TMI Blog2023 (10) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act. The show cause notice dated 23.04.2019 indicates that the investigation covered the extent of services rendered by the petitioner. Summons were also issued by the Revenue Authorities to various entities for whom the petitioner had executed the construction works. The Revenue Authorities had also collected bills and invoices from the said entities. Merely because one of the entities had not furnished the bills which would have enabled the Revenue Authorities to verify the petitioner s liability does not in any manner render the subject matter of the show cause notice dated 23.04.2019 any different from subject matter of the impugned show cause notice. There are merit in the petitioner s contention that the impugned show cause notice is not sustainable and is liable to be set aside. The Discharge Certificate issued to the petitioner is conclusive of the subject matter of the impugned show cause notice - impugned show cause notice is liable to be set aside. Clearly, the assumption that the petitioner is liable to pay tax on FOC material supplied by M/s Charms India Pvt Ltd. is ex facie erroneous. The said issue is covered by the decision of the Supreme Court in COMMISSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emised on the information received from the Gurugram Zonal Unit of the Directorate General of GST Intelligence (DGGI) and the investigation carried on by the authorities pursuant, thereto. The Revenue Authorities had received information to the effect that the petitioner had constructed several commercial and residential projects, and had paid the service tax on the works contract by availing the benefit of Notification No. 24/2012-S.T. and Notification No. 30/2012-S.T. According to the Revenue Authorities, the petitioner had wrongly declared part of its taxable income as exempted from service tax, and had not paid the service tax correctly. Based on the said information, investigations were conducted and statements of the authorised signatory of the petitioner was recorded. The Revenue Authorities also collected the running account bills and payment vouchers issued by the petitioner to its customers as well as the copy of the financial accounts of the petitioner for the relevant years financial years 2013-14 to 2017-18. 5. The show cause notice dated 23.04.2019 mentioned that the petitioner had executed works for nine entities including M/s Charms India Pvt. Ltd. and New Okhla Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is (i) rupees fifty lakhs or less, then, seventy per cent. of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent. of the tax dues; (e) where the tax dues are payable on account of a voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues. (2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant: Provided that if the amount of pre-deposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund. 8. As is apparent from Sub-section (1) of Section 124 of the Finance (No. 2) Act, 2019, the Scheme covered various categories and entailed varied reliefs depending on the category in which an assessee falls. It is appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the petitioner had issued certain invoices for free of cost (FOC) material to one of its employers M/s Charms India Pvt. Ltd. According to the Revenue, the petitioner s authorised representatives had not disclosed that the petitioner had issued FOC bills during the relevant period. According to the Revenue, the value of FOC material provided by M/s Charms India Pvt. Ltd. to the petitioner was chargeable to service tax to the extent of 50%. It is also the Revenue s case that the authorised representative of the petitioner had made a false and misleading statement by stating that the petitioner had issued only running bills during the relevant period and that the petitioner had produced all such running account bills. 14. In addition, the impugned show cause notice is also premised on the basis that the petitioner had provided works contract services to NOIDA and the petitioner s liability was determined on an erroneous assumption that the NOIDA was a body corporate. According to the Revenue, NOIDA is not a body corporate and therefore, the petitioner would have to bear the full liability for the works contract services and not just 50% of the said liability. 15. It is the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be instituted. 18. We are unable to accept the contentions advanced on behalf of the Revenue. The assumption that Section 129(2)(c) of the Finance (No. 2) Act, 2019 is applicable, is ex-facie erroneous. The petitioner had not made a declaration under the category of Voluntary Disclosure . The petitioner s declaration was under the category of Litigation . This was because the concerned authority had issued a show cause notice dated 23.04.2019, which was pending adjudication. 19. As stated above, the Scheme has a wide sweep. It not only covered cases where a dispute was pending but it also offered immunity to assessees who voluntarily came forward to make a true disclosure of their tax liability. A plain reading of Clause (c) of Section 129(2) of the Finance (No. 2) Act, 2019 indicates that the voluntary disclosure pertains to material particulars furnished in the declaration and not a statement recorded during the course of the investigation. The impugned show cause notice is premised on the basis that the statement of the authorised representative of the petitioner, which was recorded during the course of investigation, was misleading. 20. The contention that the subject ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on first principle, the value of free supply items, which are not a part of the contract between the service provider and the service recipient has no relevance in determination of the value of taxable services. Para 16 of the said decisions reads as under: 16. In fact, the definition of gross amount charged given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term gross amount charged to enable the Department to ignore the contract value or the amount actually charged by the service provider to the service recipient for the service rendered. The fact that it is an inclusive definition and may not be exhaustive also does not lead to the conclusion that the contract value can be ignored and the value of free supply goods can be added over and above the contract value to arrive at the value of taxable services. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. The service recipient can use any quality of goods and the value of such go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, as it has been constituted by the Uttar Pradesh Industrial Area Development Act, 1976 as a body corporate. Thus, clearly the Revenue has misunderstood the response received from NOIDA as is reflected in the impugned show cause notice. 29. The Supreme Court in the case of Commissioner of Income Tax (TDS) Kanpur Anr. v. Canara Bank: (2018) 9 SCC 322 had explained the difference between an entity, which is not created by a statute but is created in accordance with the provision of the statute and an entity that has been established and bought into existence by a statute. In case of a company, incorporated under the Companies Act, 2013, the company is required to be created in accordance with the provisions of the Companies Act, 2013 but in case of NOIDA, the said authority is established under the Uttar Pradesh Industrial Area Development Act, 1976. Paragraphs 20, 30, 31, 32 and 33 of the said decisions are relevant and are set out below: 20. In Sukhdev Singh, the Court had occasion to consider the status of company incorporated under the Companies Act. The Court held that company incorporated is not a company created by the Companies Act. In para 25, following as held: 25. . A com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those of the State Financial Corporation Act, 1951, it is clear that the establishment of corporation in both the enactments is by a notification by the State Government. In the present case, notification has been issued in exercise of power of Section 3, the Authority has been constituted. It is useful to extract para 2 of the Notification dated 12-4-1976: 2. The Governor is hereby further pleased, in exercise of the powers under Section 3 of the said Act, to constitute, in respect of the abovementioned industrial development area, for the purposes of the said Act, and Authority to be called the New Okhla Industrial Development Authority , consisting of the following, namely (i) Secretary to the Government, Uttar Pradesh, Industries Department, ex officio Member Chairman [Under clause (a)] (ii) Secretary to the Government, Uttar Pradesh, Public Works Department, ex officio Member [Under clause (b)] (iii) Secretary to the Government, Uttar Pradesh, Local Self-Government, Department, ex officio Member [Under clause (c)] (iv) Secretary to the Government, Uttar Pradesh, Finance Department, ex officio Member [Under clause (d)] (v) Managing Director, U.P. State Industrial Development C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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