TMI Blog2022 (8) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... bifurcation was provided in the invoice such as sale of goods and service charge. With this undisputed fact it is clear that the appellant have raised the invoices for the entire value only for sale of goods on the total sale value. The appellant have discharged the VAT on actual sale value of goods and not even on composition scheme like Works Contract Tax (WCT). The appellant have paid the entire VAT to the State Government. They have also booked the transaction in their profit loss account as sale of goods only. Accordingly it is clear that the appellant have sold the explosives and no any additional consideration was recovered towards any service. The contention of the revenue is based on the fact that the appellant have supplied the explosives in their own vehicle and the same was delivered at site. The goods were meant for blast at the particular place where the blasting was to be carried out. Therefore, the appellant have not only supplied the explosive but also carried out the blasting. Therefore, the revenue s contention is that the appellant have provided the service of site formation, clearance, excavation, earth moving and demolition . In this regard, it is found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be treated as a deemed sale. In terms of Section 65B(44) (a)( ii) an activity which constitutes such transfer/delivering or supply of any goods, which is deemed to be a sale within the meaning of Clause (29 A) of Article 366 of Constitution. Therefore, even if these activities considered as service but there is no dispute that the appellant have raised the sale invoice and paid the VAT in such case as per the above Section 65B (44) (a)(ii). the activity being a sale is also excluded from the definition of service, for this reason also the activity of the appellant shall not be chargeable to Service Tax. Reliability on statements - HELD THAT:- In the peculiar facts of the present case, since all the documentary evidences established that the transaction is in the nature of sale, even if the partner of the appellant stated something which suits the revenue will not help the revenue for the reason that it is clearly contrary to the documentary evidences. It is also submission of the appellant that the statements of the partner were recorded under duress and pressure - The appellant during the adjudication disputed the statement and submitted that the said statement may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D MR. RAJU, MEMBER (TECHNICAL) Sh. P P Jadeja, Consultant for the Appellant Sh. J A Patel, Superintendent (Authorized representative) for the Respondent ORDER The brief facts of the case are that the appellant is engaged in providing of explosives and possessing valid license for it and the transaction of trading of explosives are controlled by PESO (Petroleum and Explosives Safety Organization, formerly Department of Explosive, Government of India) and Governed by provisions of Explosive Rules, 2008. Explosives are to deal with Sold/delivered for transportation and blast use only through authorized/Registered/licensed persons under Explosive Rules, 2008. The appellant is licensed for sale and use explosive under Explosive Rules, 2008. Show Cause Notices were issued by the revenue, wherein it was alleged that supply and use of explosive to buyers at their side is amount to provision of service and the appellant has provided the taxable service of site formation, clearance, excavation, earth moving and demolition services without obtaining Service Tax registration and not paid Service Tax. During initial statements of Shri Milesh D. Joshi, partner of appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the demand for the period prior to 01.07.2012 in any case is not sustainable. He submits that after 01.07.2012 in terms of Service under Section 65B (44) of Finance Act, 1944 under Clause a (ii), the activity such as transfer, delivery or supply of any goods, which is deemed to be a sale within the meaning of (29A) of Article 366 of Constitution does not include under the definition of service. He submits that even if it is assumed that the appellant s activities is of service but since the entire value represented the sale of the goods in terms of Clause(29A) of Article 366,the transfer of the property in goods (whether as goods orin some other form) invoked in the execution of a works contract. Therefore, since the entire value charged by the appellant to their buyers is towards the transfer of property and goods, the activity is otherwise deemed sale, hence in terms of Section 65B(44) (a)(ii), the activities of the appellant is not service and the same is not liable for Service Tax. He further submits that as per Rule 2A of Service Tax (Determination of Value)Rules 2006 before or after 01.07.2012, value of goods was not to be included in the value of taxable service. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T.L. 276 (Ori)- KAY PAN SUGANDH PVT. LTD vs CCE 2.1 He further submits that the Revenue relied upon only data/information provided to the Explosive Department without any independent inquiry of verification of the said data in accordance with law before issuance of the SCN and confirmation of demands. Thus, the basis relied upon in Show Cause Notice is not corroborated with any other evidence. Hence, the said relied upon basis of statement and data should not have been or could not been used as evidence against appellant for demand of Service Tax. He further submits that the onus of proof lies on the department to prove that appellants have provided service during the disputed period. This onus has not been discharged by investigating agency. Show Cause Notice presumed entire receipt as consideration of taxable services which is against the principal of law settled by the Hon ble Supreme Court in case of Larsen and Tourbo as reported in 2014 (303) ELT 3 (SC). Show Cause Notice suffer from incurable deficiency on taxability of service and computation of Service Tax. Therefore, the impugned orders are liable to be set aside, in the facts of these appeals. In support he placed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or Commission from them.Whenever any person purchases explosives from the said M/s Sardar Trading Company, Morbi they look for any shot firers for conducting blasting operation and such purchasers contact the appellant to conduct the blasting operations and such purchasers only take them to the blasting sites and also give to the Shot Firers agreed consideration for conducting the blasting operations by the purchasers of the explosives. Appellant submits that revenue has not correctly appreciated the facts to confirm Service Tax demands against the appellant. The facts are that the short firers were not the employees of the appellant and they had carried out the blasting operations on behalf of buyers of appellant and received payments/consideration from the buyers. The buyers of appellant had engaged qualified persons as Shot Firers as per Rule 2(51) of Explosive Rules, 2008; that such Shot firers were separately recognised and certified persons under the Explosive Rules, 2008. Thus, appellant was not providing any service to its clients/customers after carrying Explosive in its vehicle.Sales invoices/evidences support this fact.He submits that the activity in Trading of Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent appeals the issue for consideration before us is that whether the activity of the appellant for supply of explosives is sale or provision of service and consequently whether liable to Service Tax. We find that the appellant s main argument is that they have not provided any service whereas they have sold the goods namely explosives to their customers on principle to principle basis, hence no services are involved. To ascertain that the activity is of sale or otherwise, we have perused the various documents. The following sample documents are scanned below: (1) Licence for sale of Explosives. (2) Representative purchase Invoices of Explosives by the appellant (3) Representative Sales Invoices Showing Sale of Explosives (4) Profit and loss account (5) List of sale of goods in terms of sub Rule (2) of Rule 19 of Explosive Rules in form 201 A (6) VAT registration issued by Government of Gujarat. (7) VAT payment challanfor sales (8) VAT returns for period upto 30.06.2017. On going through the above documents, it is absolutely clear that the entire activity of the appellant is sale of Explosives. we observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,58,486 35,64,692 15,67,017 Tax credit admissible 35,62,093 52,98,636 43,18,773 43,47,413 30,36,054 28,85,033 13,25,368 Tax payable in Cash 1,02,041 4,09,155 7,07,092 9,56,420 6,22,432 6,79,659 2,41,649 Actual cash Tax paid 1,02,041 4,09,155 7,07,092 9,56,420 6,22,432 6,79,659 2,41,469 Acknowle dgement No. 999101611 21 DT : 22 JUN 12 999164271 05 DT : 06 JUN 13 999245478 90 DT : 01 AUG 14 999550791 28 DT : 01 FEB 16 999913938 17 DT : 03 FEB 17 99R003440 50 DT : 24 FEB 18 The above summary o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above affidavit of the Shot Firers it is abundantly clear that the Shot Firers are not working on behalf of the appellant whereas they were deputed by the purchaser of the explosives for carrying out the blasting and for which they were paid the required consideration. In this fact the entire basis of the revenue that the Shot Firers have acted on behalf of the appellant is far from truth. Hence the entire foundation of the case gets demolished. Since as per the above fact and discussion the activity undoubtedly is of sale of goods. The sale of goods does not attract Service Tax either before 01.07.2012 and subsequent thereto. Post 01.07.2012 the definition of individual service was done away, the new definition of service was introduced under Section 65B (44)(a)(i) of the Finance Act, 1944 which is as under: (44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there cannot be any separate service element in the transaction. We are saying so because even otherwise the user is put in possession and full control of the software. It amounts to deemed sale which would not attract service tax. Similarly, the Hon ble Madras High Court in the case of White Cliffs Hair Studio Pvt Ltd. WP. No,. 12198 of 2009 vide order dated 08.07.2022. In the case of the activities are as under: 4. The business activity of the petitioner as captured in the impugned order is summarised below: (a) The manufacture of wigs falls under Chapter 67 of the Central Excise Tariff Act, 1985 and the petitioner remits Central Excise Duty in terms of Section 3(1) of the Central Excise Act, 1944 thereupon. (b) The petitioner also admittedly offers the entirety of the turnover from manufacture and fitment of the wig to Value Added Tax (VAT) adopting the stand that it constitutes sale of a commodity, and the service rendered, of preparation and fitment, is only incidental to the sale. (c) The wig, once manufactured, is to be fitted, the first step is to measure the head, then test the skin for endurance. The wig is thereafter prepared to the specific di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STL 401 (S.C). We find force in this submission of the appellant and accordingly, the entire value represent the value of sale of the goods cannot be subject to Service Tax. We find that from the entire facts based on the documentary evidence as discussed above, the transaction of the appellant is indeed sale of the goods. In the show cause notice heavy reliance was place on the statement dated 20.05.2015 of one partner of the appellant namely Shri Milesh Joshi. We find that firstly the said statement is exculpatory and the second statement recorded on 02.06.2015 is partly exculpatory. In the peculiar facts of the present case, since all the documentary evidences established that the transaction is in the nature of sale, even if the partner of the appellant stated something which suits the revenue will not help the revenue for the reason that it is clearly contrary to the documentary evidences. It is also submission of the appellant that the statements of the partner were recorded under duress and pressure. They have also submitted that statements are recorded in English whereas partner has studied only upto 12 in Gujarati Medium, not knowing English language. The appellant during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the witness is admissible in evidence than Adjudicating Authority is obligated to offer such witnesses for cross examination by other side/assessee. Such view has also been affirmed by the Hon'ble Supreme Court in the case of Andaman Timber (Infra) 2015 (324) E.LT. 541 (S.C.). Appellant submit that there are numerous decisions of the Tribunal laying down that such admission of persons, without following procedure u/s 9D Ibid, cannot be considered to be conclusive evidence to establish the guilt of the Appellant in such cases. Burden of proof is on the Revenue and same is required to be discharged effectively. The persons whose statement is relied upon by department was neither examined or cross-examined u/s 9D ibid. The Hon'ble P H High Court in case of M/s. G- Tech Industries Ltd. v. Union of India [2016 (339) E.LT. 209 PBH] has held that Section 9D of the Act has to be construed strictly, as mandatory and not merely directory. The Hon'ble High Court in case of Jindal Drugs Pvt. Ltd. Vs. Union of India 2016 (340) E.LT. 67 (P H) also held in favour of the Trade. In the present matter, the Adjudicating Authority has failed to follow the requirement of Section 9D of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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