TMI Blog2022 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant on behalf of the student. The amount is also utilized by the student for buying Books and the same are without fail paid by the Appellant on behalf of the students. The DGGI has taken the Gross Value based upon the comparison of highest figure as per IT Returns, invoices, Bank Statement and the account statement maintained in the CPU which was seized by the department. This is an arbitrary way of computation of demand and lacks uniformity and legal basis. Thus, it was observed that the data obtained from the CPU is the highest among all the financial documents available except 2013-14 wherein the value of the bank statement was the highest. This arbitrary selection of documents based on the highest figure is principally wrong and legally unsustainable - the Department never checked the veracity of the FIR and never analysed the impact on the valuation. It merely and blindly accepted the values mentioned in the CPU documents and concluded the demand without any investigation to this effect. The amount received on account of Hostel mess and books is not directly related to provision of taxable service. It was purely optional for the students looking into the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also upheld a penalty upon M/s. Kingmakers IAS Academy amounting to ₹ 95,57,355/-, and has also upheld the appropriation of ₹ 3,01,994/-. Further, the learned Commissioner (Appeals) also upheld a penalty of ₹ 1,00,000/- on Smt. Sathyashree Boominathan (the Proprietor) of the Appellant firm. Against the impugned order, the Appellant firm and it s Proprietor has filed Early Hearing Applications and Appeals. 1.1 Briefly stated facts of the case are that the Appellant firm is registered with the Service Tax Department vide Service Tax Registration No. BJKPS9105GSD001 under the category of Commercial Coaching Service . The officers of Director General of Goods Services Tax Intelligence (DGGI) Chennai Zonal Unit, Chennai visited the premises of the Appellant firm and made scrutiny of records and various documents recovered from the Appellant firm and also recorded the statement of the Proprietor. Consequent to investigation, a Show Cause-cum- Demand Notice dated 17.10.2018 was issued by the Joint Director, DGGI, Chennai Zonal Unit, Chennai covering the period from 01.06.2013 to 30.06.2017, directing the Appellant firm to show cause as to Why - (i) the Comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cross examination was denied, principles of natural justice were not followed, computation of demand was incorrect and arbitrary, the SCN has been issued beyond the period of limitation, there is no willful suppression of facts thus provisions of Section 78 of the Finance Act, 1994 are not attracted and retractions filed by the Proprietor were neither made a part of the SCN nor has been discussed in any part of the impugned order. The Proprietor in its appeal repeated the above grounds and contended that the penalty cannot be imposed on the Proprietor as the Proprietor and the firm are one and the same in the eyes of law. 1.3 Both the Early Hearing applications were heard on 22.10.2021. After hearing, the Early Hearing applications were allowed. On 22.10.2021 this bench heard both sides on the main appeals also with the consent of Authorized Representative of revenue. 02. The Appellant firm filed the Appeal and submission which are summarized as under:- (a) that the Appellant is Commercial Coaching and Training Service center and operating since the year 2013 vide STC No. BJKPS9105GSD001 under the category Commercial Coaching Service to train UPSC aspirants and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 01.06.2013 to 30.06.2017 taking gross value received by the Appellant as Taxable value for the purpose of computation of service tax liability under Section 67 of the Finance Act, 1994. The computation made in the SCN was miserably whimsical, arbitrary and factually incorrect. The Gross Value is taken based upon the comparison of highest figure as per IT Returns, invoices, Bank Statement and the account statement maintained in the CPU which was seized by the department. This is an arbitrary way of computation of demand and lacks uniformity and legal basis. That it was observed that the data obtained from the CPU is the highest among all the financial documents available except 2013-14 wherein the value of the bank statement was the highest. This arbitrary selection of documents based on the highest figure is principally wrong and legally unsustainable. (e) that the Appellant had informed through submissions in the form of replies and in appeal proceedings that the account statement in CPU was being fraudulently maintained by Appellant s previous Accountant against whom Appellant had also filed FIR much prior to the Case made out by the department (DGGSTI). (f) that whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (h) that against net income of ₹ 84,46,161/- (shown in IT Returns), the Appellant firm has made payment of Service Tax on amount of ₹ 69,09,934/- as per ST-3 Returns. The difference remains of ₹ 15,36,227/- on which Service Tax of ₹ 1,89,878/- (@12.36%)was payable. Against this, the Appellant has already made payment of ₹ 9,55,736/-. Therefore an amount of ₹ 7,65,858/- has been paid in excess and the Appellant may be refunded this amount with applicable rate of interest. (i) that regarding non-payment of Service Tax on amount of ₹ 1,59,55,292/- (collected towards Books ), the Appellant submitted that the said amount is outside the purview of Service Tax in view of the benefit extended under Notification No. 12/2003-ST dated 20.06.2003. The said amount has been shown in Financial records as expenses made towards Books purchased which were further provided to the students. (j) that the fact that the books are purchased by the Appellant from a third-party supplier for students is not in dispute. The exemption provided under Notification No. 12/2003-ST dated 20.06.2003 would be available to the Appellant since expenses for the text bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mess charges. By no stretch of imagination, the Mess charges collected can be considered as receipt for rendering the service of 'Commercial Training and Coaching'. The Commissioner has stated that there is no provision for excluding the said charges. We would like to emphasis that there is no provision for inclusion of any amount whatsoever collected by the appellants. There should always be a nexus between the amount collected and services rendered. The Mess charges have been collected for availing the facility of the mess. The mess is meant for providing food to the trainees. It cannot be brought under the category of receipt for 'Commercial Training or Coaching' and subject to service tax. Further we find that the show-cause notice was issued based on some Audit objection. There is no justification for invoking the longer period. Therefore, the demand is also hit by time bar. In view of the above findings, we do not find any merit in the impugned order. The demand is not sustainable. Once the demand is not sustainable, the imposition of penalty/demand of interest also cannot be upheld. Hence, the impugned order is set aside and the appeal is allowed with con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: - (a) that the Appellant is a Proprietor of the Appellant firm. Hence two different penalties under section 78 on the Appellant firm and 78A on the Proprietor cannot be imposed when both entities essentially remain the same being Proprietary Concern. The Imposition of personal penalty on the Appellant is without any authority of law and is liable to be set aside. The Appellant also placed reliance on number of case laws cited in Appeal Memo and subsequent Submission. 03. The Learned Authorized Representative appearing on behalf of the revenue supports the Order-in-Appeal and reiterates the findings given in the impugned order. 04. We have carefully considered the submissions made by both the sides through video conferencing and perused the appeal records and subsequent submissions made by the Appellant and the Learned Departmental Representative. The issue involved in the instant case for decision is determination of correct assessable value for the purpose of Service Tax and whether the deductions claimed by the Appellant firm towards reimbursement of expenses on account of Hostel Mess Fee and books are admissible deductions or not. Essentially there is challenge to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd never analysed the impact on the valuation. It merely and blindly accepted the values mentioned in the CPU documents and concluded the demand without any investigation to this effect. 4.3 We find that while computing the tax liability, the department has made calculation on Cum-Tax-Value basis and had determined the amount of ₹ 95,57,355/- as Service Tax liability on ₹ 7,71,27,668/- the value taken from account statement maintained in the CPU. The department has not considered in its demand calculation the amount of Service Tax of ₹ 3,01,994/- which has already been paid as per ST-3 Returns filed. This arbitrary and incorrect calculation done shows the carelessness, biasness and pre determination on the part of Department which is not sustainable. 4.4 The Appellant firm in their submission has given the reconciliation statement prepared by taking into consideration of statutory documents viz. IT Returns, Bank Statements and ST-3 Returns. In the nutshell it emerges that against net income of ₹ 84,46,161/- (shown in IT Returns), the Appellant has made payment of Service Tax on amount of ₹ 69,09,934/- as per ST-3 Returns. The difference of taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Centre Vs Commissioner of Cus, C.Ex. S.T. Guntur. It is also noticed that the Department has sent the Scrutiny Notice to the Appellant and the Appellant had provided the documents and data in response to it. It also clearly establishes the bona fides of the Appellant in terms of their compliance. So, on the ground of Limitation also demand based on excel sheet obtained from the CPU does not sustain. 4.7 The Respondent in impugned order has not distinguished the case laws cited by the Appellant firm. The DGGI without making thorough investigation and has adopted a short-cut method of relying on only CPU Data which was alleged to have prepared by the erstwhile Accountant against which the Applicant firm had filed the FIR with the Chennai Police. DGGI did not record any statement of the accountant hence the reliance placed on some unauthenticated and unreliable data is patently wrong. 4.8 We further find that with total disregard to the Principles of Natural Justice, the investigation and the Respondent has accepted and blindly relied the statements of the Proprietor of the Appellant which were immediately retracted vide retraction letters sent to the Investigating Officers. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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