TMI Blog2023 (5) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... is also a fact borne on the record, at paragraph 9.1 of the Order-in-Original, that but for the audit, the issue could not have come to light. It is an undisputed fact that such audits took place in the years 2009 and 2010, during which time the fact of alleged non-offering of the Service Tax on the royalties was noticed by the audit party. Thus, the Revenue cannot stake a claim that the matter had remained suppressed. When each and every fact was very much available with the Revenue, what is that which was suppressed is not clear. We say so because, the non-payment of Service Tax on royalty having been noticed during audits conducted since 2009 appears to have been pointed to the appellant and the appellant appears to have replied thereto - the reason of fraud or collusion or suppression of facts, etc., with intent to evade payment of service tax is a necessary ingredient. However, the Revenue has only stated suppression of facts with an intention to evade payment of Service Tax when, clearly, the facts and figures were only collected from the books / ST-3 returns of the appellant - it is very difficult for us to accede to the Revenue s stand that the appellant had suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the Order-in-Original, are that during the course of audit of accounts of the appellant by the Internal Audit Group, it appears that they had noticed the agreements entered into by the appellant with music directors / music companies association for procuring ringtones and paid royalty charges at agreed rates per download. It appeared that there were separate agreements between the appellant and various mobile telecommunication operators to provide ringtones, pictures, etc., that could be downloaded by the customers from the mobile platform developed, installed and maintained by the appellant, for which the appellant was entitled for revenue sharing at agreed rates per download by those mobile operators. In addition to the above, it appears that the appellant also received the royalty amount payable / paid to the music directors / music companies from the said mobile operators. It further appeared to the Revenue that the appellant had paid Service Tax under business auxiliary service on the revenue share received, as above, and in certain cases, it appeared that the appellant had paid Service Tax on the gross amount received from the mobile telecommunication operators, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of extended period of limitation under Section 73(1) of the Finance Act, 1994. 3.2.1 It appears that the appellant filed detailed objections, in reply to the Show Cause Notice, to each of the proposals therein, vide its letter dated 15.12.2011. It appears, as contended by the Learned Advocate before us, that there was a visit by the officers attached to the Audit Branch in 2009 and again, in 2010, during which it appears that the audit party raised the very same issue of non-payment of Service Tax on the royalty amount received and paid by the appellant to the music directors / music companies. 3.2.2 It further appears that thereafter, a letter dated 08.08.2011 was also received from the Superintendent of Service Tax, Group V, Chennai-II Division asking for the details (year-wise) of the royalty paid by the appellant to the music directors / music companies for the period 2006-07 to 2010-11 with a similar allegation that Service Tax payable on the royalty amounts was not paid by the appellant, in response to which it appears that the appellant had also filed its detailed reply dated 16.08.2011. 3.2.3 It also appears that one more letter dated 07.09.2011 issued by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manded the alleged differential Service Tax and therefore, there was nothing on record to suggest that there was any suppression to facts, to justify invoking the provisions of Section 73(1) ibid. 4. The Adjudicating Authority appears to have considered the explanation in the adjudication proceedings, but however, being not satisfied, has confirmed the demands proposed in the Show Cause Notice vide impugned Order-in-Original No. 16/2013 dated 28.02.2013. The appellant has, therefore, assailed the said Order-in-Original in its appeal before this forum. 5. Today, when the matter was taken up for hearing, Shri N. Viswanathan, Learned Advocate, appeared for the appellant and Smt. K. Komathi, Learned Additional Commissioner, appeared for the Revenue. 6. We have heard the rival contentions and have gone through the documents placed on record, including the order of the lower authority. We have also considered the decisions / orders relied upon by the Learned Advocate for the appellant. 7. After hearing both sides, we find that the issues to be decided by us are: - (1) Whether the demand for the period from 01.05.2006 to 31.05.2007 under business support service and from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which time the fact of alleged non-offering of the Service Tax on the royalties was noticed by the audit party. Thus, the Revenue cannot stake a claim that the matter had remained suppressed. 9.2 It is also a matter of record that the differential Service Tax demanded was calculated based on the books of accounts / ST-3 returns maintained / filed by the appellant and no other material evidence was relied upon for invoking the extended period of limitation. 10. In the background of the above discussion, when each and every fact was very much available with the Revenue, what is that which was suppressed is not clear. We say so because, the non-payment of Service Tax on royalty having been noticed during audits conducted since 2009 appears to have been pointed to the appellant and the appellant appears to have replied thereto. We, however, would not like to get into the merits or otherwise of such reply, but the fact remains that the Revenue was very much aware of these facts. 11. The proviso to Section 73(1) of the Act, which allows the invocation of extended period of limitation, reads as under: - Provided that where any service tax has not been levied or paid or ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly, Rule 5 of the Rules, 2006 brings within its sweep the expenses which are incurred while rendering the service and are reimbursed, that is, for which the service receiver has made the payments to the assessees. As per these Rules, these reimbursable expenses also form part of gross amount charged . Therefore, the core issue is as to whether Section 67 of the Act permits the subordinate legislation to be enacted in the said manner, as done by Rule 5. As noted above, prior to April 19, 2006, i.e., in the absence of any such Rule, the valuation was to be done as per the provisions of Section 67 of the Act. . . 24. In this hue, the expression such occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing such taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such taxable service . That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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