virtue of Section 83 of FA, 1994. 3. Every appeal under sub-section(1) [or sub-section(2) or sub-section(2A)] of Section 86 of FA,1994 shall be filed within three/four months of the date on which the order sought to be appealed against was received by the assessee/ the [Committee of the Commissioners], as the case may be. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rao, Chief Accounts Manager of appellant company against Order-in-Original No.48/2020-21-Adjn(JC) ST-HYD-GST dated 27.11.2020 passed by the Joint Commissioner of Central Tax, Hyderabad GST Commissionerate, Hyderabad. These proceedings arise out of appeals filed by (1) M/s Ganesh Digital Network Private Limited, Plot No. 136, Phase Ill, Road No. 74, Jubilee Hills, Hyderabad 500 096 (hereinafter referred to as appellant company ), (2) Shri Narne Apparao, Chairman-cum-Director, (3) Smt. Gadde Vijaya Sree, Managing Director and (4) Shri Kuchi Nageswararao, Chief Accounts Manager of appellant company against Order-in-Original No.48/2020-21-Adjn(JC) ST-HYD-GST dated 27.11.2020 (hereinafter referred to as impugned order ) passed by the Joint Commissioner of Central Tax, Hyderabad GST Commissionerate, Hyderabad (hereinafter referred to as original authority). 2. The appellant company is engaged in providing taxable services viz., TV broadcasting, advertising, operation and maintenance of studios etc., under the brand / TV channel name STUDIO ONE . They are registered for the purpose of payment of service tax on taxable services rendered by them under the category of Broadcasti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase Orders and books of accounts of the appellant company revealed that they received net service consideration of ₹ 13,21,78,373/- and also charged / collected service tax of ₹ 1,81,39,742/- from their clients. However, the appellant company did not remit the service tax so collected to the government account during the period from October 2014 to June 2017 and did not file ST-3 returns in contravention of the provisions of the Finance Act, 1994 and the rules made thereunder. The said activity of sale of time for advertisement on their Television channel appeared to be a service in terms of clause (44) of the Finance Act, 1994. Further, it appeared that the above said service neither falls in the Negative List of services as mentioned in Section 66D of the Act ibid nor falls in the list of exempted services. As such it appeared to be a taxable service in terms of clause (51) read with clause (44) of Section 65B of the Finance Act, 1994 and the appellant company is liable to pay service tax along with interest and penalty. 2.3 From scrutiny of books of accounts, Annual Reports / Balance Sheets, Other Income Party Ledgers and the appellant company s letter dated 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble services and receipt of income thereon with intent to evade payment of Service Tax. Therefore, the appellant company appeared to be liable to pay Late Fee of ₹ 1,20,000/- for not filing of six ST-3 Returns for the period from October 2014 to June 2017. 2.5 During the course of investigation, it came to the fore that the appellant company filed an application No.LD3112190010574 on 31.12.2019 under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 ( SVLDRS ) wherein they made voluntary disclosure by declaring total service tax liability of ₹ 73,54,987/-. Their premises was searched for alleged evasion of service tax on 20.12.2019 and after initiation of investigation in terms of the provisions of the Finance Act, 1994 by DGGI, HZU the appellant company filed the above said application. Accordingly, it appeared that the said voluntary declaration I application was made with mala fide intention in contravention of the provisions of Section 125(1)(f)(i) of the Finance (No 2) Act, 2019. Further, it appeared that they falsely declared the service tax liability of ₹ 73,54,987/- only for the period from October 2014 to June 2017 in the above said SVLDRS appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and one of the promoters of the appellant company has been in office during the period when service tax was apparently evaded, provisions of Finance Act, 1994 and rules made thereunder were contravened and offences were seemingly committed. In his voluntary statement, he deposed that he looks after all financial accounts and business development matters of the company and he is also authorized signatory for Service Tax and GST matters of the appellant company. Thus, it appeared that he was in charge of the company during the impugned period and appeared to be responsible for the conduct of business of the appellant company. Therefore, it appeared that he was knowingly concerned with non- filing of the statutory returns with intent to evade payment of service tax. Shri Narne Apparao, Chairman-cum-Director of the appellant company, by virtue of being in charge and responsible for the affairs of the company during the impugned period, appeared to be liable to penalty under section 78A of the Finance Act, 1994. 2.9 Smt. Gadde Viiaya Sree, Managing Director of the appellant company is in office during period when service tax was apparently evaded, provisions of Finance Act, 1994 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) read with clause (44) of Section 658 of the Finance Act, 1994 and as to why the entire value should not be treated as the consideration in respect of the said services so provided under the provisions of Section 67 of the Finance Act, 1994; (ii) SVLDRS Application No.103112190010574 filed by the appellant company under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) falsely declaring service tax liability of ₹ 73,54,987/- on 31.12.2019 i.e., apparently after they had been subjected to investigation under the Finance Act, 1994, should not be rejected and dismissed as if the same was never made/filed for the contravention of Section 125(1)(f)(i) and Section 129(2)(c) of the Finance (No 2) Act, 2019; (iii) Consequently, an amount of ₹ 1,82,07,288/- being the service tax collected but not deposited to the Government account on the taxable services mentioned at (I) above during the period from October 2014 to June 2017 should not be demanded and recovered from them under proviso to section 73(1) of the Finance Act, 1994; (iv) an amount of 50,00,000/- paid towards part of their Service Tax liability during investigation should not be appropriated/a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2019 is not applicable to the present case. The event of conduct of enquiry being preceding the date of filing SVLDRS-1 does not bar the appellant from taking benefit of the scheme. On 26th December 2019, Chairman-cum-Director of the appellant was examined on statement wherein he stated that the appellant has utilized the CENVAT Credit balance of ₹ 1,08,12,978/-, adjusted the credit notes for a value of ₹ 5,51,782/- and therefore, the final service tax liability is ₹ 73,54,987/- which has been duly accounted for in the books of account. Appellant filed application in Form SVLDRS-1 on 31st December 2019 declaring the voluntary payment of tax as ₹ 73,54,987/-. Since the payment was made under option Voluntary Disclosure , the designated committee proceeded to directly issue the Form SVLDRS-3 on 9th January 2020 for the same amount. In the meanwhile, Investigation team issued the SCN dated 21.04.2020 under proviso to section 73(1) of the Act read with section 174(2) of the GST Act and alleged that the appellant is not eligible to file a declaration under the SVLDRS scheme. Appellant is eligible to make declaration under the scheme. Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation or audit has also been de fined [Sections 121(g) and 121(m)]. A doubt has been expressed as to whether benefit of the scheme would be available in cases where documents like balance sheet, profit and loss account etc., are called for by department, while quoting authority of Section 14 of the Central Excise Act, 1944 etc. it is clarified that the Designated Committee concerned may take a view on merit, taking into account the facts and circumstances of each case as to whether the provisions of section 125(1)(f) are attracted in such cases. In terms of provisions of Circular Number 1072 (supra), appellant is covered under the SVLDRS scheme subject to the view of designated committee to be taken on merit, taking into account the facts and circumstances of each case and that in light of facts of the present case, benefit of the scheme shall be allowed to the appellant because of following reasons: As per SVLDRS Rules, appellant had time till 31st December 2019 to file the application in Form SVLDRS-1. This time limit was further extended to 15 th January 2020 by way of NN 07/2019-CE(NT) dated 31.12.2019. In the meanwhile, the Investigating team conducted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, immunity from interest has always been sought on ₹ 73,54,987/- as declared by the appellant and it can never be sought on gross tax liability i.e., ₹ 1,81,67,964/-. Appellant has also furnished all services tax returns which further clarifies the fact regarding pending service tax liability. Therefore, SVLDRS application is not liable to be rejected for the reasons that amount payable under the scheme has been falsely declared by the appellant. The facts of non-issuance of discharge certificate in form SVLDRS-4 is undisputed. Since the adjudication officer himself agreed to make the allegation regarding rejection of SVLDRS subject to the issuance of Discharge Certificate, the adjudicating proceedings should not have been concluded prior to issuance of said certificate. The designated committee issued the Form SVLDRS-3 on 9 th January 2020 for the amount of ₹ 73,54,987/-. At time when appellant tried to generate challan for payment of service tax dues, after appropriating the amount of ₹ 50,00,000/- paid during investigation, it was observed that said challan could be generated with full amount of ₹ 73,54,987/- and the amount paid by appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeded to adjudicate the case in the absence of issuance of discharge certificate. Appellant submitted a representation dated 21st October 2020 before the Designated committee through email wherein the Adjudication officer was also marked as cc recipient, requesting to issue the discharge certificate in Form 4 for the various reasons/submissions mentioned therein. A physical copy of the representation was also submitted in the office of adjudication officer on 27 th October 2020 prior to start of personal hearing and this fact was also stated before the adjudication officer at the time of conduct of personal hearing on 27 th October 2020. Since the appellant is not getting heard from the competent authorities regarding issuance of Form SVLDRS-4, they are in the process of filing a writ petition before jurisdictional High court to get a suitable direction in this regard along with certain other relief(s). Since the writ petition is not final as on date of submission of this appeal, they have not enclosed any proof of filing thereof. CENVAT credit claimed in the books of account is considered as valid compliance with the provisions related to availment of credit. Reportin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty on output services provided by them were maintained. These records were duly audited by the practicing Chartered Accountant as well as furnished on MCA website as a part of the corporate compliance. These audited statements of annual accounts were also submitted to the Investigation team at the time of visit made in the premises of appellant. In the present case, as is evident from the statements made by the Managing Director and Chairman-cum-Director of the appellant, the fact of availment of CENVAT Credit to the tune of ₹ 1,08,12,978/- and pending service tax liability of ₹ 73,54,987/- which is arrived after appropriating I utilizing the balance of CENVAT Credit was disclosed to the Investigating team as well as to the Adjudicating officer. However, despite taking this statement on record, they did not ask the appellant to submit the information related to month-wise CENVAT Credit balances. Rule 9 further provides that provider of output service availing CENVAT credit shall submit a half yearly return in Form ST-3. Therefore, Form ST-3 is merely a furnishing of information related to CENVAT Credit availed by the provider of output service and it is not a Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Gopal Ors [Civil Appeal No. 1878- 1880 of 2004]. The reliance is further placed on the decision of Hon ble Madhya Pradesh High Court rendered in the case of M/s Bharat Heavy Electricals Limited Versus CEC, Bhopal (MP) reported as 2015 (4) TMI 1101. Vide para 19.2 above decision reject the entire Credit has been of the impugned order, the Adjudication officer distinguished the of Hon ble Madhya Pradesh HC which cannot be a ground to CENVAT Credit admissibility in a situation where entire CENVAT audited by the statutory auditor. The Adjudication officer has further taken the ground of non-utilization of the Cenvat Credit due to non-filing of ST-3 return as well as not carrying forward the same to GST regime by way of filing Form GST TRAN- 1. As per GST law, only the closing balance lying in CENVAT Credit account as on 30 th June 2017 can be transitioned to the GST regime subject to various conditions specified in section 140(1) of the Central Goods and Services Tax Act, 2017 and in the present case, there was nil closing balance in the CENVAT Credit account as on 30 th June 2017. On the basis submissions made above, appellant submits that demand for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Central Excise V Skematic Consultants reported as 2007 (3) TMI 762 (Kol) wherein the penalty under section 78 was waived taking note of the fact that all tax dues were duly accounted in the books of account and there was a reasonable cause for not paying the taxes on time. On the basis of the supra mentioned submissions, appellant submits that penalty u/s 77 is also not leviable. 4. Shri Narne Apparao, Chairman-cum-Director Smt. Gadde Vijaya Sree, Managing Director and Shri Kuchi Nageswararao, Chief Accounts Officer of the appellant company mostly reiterated the contentions raised by the appellant company and accordingly contested the penalty imposed on them under Section 78A of the Finance Act, 1994. Personal hearing: 5. In view of the Board s instructions dated 21.8.2020 issued from File No.390/Misc/3/2019-JC, personal hearing was held in virtual mode. Sri Kashish Gupta, Chartered Accountant appeared for personal hearing on 09.06.2021 on behalf of the appellants. 5.1 Referring to their appeal memorandum, the learned consultant has explained the issue in detail. 5.2 Referring to the show cause notice, copy of the Order-In-Original and SVLDRS de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal authority has not passed a reasoned and speaking order while passing the impugned Order-in-Original. Though they have specifically claimed before the original authority as part of their reply to the show cause notice, that they are eligible for the Cenvat credit on the input / input services in the event of tax liability on their output service is confirmed, the original authority has not dealt with these arguments properly and dismissed their contention on the ground that allowing Cenvat credit was not part of the allegations made in the show cause notice 5.8 It was contended that it is the duty of the original authority to consider this aspect and get their claim verified and arrive at the correct tax liability while passing the impugned order. It was contended that this was not done so by the original authority in the impugned order. In this regard, he has drawn my attention to various case laws covered in their appeal memorandum on this aspect. 5.9 It was also contended that while the show cause notice has proposed as to why their SVLDRS declaration should not be rejected and why the service tax should not be demanded from them, the original authority in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not disputed taxability of the services provided by them. They have also not disputed quantification of the service tax liability. They, however, claimed that out of the demand of ₹ 1.82 crores, ₹ 1.08 crores stood paid through the balance in Cenvat Credit Account which was claimed by them in their books of accounts. The appellant company further contended that they are entitled to Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (for short SVLDRS ) and rejection of their application is not proper. 8. As per the record, the appellant company filed an application on 31.12.2019 under SVLDRS under voluntary disclosure category by declaring their total service tax liability for the impugned period. The appellant company field the said application after their premises was searched on 20.12.2019 by DGGI, Hyderabad Zonal Unit for alleged evasion of service tax. Therefore, the application filed by the appellant company under SVLDRS was alleged to be in contravention of the provisions of Section 125(1)(f)(i) of the Finance (No 2) Act, 2019, which bars a person from making voluntary disclosure under the Scheme after being subjected to any enquiry or investigation or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. I do not find any infirmity in these findings of the original authority. 9. However, I find the grievance of the appellant company that when the original authority has taken up the show cause notice for adjudication, as an adjudicating authority he should have considered all their arguments while arriving at the correct tax liability including their eligibility for Cenvat Credit, to be legally tenable. The appellant company contended that CENVAT credit claimed in the books of accounts should be considered as valid compliance with the provisions related to availment of credit; that reporting of these figures in ST-3 form is merely a reporting requirement and, therefore, CENVAT credit shall not be disallowed. It is the case of the appellant that eligibility of credit is based on receipt of input services and since they received the input services at material point of time, the eligibility of CENVAT Credit cannot be disputed. In this connection, the appellant company relied on the case of Target Corporation India Private Limited versus commissioner of central Tax, Bangalore East [2019 (10) TMI 1148] wherein the Hon ble CESTAT observed that it has not been categorically provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainly on the ground that they had not filed ST-3 returns for the impugned period. The original authority observed that unless the credit availment and utilization s reported in the ST-3 returns, the department has no way of knowing the amount of credit availed and the extent of tax liability discharged by utilising the credit, whether there is excess credit utilIsation or whether any irregularity or offence is committed by the assessee with regard to the same. But, I find that in terms of Rule 4 of Cenvat Credit Rules, 2004, CENVAT credit in respect of inputs can be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Further, in terms of sub-rule (4) of Rule 4 of Cenvat Credit Rules, 2004, the CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 is received. Thus, as per the rules, the right to CENVAT on inputs is accrued immediately on receipt of inputs in the factory / premises of the provider of output service and the right to CENVAT on input services is accrued on receipt of the invoice, bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany to produce the required invoices for the relevant period to the original authority. They should co-operate with the original authority and produce them during the remand proceedings. 10. The appellant company raised many contentions against invoking extended period of limitation and imposing penalty on them. But, it is to be noted that the appellant company during the impugned period provided taxable services and also collected service tax. However, they failed to pay the service tax so collected to the Government Exchequer. The appellant company also failed to file ST-3 returns for the impugned period. As rightly held by the original authority, the appellant company s claim that they did not pay the tax on account of financial crisis is not acceptable in the light of the fact that they had collected the service tax from their customers over and above the service consideration. Therefore, I do not find any justifiable reason to differ with the findings of the original authority to the extent of invoking proviso to Section 73(1) of the Finance Act, 1994 for recovery of service tax payable by the appellant company and imposing consequential penalty on them. The case laws re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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