TMI Blog2024 (2) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute on the Cenvat Credit availed by appellant in this regard. So also there is no dispute that appellant has not discharged Service Tax on the payments received for providing services. The allegation is that they did not discharge Service Tax on advance payments. As already stated, there is no evidence of any transactions of receiving advance payment which has escaped payment of tax. The accounting of amount under the head negative debtors is assumed by department as advance payments. The department has not been able to correctly establish the basis of demand and has raised the demand on a suspicion of the accounting done under the head Debtors with negative marking - thus the demand cannot sustain. The issue on merit is answered in favour of appellant. Extended period of limitation - Suppression of facts or not - HELD THAT:- The department has failed to establish any positive act of suppression on the part of the appellant. The demand raised invoking the extended period is therefore not sustainable. The appellant succeeds on the issue of limitation also. The impugned order is set aside. The appeal is allowed. - HON'BLE MEMBER (JUDICIAL), MS. SULEKHA BEEVI C.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re shown as debts under the head Debtors and the amounts which the Appellant owes to the network firms for services provided by network firm to appellant is shown as negative items under the head Debtors , thereby adjusting the liabilities of the Appellant against the debts. The Appellant maintains current account with the network firms. 2.3 It is submitted that all the entries made under the head of Debtors are backed by invoices/ debit notes. On these invoices/ debit notes, Service Tax is being duly discharged. It is pertinent to submit that Service Tax has been paid already by the network firms on the transactions which are mentioned as negative items under the head Debtors and which have been treated as advance payments in the impugned Order. Further, the Appellant has also availed CENVAT Credit on the said transactions, which has not been disputed by the Department. 2.4 In support of the above, the Appellant has submitted the following documents: Invoice/ Debit Notes-wise correlation with respect to approximately 90% of the demand Exhibit - F CENVAT Credit register Exhibit O Accounting of advances received from customers: 2.5 It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land allegation in the Show Cause Notice that a service under a particular head is provided without any substantiation to how the said service falls under the particular head as done in the instant case makes the SCN vague and the demand unsustainable in Law. In this regard, reliance is placed on the case of Gujarat Power Corporation Ltd. v. CCE ST, Ahmedabad, STA No. 10193 of 2017 CESTAT Ahmedabad C. Burden of proof has not been discharged by the Department: 2.14 It is submitted that the Department has not discharged burden of proof to show how Service Tax is attracted in the instant case. It is submitted that the burden is on the Department to bring a transaction to charge. The Department is required to discharge the burden to prove that there has been a service provided, consideration received and service recipient who has received the service to attract Service Tax. The same has not been done in the instant case. In this regard, reliance is placed on the case of Commissioner of Cus. (Imports), Mumbai v. Dilip Kumar Co., 2018 (361) E.L.T. 577 (S.C.). 2.15 The SCN and the impugned Order merely refer to entries in the books of accounts and the charging provision a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors. In the second letter dated 03.04.2014, it was stated that the amount are expenses incurred by the Appellant which is to be paid to network firms. It is submitted that a conjoint reading of the two letters brings out the clear position that the amounts in the negative items under the head debtors are expenses incurred and to be paid to network firms who are the creditors. It is submitted that when expenses are incurred, such amount of expenses are debited as expenses in financials and the account of the vendor would be credited in the financials, as done in the instant case. It is therefore submitted that the statement with respect to creditors in the first letter and with respect to expenses incurred by the Appellant are two legs of the same transaction. Therefore, it is submitted that the two letters cannot be said to be contradictory to each other. ii. The debits notes/ invoices submitted by the Appellant correlate with the excel sheet and the same is not made-up: 2.20 It is submitted that the excel sheet provided by the Appellant is not made-up and it correlates with the list of debtors and the sample debit notes/ invoices submitted by the Appellant vide lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n between Para 7 and Para 8 and the Appellant cannot be fastened with liability of Service Tax on the expenses charged on them merely because they have paid Tax on the amounts actually received by them for services. F. Extended period of limitation could not have been invoked in the instant case: 2.28 It is submitted that the entire demand has been raised and confirmed by invoking extended period of limitation upon alleging that there was suppression with intention to evade payment of Tax by the Appellant. 2.29 It is submitted that there is no suppression by the Appellant as the Appellant was not required to disclose the expenses incurred by them towards services provided by the network firms. The network firms disclosed the same and also paid Service Tax on the same. It is submitted that the Appellant has disclosed the services provided by them duly and also remitted Tax with respect to the same. 2.30 Without prejudice to the above, even assuming without admitting that the Appellant is liable to pay Service Tax in the instant case, the non-payment or non-reporting of the same in returns would not automatically show that the Appellant has willfully suppressed informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order was reiterated. 4. Heard both sides. 5. The issue to be decided is (i) whether the demand of Service Tax alleging that appellant has received advance payment from their clients (and accounted under the head debtors indicating negative) is sustainable or not. (ii) whether the extended period is invocable. 5.1 The allegation in the SCN is that appellant received advance payments from their clients and did not discharge Service Tax on these amounts. The Ld. Counsel for appellant has submitted that the department has proceeded with the investigation and issued SCN on a wrong understanding of the manner by which the appellant had maintained the accounts due to the format of the SAP accounting system. It is submitted that the period is prior to 2011 during which period the Service Tax was to be paid on receipt bases. It is explained that the amounts shown in negative are in respect of transactions with their network firms. To understand the issued better Annexure-D of the Audit report is extracted as under: DHS Baroda Analysis of High value unallocated credits as per Annexure D of the Audit Para S.No . Name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9000010150 Debit note raised by DTTIPL 3 44,39,575 4,43,958 39,95,617 8 Deloitte Touche Tohmatsu -33,46,875.00 9000010150 Debit note raised by DTTIPL 4 33,46,875 0 33,46,875 9 Deloitte Touche Tohmatsu -4,22,73,512.00 9000010150 Debit note raised by DTTIPL 5 4,25,75,800 3,02,288 4,22,73,512 10 Deloitte Touche Tohmatsu -1,36,61,013.10 9000010150 Paid by DTT on our behalf to AFFCo Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 Deloitte Haskins Sells- Mumbai -7,75,10,016.00 9000010159 Debit Note raised by DHS M 8 8,07,39,600 32,29,584 7,75,10,016 18 Deloitte Haskins Sells- Mumbai -75,44,520.00 9000010159 Debit Note raised by DHS M 9 83,82,800 8,38,280 75,44,520 19 Deloitte Haskins Sells- Mumbai 1,55,00,000.00 9000010159 Paid by DHSM to DHS B on behalf of DSSIPL 20 Deloitte Haskins Sells- Mumbai 1,07,04,502.90 9000010159 Paid by DH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 C.C.Chokshi Co. -8,80,361.38 Op balance Mar'07 26 C.C.Chokshi Co. -31,46,545.00 Fixed Assets Trfd. from CCC 27 C.C.Chokshi Co. -30,00,000.00 Funds trf 28 C.C.Chokshi Co. -15,00,000.00 Funds trf 29 C.C.Chokshi Co. -18,00,000.00 Funds trf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 C.C.Chokshi Co. -2,36,866.00 Fixed Assets Trfd. from CCC 42 C.C.Chokshi Co. 17,316.00 43 C.C.Chokshi Co. -5,00,000.00 Funds trf 44 C.C.Chokshi Co. 91,495.00 Funds trf -70,03,932.38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant against debts. Appellant----Network firms [-Debtors] Network firms--- Appellant [Debtors] 5.4 The appellant maintained a current account with the network firms and by issue of debit notes they were able to make adjustments of the amount to the paid and to be received by them in respect of network firms. It is seen that the network firms have raised invoices on the appellant collecting the Service Tax from the appellant. For the payments along with Service Tax made to network firms the appellant has availed credit of such Service Tax as input service and there is no dispute in this regard. 5.5 The statement of Shri Yogesh G. Shah partner of the appellant was recorded on 14.08.2014. It is stated by him as answer to question no.12 that whenever an advance is taken, an invoice is raised on the client collecting the Service Tax. To the question no. 28 why figures showing as in bracket in the list of outstanding debtors as on 31.03.2012? the said partner has replied as under: in reference to our letter dated 03.04.2014, we have already provided the rationale for the figures showing in brackets for an amount aggregating to Rs.36.22 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egative marking. We therefore find that the demand cannot sustain. The issue on merit is answered in favor of appellant. 5.8 The Ld. Counsel has argued on the grounds of limitation also. It is seen that the demand has been raised pursuant to audit verification. The audit report dated 17.02.2014 at para 8 shows the objection raised by the audit team of non payment of Service Tax due to the peculiar accounting system of the appellant. The appellant has issued series of reply, explaining why they happened to show 'debtors' as negative balance. The SCN dated 28.08.2014 is issued for the period from 10/2008 to 3/2012. It is seen that prior to this an audit for the period April 2004 to March 2010 was conducted. The final audit report for this period has not objected to the accounting system or raised an query in this regard. This audit was conducted on 09.03.2011 and 11.03.2011. Later, for the period 2010-2011 audit was conducted on 30.01.2012, 31.01.2012 and 07.02.2012. The final audit report for this period also does not raise any objection as to the accounting method adopted by the appellant. Much later, after audit report dated 13.02.2014, this SCN has been issued alleging ..... X X X X Extracts X X X X X X X X Extracts X X X X
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