TMI Blog2022 (11) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... renting of immovable property service. The demand on this count is set aside. Levy of service tax - scientific or technical consultancy service or not - signature bonus - appellant in respect of their contract with Torrent Power Ltd. received Rs. 10 Crore as signature bonus - HELD THAT:- The said signature bonus is given for what the appellant brings to table for the purpose of such agreement. It is not for any specific service given by the appellant to M/s Torrent Power Limited. It is seen from the Show Cause Notice, Revenue has not pointed out any specific example of any service in the nature of Scientific and Technical Consultancy extended by the appellant to M/s Torrent Power Limited. It is noticed that para 2.3 of the agreement between the appellant and M/s Torrent Power Limited uses the expression for its expertise and consultation services in Power Project . It is not necessary that the expertise and consultation services can only be scientific and technical in nature. To be classified under scientific and technical consultancy service, the services and the consultancy should be in the field of science and technology. No evidence has been produced by Revenue to substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is absolutely no indication as to how the amount received by the appellant would qualify as Business Auxiliary Service. It is a bland allegation without any substantiation and therefore it cannot be upheld - demand under this head and the penalty imposed under this head is set aside. Rent income - short payment of service tax - Whether service tax of Rs. 97,335/- is payable on the income of Rs. 9,45,000/- during the year 2009-10? - HELD THAT:- This issue relates to demand of service tax of Rs. 97,335/- on an amount of Rs. 9,45,000/- received by the appellant in the year 2009-2010. The only ground on which the appellant has defended it is that it falls within the basic threshold limit of Rs. 10 Lakhs during the relevant time. We find that demand under head of signature bonus or one time payment have not been sustained in para 2 and 3 above. Consequently, the appellant succeeds in its argument that the value being threshold limit no tax can be charged. The appeal on this count is allowed. Levy of service tax - payments made to the foreign entities - reverse charge mechanism - extended period of limitation - HELD THAT:- The defence is mainly on the ground that the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is upheld except for penalty under Section 78, which is set aside. Levy of service tax of Rs. 13,43,547/- under Rule 6(3) of the Cenvat Credit Rules, 2004 - cenvat credit on Solar Power Project on the Plot developed by the appellant themselves - levy of interest - HELD THAT:- No evidence has been produced by the appellant that the credit of Rs. 13,473,547/-, relates to Wind Mills operated by the appellant. However, in many circumstances, credit of services availed in respect of Wind Mills located away from the factory is admissible. The exact nature of transaction in the instant case is not clear from the appeal memorandum or from arguments made by the appellant. Moreover, this argument was not raised before the lower authority. In these circumstances, we set aside the demand on this count and remit the matter back to the original adjudicating authority for fresh adjudication - Matter on remand. CENVAT Credit - input services or not - security service - housekeeping service - gardening services - advertisement services - maintenance of guest house services - HELD THAT:- The appellant has submitted that such services being in the nature of security service. houseke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri. Amal Dave, Advocate for the Appellant Shri. Dinesh Prithiani, Assistant Comm. (Authorized Representative) for the Respondent ORDER This appeal has been filed by M/s Gujarat Power Corporation Limited against confirmation of demand of service tax, interest and imposition of penalty. Learned Counsel pointed out that there are multiple issues raised in the instant case. 2. The first issue in dispute is the service tax is leviable on one time premium/salami under the category of renting of immovable property: Learned counsel argued that a demand of Rs.11,80,19,611/- has been confirmed under the category of renting of immovable property service. It was submitted that the demand has been confirmed considering the one-time premium charged by the appellant as rent in addition to the annual lease rent which is being charged separately. It is submitted that on a perusal of the contract it is clear that the demand of Rs. 11,80,19,611/- has been confirmed considering the one time premium as a consideration towards rent and a perusal of the contract, shows that rent was being charged over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Premium amount clearly shows their intention to evade the service tax. Appellant is required to pay the service tax from the date of invoice and not from the date of payment and accordingly demand is rightly invoked. 2.2.1 We have considered rival submissions for the issue. We find that the issue regarding includability of the one time premium in the assessable value has been examined by the Tribunal in the case of Greater Noida Industrial Development Authority 2015 (38) STR 1062. In para 10.1 of the said order, following has been observed: 10.1 A lease is a transaction, which has to be supported by consideration. The consideration may be either premium or rent or both. The consideration which is paid periodically is called rent. As regards premium, the Apex Court in the case of Commissioner of Income Tax, Assam and Manipur v. Panbari Tea Co. Ltd. reported in (1965) 3 SCR 811 has made a distinction between premium and rent observing that when the interest of the lessor is parted with for a price, the price paid is premium or salami, but the periodical payments for continuous enjoyment are in the nature of rent, the former is a Capital Income and the latter is the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows in the opening para: The Commissioner of Service Tax, Noida has filed this appeal against the order of the Customs, Excise Service Tax Appellate Tribunal Principal Bench, New Delhi, dated 28-8-2014 passed in Appeal No. ST/59067/2013 and Appeal No. ST/3256/2012 [2015 (38) S.T.R. 1062 (Tri.-Del.)]. The department is aggrieved by the part of the judgment, wherein it has been held that the letting out of vacant land by way of lease/license, for construction of buildings or temporary structure for use at a later stage in furtherance of business and commerce, is a taxable service only from 1-7-2010 and not from any date prior to it. From the above, it is seen that the Revenue has not appealed against the specific finding in para 10.1 of Tribunal order dated 28.08.2014 wherein it has been held that the onetime premium is not taxable under the Renting of Immovable Property Service. 2.2.2 The impugned order placed reliance on the decisions of Tribunal in the case of CIDCO Ltd. 2015 (37) STR 122 and in the case of Maharashtra Industrial Development Corporation 2014 (36) STR 1295. We noticed that both these decisions are interim orders fixing the pre-deposit under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65(92) of the Finance Act, 1994 as it stood during the relevant time was as follows: Scientific or technical consultancy means any advise, consultancy, or scientific or technical assistance, rendered in any manner, either directly or indirectly, by a scientist or technocrat, or any science or technology institution or organization to a client, in one or more disciplines of science or technology. Learned Authorized Representative relied on CBEC vide Letter F.No. B.11/1/2001-TRU dated 09.07.2001 has at Para 2 of Annexure-1 of the said letter has clarified Consultation as under: The taxable service should be understood in the context of its commonly understood meaning and scope. For instance, it would cover consultation, advice or technical assistance provided by a scientist or a technocrat or science or technology an institution on any issue relating to any branch of science and technology. Such consultation may be in the nature of an expert opinion/advice in regard to scientific or technical feasibility or any other scientific or technical aspect of a project, process or design, recommending an apt technology, suggestion for improvement in existing technology or proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were required to perform. Mere saying that obligation were not taxable service appears to be flimsy ground without any substance and evidence. 3.2 We have considered rival submissions. It is noticed that the appellant has contended that there is no evidence on record to say that any scientific and technical consultancy service was given by the appellant to M/s Torrent Power Limited for which an amount of Rs. 10 Crores was charged. It has been argued that M/s Torrent Power Limited has paid non-refundable sum of Rs. 10 Crores as signature bonus which is directly payment made by one party in the contract to the other. The Revenue has to establish that certain Scientific and Technical Consultancy Service was given for receipt of this payment. It has been argued that no such evidence has been brought on record by Revenue to establish that payment made as signature bonus by M/s Torrent Power Limited to the Nodal Agency appointed by the State of Gujarat was not charged any value for any taxable service. From the Show Cause Notice, it is seen that the allegations are based on the Memorandum of Understanding signed between GPCL (Appellant) and M/s Torrent Power Limited for promoting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly with the selected parties. Thereafter, M/s GPCL obtains various statutory and non-statutory clearances for Implementation of power project, such as, water and air pollution clearance, forest clearance, environmental and forest clearance, civil aviation clearance etc. It also pursues the formalities related to acquisition of land under the Land Acquisition Act, 1984 and ties up the fuel linkages for the power project. Paragraph 2.9 of SHA clearly states that they have agreed to provide various services Including assistance in the finalization of loan/borrowing from lenders/financial institutions and provide equity capital contribution in time, as may be required by the Company. They also undertake to provide assistant to the Company in obtaining various approval and negotiation of the terms and condition of the Power Purchase Agreement with distribution company(s), in establishing fuel linkage, in obtaining clearance and also provide assistance for the evacuation of power generated by the company. Thus M/s. GPCL acts as a nodal agency for augmenting various needs of power sector. The scope of responsibilities of M/s GPCL is very wide. Only a small part of their services could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of property in goods transferred in the execution of the said works contract and also less value added tax or sales tax, as the case may be, paid or payable, if any, transfer of property in goods involved in the execution of the said works contract. During scrutiny of the documents, it was revealed that appellant has not determined the correct assessable value and short paid Service Tax of Rs. 1,29,71,525/-. 4.2 Learned Authorized Representative further argued that it is not in dispute that appellant has paid Rs. 48.75 lakhs under Works Contract for the expense incurred during the year 2010-11 and 2011-12. However, failed to pay service tax of Rs. 1,29,71,525/- on account of non-determination of proper value as per Rule 2A of Service Tax Valuation Rules, 2006. 4.2.1 Learned Authorized Representative argued that appellant has accepted the short payment and accordingly paid 1,29,71,525/ alongwith interest of Rs. 49,02,189/- vide challan dated 27.08.2014. Appellant has claimed that it was bonafide mistake in calculation of taxable service, and therefore, penalty cannot be imposed. Learned Authorized Representative argued that from perusal of the Table enumerated at Para No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t find any error in the impugned order appropriating the legally due service tax and interest paid by the appellant. We also note that penalty has been imposed in the impugned order. It is seen that in para 13 and 14 of the Show Cause Notice charge of the suppression, misdeclaration has been made in following terms: 13. The government has from the very beginning placed full trust on the service provider so far as the payment of service tax is concerned and accordingly measures like self-assessments etc., based on mutual trust and confidence are in place. Further, a taxable service provider is not required to maintain any statutory or separate records under the provisions of Service Tax Rules as considerable amount of trust is placed on the service provider and private records maintained by him for normal business purposes are accepted, practically for all the purpose of Service tax. All these operate on the basis of honesty of the service provider; therefore, the governing statutory provisions create an absolute liability when any provision is contravened or there is a breach of trust placed on the service provider. Further, Sec. 70 of the Finance Act, 1994 casts an obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act and the Rules on the part of the assessee have been committed deliberately with an intent to evade payment of service tax by mis-declaring and suppressing the material facts from the department and thus appears to have rendered the assessee liable for penal action under Section 78 of the Finance Act, 1994. They also appear to have rendered themselves liable for penal action under Section 76 and 77 of the Finance Act 1994 for contravention of various provisions of the Act/Rules discussed in paras supra. It further appears that the assessee have indulged in contravention of the various provisions of Cenvat Credit Rules, 2004 as discussed hereinabove and have rendered themselves liable to penalty in terms of the provisions of Rule 15 of the Cenvat Credit Rules, 2004. Thus, the averment of the appellant that no charge of suppression, misdeclaration has been made is misplaced and incorrect. The Commissioner in the impugned order at para 38 has observed as follows: 38. Further, the assessee has contended that service tax of Rs.1,29,71,525/- alongwith interest of Rs.49,02,189/- on value of 'Work Contract Service' provided to M/s PGVCL was paid by them before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel argued that the department has sought to tax the amount received by the appellant being 2% of the project cost, considering it to be value received towards business auxiliary services. It was submitted that other than raising the demand under business auxiliary services category. the department has nowhere mentioned as to how such amount would be taxable under the business auxiliary service category and whether such amount was received towards any commission which could be considered under the BAS category. It was submitted that since the demand is raised under BAS category without any further details, it is vague in nature; the same is also not sustainable and is barred by limitation. It was submitted that, the Tribunal, Mumbai has in the case of M/s. Swapnil Asnodkar reported at 2018 (10) GSTL 479, held that when there is no clarity in the show cause notice whether what goods or services the assessee has provided or promoted. then the demand becomes vague and such demand is not enforceable. Similarly, the CESTAT, Allahabad has in the case of M/s. Dharamvir Singh Company reported at 2018 (8) GSTL 440. held that when the break up of services is not given in the show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f development charge @2% cannot be project cost being sought to be taxed under Business Auxiliary Service. The appellant has argued that Revenue has failed to clarify as to how the amount received @2% of the project cost would qualify as Business Auxiliary Service. It has been pointed out that the demand is vague in nature without specifying under which category of Business Auxiliary Service the demand has been raised. We have seen para 5 and 5.1 of show cause notice where the charges of demand under this head has been mentioned. It is seen that there is absolutely no indication as to how the amount received by the appellant would qualify as Business Auxiliary Service. It is a bland allegation without any substantiation and therefore it cannot be upheld, in view of the decisions relied upon by the appellant namely M/s Swapnil Asnodkar reported at 2018 (10) GSTL 479 and M/s Balaji Enterprises reported at 2020 (33) GSTL 97. In the aforesaid decisions, it had been clearly laid down that unless the specific nature of service is examined and specific category under Business Auxiliary Service specified in the show cause notice, the demand cannot be sustained. In view of above, demand und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment for Renting of immovable property, however, failed to pay service tax, clearly indicate their intention of evasion and therefore, penal provision is rightly invoked. 6.2 This issue relates to demand of service tax of Rs. 97,335/- on an amount of Rs. 9,45,000/- received by the appellant in the year 2009-2010. The only ground on which the appellant has defended it is that it falls within the basic threshold limit of Rs. 10 Lakhs during the relevant time. We find that demand under head of signature bonus or one time payment have not been sustained in para 2 and 3 above. Consequently, the appellant succeeds in its argument that the value being threshold limit no tax can be charged. The appeal on this count is allowed. 7. The sixth issue in dispute is if service tax totalling to Rs. 13,90,401/- is payable under reverse charge mechanism on the payments made to the foreign entities.: Learned counsel argued that the case of the department is that the appellant is liable to pay service tax of Rs.9,50,404/- on the amount paid to M/s. Atlantis Resources Corporation Pvt. Ltd. on the grounds that the services were provided by an overseas entities and the appellant being th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice and appellant is required to pay service tax under RCM. Here it is pertinent to mentioned the Section 65 B of the Finance Act, 1994 which is for Interpretations. - wherein at (27) (d) defines the India means the air space above its territory and territorial waters, . Thus, the activities of Oceanographic survey. tide velocity and flow modelling, CRZ mapping through ISRO is done within the India and accordingly the overseas service provider has provided the service in India and under RCM, appellant being a service receiver, liable for payment of service tax. 7.2 It is also not in dispute that appellant had hosted International Conference on Indian Solar Power Investment Technology Summit 2012' at Ahmedabad and availed the service of M/s. Solar Media Ltd., London availed the service by way of selling of sponsorship and exhibition space to companies headquarters outside India and they were required to introduce relevant industry experts and brand representative to appellant with the objective of maximising the success of said Summit and arrangement of International Speakers for Summit 2012 at Ahmedabad. Thus, payment made by appellant to said overseas M/s. Solar Medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas of Kutch. Similarly, payment has been made to Solar Media Limited for co-hosting partnership plus arrangements of international speakers for Summit-2012. This was for the purpose of hosting international conference on Indian Solar Power Investment and Technology Summit-2012 with Solar Media Limited. The period involved in both services received from M/s Atlantis Resources Corporation Private Limited is 2010-2011 and that in respect of M/s Solar Media Limited is 2012-2013. In case of services provided by M/s Atlantis Resources Corporation Private Limited, the service has been sought to be classified under the head of Consulting Engineer s Service and demand under reverse charge has been made under Rule 3(iii) of Taxation of Service (Provided from Outside India and Received in India) Rules, 2006 read with Section 66A of the Finance Act-1994. The appellants have not challenged any facts. The defence is mainly on the ground that the demand is barred by limitation as credit of the said service tax was admissible to the appellant. The appellant have made a bland statement that credit of these taxes paid would be admissible to them, they have not mentioned under what are the taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State of Gujarat. M/s Atlantis to undertake the study, write the Report and use its reasonable efforts to deliver the Report to StudyCo. The StudyCo delivers the Reports to GPCL. Accordingly, M/s GPCL had made payment of US$ 200,000 equivalent to Indian Rs.92,27,225/- to Atlantis on 20.02.2010 for the said purposes. From the feasibility report submitted by M/s Atlantis, it is seen that M/s Atlantis carried out study which includes Satellite map delineating HTL line from BISAG, indicating location of 66KVA High Tension Line passing through Mandvi Beach, Oceanographic survey, tidal velocity and flow modeling, CRZ mapping through ISRO. Therefore, the service rendered by Atlantis by way of preparation of feasibility report for M/s GPCL is a taxable service failing within the meaning of Consulting Engineering's Service as defined under Section 65(105) (g) of the Finance Act, 1994 read with Section 65(31) of the Finance Act, 1994. 28.3 Further, the facts made available, it is found that though the service provider i.e. M/s Atlantis was located outside India, the services were rendered in India and received by M/s GPCL In India. Hence, in terms of Rule 3(iii) of Taxation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able service under category 'Services of promotion or marketing of brand of goods/ services/events' as defined under Section 65(105)(zzzza) of the Finance Act, 1994. 28.6 Further, from the available records, it is found that though the service provider i.e. M/s SML was located outside India, the services were rendered in India and received by M/s GPCL in India. Hence, in terms of Rule 3(iii) of Taxation of service (provided from outside India and received in India) Rules, 2006 read with Section 66A of the Finance Act, 1994, I hold that M/s GPCL, being recipient of the service, is liable to pay service tax of Rs.4,39,997/- 12.36% on the amount of Rs.38,74,572/- made to M/s SML. I find that all the argument put forth by the assessee are not tenable. As per the sub-rule (iii) of Rule 3 of the said rules, the taxable services provided from outside India and received in India, shall, in relation to taxable services mentioned in the said sub-rule shall be such services as are received by a recipient located in India for use in relation to business or commerce. In the instant case, the only condition to be satisfied for the services, provided by M/s SML and received by M/s GPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir customers under Real Estate Agent Service. Learned Authorized Representative further submits that it is not in dispute that appellant is nodal agency for the development of 'Solar Park' at Charanka, Patan, for which development work of the land was undertaken and land was given on lease to various parties, and have issued 22 invoices to various parties for recovery of development charges and did not pay the service tax of Rs. 9,12,76,391/- under the category of Real Estate Agent' within the six months from the date of issue of invoices. He submits that as per Rule 3 (a) of the Point of Taxation Rules, 2011, the liability of payment of Service Tax in this case becomes the date when the invoice are issued by the appellant and not the date of payment. Appellant have accepted their liability and have paid the Rs. 4,15,93,832/- from PLA and Rs. 4,96,82,559/ from Cenvat Account. Appellant have paid the interest of Rs. 2.20 crores against late payment of service tax. He submits that appellant's plea that due to ignorance and they failed to pay service tax in time is lame excuse. He argued that the appellant is well aware of the Act/ Rules, but he has refrained from pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the service was provided by the appellant to itself and such being the case, it was an exempt service, and therefore, cenvat credit of various input services was not available to the appellant. The appellant while considering this fact reversed the credit of Rs.13,43,547/- and the only issue in this regard was about the levy of interest on such amount of credit which was not utilized. It was submitted that the appellant had availed cenvat credit under a bona-fide impression that the appellant was eligible for taking such credit and on being pointed out by the department such cenvat credit was reversed. In the facts there was no question of any mala-fide intention to avail fraudulent credit and even the department has not suggested as such in the show cause notice or in the impugned order. Therefore, the interest on such amount being demanded under the extended period of limitation is not sustainable. 9.1 He further argued that the Hon'ble Delhi High Court has in the case of M/s. Hindustan Insecticides Ltd, reported at 2013 (297) ELT 332 held that the limitation for demanding interest would also be as per Section 11A, and therefore, if the short payment of tax was not due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 99.52 Lakhs and @6% of Rs. 1.24 Crores becomes payable under Rule 6 of the Cenvat Credit Rules, 2004. The appellant have agreed with the objection and paid the amount on 01.08.2013 by debiting their cenvat credit account. However, they have failed to pay the interest under Rule 14 on the ground that they had not utilized the said credit and they always had sufficient balance in their cenvat credit account during the period of default. On the demand of Rs. 13,45,547/-, the appellant has contended that the cenvat credit pertains to services availed for their Wind Mills. They have claimed that the credit in respect of Wind Mills located away from the premises of the factory is admissible in terms of various Tribunals decisions. They have also claimed that Revenue could not have demanded an amount of 5%/6% of the exempted transactions but only could have asked for reversal of cenvat credit availed on these services. 9.4. We find that some of these contentions of the appellant were not raised before the Original Adjudicating Authority. No evidence has been produced by the appellant that the credit of Rs. 13,473,547/-, relates to Wind Mills operated by the appellant. However, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended period of limitation would not be sustainable inasmuch as availment of cenvat credit is a subject matter of interpretation and even the department has not alleged that the appellant had any ill-intention to avail wrongful credit. Therefore, such demand over and above Rs.11,67,454/-is time barred and liable to be set aside in the interest of justice. 10.1. It has been alleged that the appellant have availed proportionate cenvat credit on input service pertaining to general expenses of the company and full credit on specific services pertaining to Solar Park- Charanka. It has been alleged that the appellant have availed credit for inadmissible services. Before the original adjudicating authority, the appellant have admitted that credit of Rs. 6,22,671/- is not admissible and has agreed to reverse the same. The adjudicating authority has however upheld the entire charge in respect of all other service in respect of which credit has been availed. While the impugned order does not give detailed findings on each head under which credit has been availed. The impugned order observes that no credit on travelling expanses is available to the assessee under Rule 2(l) of the Cenvat C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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