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TMI Blog2023 (9) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit it indicated that Appellants were evading payment of service tax by resorting to suppression of taxable value of the services provided by them to their clients. The intelligence further indicated that they were suppressing the actual taxable value by collecting certain portion of such taxable value, of services so provided, in cash which was not accounted in their books of accounts and was also not considered at the time of computing service tax leviable on the same. Based on intelligence search was conducted at the business premises of the appellants and certain pen drives and other electronic data were discovered and retrieved. During the search it was found that appellants were raising invoices for the service provided to their clients, for a certain parts of actual taxable value and consideration received was being accounted in their regular Tally account. It was also found that part of taxable value of such services being recovered by appellant in cash from their clients and this cash amount was not being entered into their regular books of accounts but was entered in a separate .xls sheets. All such .xls files were stored either in pen-drives of key persons or on Google ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uter printouts is secondary evidence, and therefore such printout can be admitted as evidence only if the mandatory conditions of Section 36B of the Act are complied. He placed reliance on the following judgments : - (i) J.P. Iscon Pvt. Limited - 2022 (63) GSTL 64 (Tri. Ahmd) (ii) Orissa High Court Judgment in Commissioner of Central Excise & Customs, Bhubaneshwar vs. M/s Shivam Steel Corporation - Tax Appeal Nos. 13 to 17/2016 decided on 14.12.2022. (iii) Arjun Panditrao Khotkar vs. Kailas K. Gorantyal - (2020) 7 Supreme Court Cases 1 (iv) Anvar P.V. vs. P.K. Basheer & Others (2014) 10 Supreme Court cases 1 6. He also submits that Learned Commissioner has confirmed the service tax demand on the basis that two Accounts Manager of the appellants and Partner/ Director of the Appellants have stated before the investigating officers when their statements were recorded that the computer printout were for receiving cash from the clients, and thus receiving cash for the taxable services was admitted by these persons. The Learned Commissioner also relied upon statement of one client who has stated before the investigating officer that certain cash payment was made by him. But thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is settled legal position that cogent and reliable evidence of a substantial quantum of alleged evasion, and sufficient number of customers/ clients, must be adduced by the Revenue. He placed reliance on the following decisions:- (i) Grace Castings Limited Vs. Commissioner, Ahmedabad -2019 (369) ELT 751 (Tri. Ahmd) (ii) Commissioner Vs. Motabhai Iron & Steel Industries -2015 (316) ELT 374 (Guj.) (iii) S.M. Energy Teknik & Electronics Ltd. Vs. Commissioner, Vadodara 2015 (328) ELT 443 (Tri. Ahmd.) (iv) Mahesh Silk Mills Vs. Commissioner of Central Excise -2014 (304) ELT 703 (Tri. Ahmd.) (v) Commissioner Vs. Mahesh Silk Mills -2015(319) ELT (A52) -Gujarat High Court. (vi) Arya Fibers Pvt. Limited Vs. Commissioner, Ahmedabad -2014 (311) ELT 529 (Tri. Ahmd) 9. He further submits that a case of clandestine activities has to be established by the revenue by leading cogent, reliable and independent evidence. Such case cannot be made out only on statements recorded by the investigating officers. The customers /buyers who are alleged to have paid cash must be located, statements of such persons must be recorded for proving cash payment by them, the amount of cash transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (184) ELT 263 (Tri. Bang) (viii) CCE, Madras Vs. Systems & Components Pvt. Ltd. - 2004 (165) ELT 136 (SC) (ix) Lawn Textiles Mills Pvt. Ltd. Vs. CESTAT, Chennai - 2018 (362) ELT 559 (Mad.) (x) CC, Kandla Vs. Essar Oil Limited. 13. We have heard the rivals and carefully considered the facts of the case and the submissions made at length by both sides. We find that the Revenue has proceeded in confirmation of the service tax demand on the basis of .xls Sheets recovered from Pen Drive seized from the appellants premises. The entire case of Revenue in the present matter is based on said .xls sheets and Statement of employee, partner and director of the Appellants. However, it is seen that apart from recording the statements of persons in the present matter no independent investigation has been carried out by the department. We observed that Department has not brought out any independent facts or evidence as who is the service receivers, whether the cash receipts shown in the xls. Files pertaining to the service component only or otherwise and no corroborative evidence produced in support of details mentioned in the said xls. files. In the present matter allegation of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver paid to them and He negotiated the entire deal with Shri Pankaj Dandwala. We find that such denial of the customer is not considered or dealt upon by the Ld. Commissioner in his order. We also gone through the statement of Shri Suvrat M Puri and observe that this customer was not the one who entered into agreement with the appellant. Shri Suvrat's brother Late Shri Vishrut Puri has negotiated the deal with the appellant. Further in his statement Shri Suvrat M Puri is also not sure whether any cash was paid by Shri Vishrut Puri to appellant or not. Such statement cannot be relied upon as there is no confirmation from any statement recorded that such customers have paid any cash to the appellant and the person who actually has entered into agreement with the appellant is no more alive. We also find that in the present matter two invoices of customers Shri Sunny Arora and Shri Manojkumar Agarwal that are reproduced in impugned order, however statements of such customers were not recorded by the revenue. We find that the department has not substantiated the allegation about service provided in cash as mentioned in the disputed Excel Sheets. Further more than 100 names and address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truth of the facts which it contains, - (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court." The above Section deals expressly with the circumstances in which a statement recorded before a gazetted officer of Central Excise (under Section 14 of the Act) can be treated as relevant for the purposes of proving the truth of the contents thereof. Reliance is placed on the ruling of the Hon'ble Punjab & Haryana High Court in the case of Jindal Drugs (Infra),2016 (340) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. We find that in the present matter Ld. Adjudicating Authority failed to do such exercise. We also note that Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which examination-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. 18. In the present matter it is admitted facts that Statements recorded during investigation in the present matter, whose makers are not examination-in-chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, we hold that none of the said statements were admissible evidence in the present case. 19. We also find that the case of the Revenue is based on the Excel Sheet printout found in the Pen Drive / Google Drive, with regard to reliance on the computerized print out appellants herein has objected the mode of reliance for which they argued that as per Section36B of the Central Excise Act, without following the prescribed procedure the said Excel Sheets docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether - (a) by a combination of computers operating over that period; or (b) by different computers operating in succession over that period; or (c) by different combinations of computers operating in succession over that period; or (d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly. (4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, - (a) identifying the document containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. In the present case, the data was not stored in the computer but the officers had taken the printout from the USB drive by connecting to the computer. The officers had not obtained any certificate as required under Section36B of the said Act. It is also noted that none of the conditions under Section 36B(2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the allegations of the revenue. It is noted that the requirement of certificate under Section36B(4) is also to substantiate the veracity of truth in the operation of electronic media. We also agree with the contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as the time of obtaining printouts there from, a certificate should have been obtained as per the provision of Section3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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