TMI Blog2021 (10) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... levied only for consideration received for service - the entire demand of service tax on reimbursable expenses collected from clients for the period post 1.5.2006 cannot sustain and needs to be set aside. Demand of service tax - Business Auxiliary Services on the services rendered by the appellant - period 10.09.2004 to 30.04.2006 - HELD THAT:- This issue has already been settled by the Tribunal in appellant s own case in previous name of KARVY CONSULTANTS LTD. VERSUS COMMISSIONER OF CUS. C. EX., HYDERABAD [ 2007 (12) TMI 60 - CESTAT, BANGALORE] where it was held that there is no dispute regarding the fact that the appellants are engaged in the services of share transfer agent and registrar official. They first brought into service tax net only w.e.f. 1-5-2006. The Tribunal in the case of COMMISSIONER OF C. EX., INDORE VERSUS ANKIT CONSULTANCY LTD. [ 2006 (10) TMI 61 - CESTAT, NEW DELHI] cited by the learned Advocate elaborately dealt with this issue and has given a finding that prior to this period it would not come fall within the category of Business Auxiliary Services . The current demand is for a subsequent period (10.09.2004 to 30.04.2006) and there was a chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . - SERVICE TAX APPEAL NO. 1957 of 2011 - FINAL ORDER No. 30319/2021 - Dated:- 11-10-2021 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri S. Thirumalai, Advocate for the appellant. Shri S. Hanuma Prasad, Authorised Representative for the Department. ORDER In this appeal the appellant is assailing order-in-original dated 22.04.2011 [Impugned order] passed by the Commissioner of Customs, Central Excise Service Tax, Hyderabad II whereby he adjudicated the show cause notice [SCN] dated 13.10.2009 (covering the period 10.09.2004 to 31.12.2007) issued by the Director General of Central Excise Intelligence [DGCEI]. Both the SCN and the impugned order were issued in the name of the former name of the appellant M/s. KCPL Computershare Pvt. Ltd. As proposed in the show cause notice, the learned Commissioner confirmed the demand of service tax, interest and imposed penalty upon the appellant under section 78 of the Finance Act, 1994. The operative part of the order is as follows:- (i) I confirm the demand of Service Tax of ₹ 11,46,11,071/- inclusive of Education cess and SHE cess, being the Service Tax short paid by M/s KCPL C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 under the head Business Auxiliary Service under clause (iv) of Section 65(19) of the Finance Act, 1994 [the Finance Act ], as it stood prior to 10.9.2004. On appeal, CESTAT had, by Final Order dated 20.12.2007 [ Karvy Consultants Ltd vs Commissioner of Cus. C. Ex, Hyderabad 2008 (10) STR 166(Tri-Bang) ] set aside the demand and held that these services were brought into tax net only on 1.5.2006 and prior to this date, they were not chargeable to service tax. Paragraph 6 of this order is as follows: 6. On a very careful consideration of the issue, we find that there is no dispute regarding the fact that the appellants are engage in the services of share transfer agent and registrar official. They first brought into service tax net only w.e.f. 1-5-2006. The Tribunal in the case of Ankit Consultancy[2007 (6) STR 101] cited by the learned Advocate elaborately dealt with this issue and has given a finding that prior to this period, it would not come fall within th category of Business Auxiliary Services .. Therefore, both on merits and also on limitation there is no justification in the impugned order. The same is liable to be set aside. Hence, we allow the appeal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing of goods for, or on behalf of, the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service or any activity that amounts to manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944 Explanation For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) commission agent means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person (i) Deals with goods or services or documents of title to such goods or services; or (ii) Collects payment of sale price of such goods or services; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. Therefore, the service tax liability in so far as the period from 10.09.2004 to 30.04.2006 under the Business Auxiliary Service attained finality. To sum up: a) For the period prior to 10.9.2004, the appellant s services were held by CESTAT Final Order dated 20.12.2007 to be not chargeable to service tax under Business Auxiliary Services. It was also held that these services were brought under tax net only with effect from 1.5.2006 under the heads of Share Transfer Agents Services and Registrar to Issue services and no service tax can be levied prior to his period under the Business Auxiliary Services. b) For the period 10.9.2004 to 1.5.2006 the appellant paid service tax under protest which was refunded to it by the department and the orders sanctioning the refund were not challenged by the Revenue. c) For the period post, 1.5.2006, the appellant is paying service tax and there is no dispute. 9. Thereafter, on 11.06.2007 the officers of Director General of Central Excise Intelligence initiated investigation against the appellant and came to the conclusion that it was liable to pay service tax under the head of Business Auxiliary Services for the period 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause the Revenue has not appealed against them. The DGCEI could not have raised a demand again on the same issue under the same head and also demanded service tax on reimbursable expenses received from clients with respect to this service. It is a well- settled position in law that once a service tax is chargeable under one head by virtue of a new entry, it cannot be presumed to have been chargeable to service tax under a different entry prior to that date. This contention of the appellant was accepted by the Revenue and refunds have been sanctioned. This was also the order of the Tribunal in its own case Karvy Consultants Ltd. It is not open for the DGCEI to take a different view and raise a demand under the head of Business Auxiliary Services at this stage. If no service tax is chargeable under the head of Business Auxiliary Services, any reimbursable expenses paid by the clients with reference to such services also cannot be taxed. Therefore, the demand in the impugned order on this count that should be set aside. (ii) For the period 1.5.2006 to 30.1.2007, undisputedly, the appellant has been paying service tax under the heads Share Transfer Agent Service and Registrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itment or supply of manpower. It is now a well-settled legal position that no service tax can be levied under the head manpower recruitment or supply agency service on the salaries of the persons sent on secondment reimbursed to the parent organisation. Therefore, the demand on this count needs to be dropped. (c) The fact that it was rendering these services were known to the Department for a long time and there is no evidence of fraud or collusion or willful statement or suppression of facts which are essential to attract penalty under section 78; therefore, no penalty can be imposed upon them under Section 78. 12. Learned Counsel for the appellant, therefore, prays that the impugned order may be set aside and the appeal be allowed. 13. Learned Departmental Representative reiterated the findings of the Commissioner in the impugned order. 14. We have considered the arguments of both sides and perused the records. 15. Undisputedly, the appellant is rendering the service of Registrar to Issue services and Share transfer agent services, both of which became chargeable to service tax w.e.f. 01 May 2006 and it has been paying service tax from that date. As far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC 1] wherein it was observed as under : 27. A legislation, be it a statutory Act or a statutory rule or a statutory notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of interpretation of statutes . Vis-a-vis ordinary prose, a legislation differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do so. 17. However, to the extent the appellant has collected any amount representing service tax on such expenses and interest thereon from clients, the same needs to be deposited with the Government in terms of Section 73A of the Finance Act. 18. The learned Counsel for the appellant affirms that it had already deposited the amount. We do note that the demand is NOT CONFIRMED under section 73A (as amount collected as representing tax) but under section 73 (as tax payable on the reimbursable expenses), which is not sustainable. However, the appellant will not be entitled to any refund of such amount even if no service tax or interest was payable, in view of the obligation under Section 73A to deposit the same. 19. As far as the period 10.09.2004 to 30.04.2006 is concerned, the impugned order charges service tax under the head Business Auxiliary Services on the services rendered by the appellant. This issue has already been settled by the Tribunal in appellant s own case in previous name of Karvy Consultants Ltd. reported in 2008 (10) S.T.R. 166 (Tri. Bang.), in which relevant paragraph is as follows :- 6. On a very careful consideration of the issue, we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Commissioner s Order, proposed to classify the services of Karvy under sub clause (iv) of unamended Section 65 (105) of the Finance Act, 1994, i.e. for the period prior to 10.09.2004, and pertained to the period 01.07.2003 to 31.01.2004. The period of contention in the present Notice pertains to the period from 10.09.2004 (i.e. from the date of amendment of the definition of Business Auxiliary Service to include clause (iv) to 01.05.2006, i.e. the date of introduction of clauses (zzzi) and (zzzj) of Section 65 (105) of the Finance Act, 1994 in as much as the assessee has taken registration under the said clauses with effect from 01.05.2006. Further, the ear4lier order of Hon ble CESTAT in respect of M/s Karvy Consultancy Ltd. vide Final Order No. 42/2008, pertains to period 01.07.2000 to 30.01.2004. It relied upon the ratio of the Sathguru case law, which in turn relied heavily on the Ankit Consultancy case. However, it is seen that the facts and circumstances of the Ankit case are totally different from the present case in as much as it pertains to the period prior to the introduction of new sub clause (vi) to the definition of Business Auxiliary Service with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2006 taxable. In the impugned order, the Commissioner has not only ignored the ratio of the order passed by the Tribunal but also the fact that Revenue itself has agreed with such decision and has even refunded the tax so paid. 25. As far as the demand of service tax under the head Manpower Recruitment Agency Service is concerned, it has been confirmed on the amount paid by the appellant to its overseas partner M/s Computershare Investor Services Pty. Ltd., Australia, who provided the services of one M/s Susan Kitchener. As per the agreement between M/s Computershare and the appellant, Ms. Kitchener was deputed/seconded to the appellant but her salary was paid by M/s Computershare and the appellant reimbursed these amount. This is not a case of Manpower Supply Agency Service rendered by Manpower Agency Service to the appellant. Therefore, the same cannot be charged to service tax under reverse charge mechanism merely because one person was sent on deputation by M/s Computershare, Australia to the appellant and the appellant had reimbursed her salary to M/s Computershare. Therefore, the demand on this count also needs to be set aside and we do so. 26. In the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
