TMI Blog2024 (4) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... n clarified by the Board vide its Circular dated 30.05.2018. It is further found that the ground raised by Learned Special Counsel for Revenue regarding bifurcation of bundled service in respect of comprehensive contract where police/fire response system was also in bundle, is only minuscule, being less than 5% and hence did not call for any bifurcations in terms of Section 66F(3)(a) of the Finance Act 1994. Admittedly Appellant have been providing services to the State Governments under written agreements. All the receipts are through the banking channel. Admittedly, Appellant have maintained proper books of accounts and records of the transactions. Appellant was also registered with the Service Tax Department and they were filing their returns and paying the admitted taxes. The Appellant assessee was under bonafide belief that the services being related to public health under NHM they are entitled to exemption under Notification No. 25/2012 ST. The assessee was also under bonafide belief that the service relating to emergency response service including for police/fire was also exempted being provided to the Government - Further evidently the Appellant on being so advised, during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 2016 along with appropriation of matching amount already paid. Further interest was demanded under Section 75 and the amount already deposited Rs. 46,04,563/- was appropriated towards the interest liability. Further penalty of Rs. 81,19,495/- was imposed under Section 78 of the Finance Act. Further penalty of Rs. 10,000/- was imposed under Section 77. The personal penalty proposed on Mr K. Krishnam Raju, Director was dropped. 2. Revenue is in appeal being appeal No. ST/30093/2019 against dropping of the demand and the Appellant assessee is in appeal No. ST/31 268/2018 against confirmation of the part of demand for service tax with respect to Dial 100 Project. The Appellant assessee also filed Miscellaneous Application for additional evidence in both the appeals being Miscellaneous Application No. ST/AE/30231/2023 in appeal No. 31268/2018 and Miscellaneous Application No. ST/AE/30646/2019 in appeal No. ST/30093/ 2019. 3. The brief facts are that the Appellant G V K Emergency Management Research Institute have Registered Office at Secunderabad (herein after referred to as GVK EMRI for short). They had taken centralised registration for providing taxable services under the head B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Project. This was implemented in about 14 States/Union Territories. They are providing the emergency response service under public-private partnership by operation and maintenance of the fleet of ambulances of the respective State Governments which includes provision of manpower, infrastructure, technology, training, 24x7 call centre, fleet management of the ambulances, administration, managerial support etc. 7. Dial 102 Project: this emergency number is for the pregnant women, newborn child for taking them to hospital and drop back to home commonly called as inter-facility ambulance 102 project or 102 ambulance project. They are providing the emergency response service which includes the same provisions as project 108 like manpower, infrastructure, technology, training etc. 8. Dial 104 Project: this emergency number is for the day health services commonly called 104 Ambulance Project by the assessee. In this they are providing emergency response service similar to project 108 in the states of Tamil Nadu and Andhra Pradesh. 9. Dial 100 Project: the emergency number 100 is for the police emergency, which is commonly called Dial 100 Project by the assessee and have been provided in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gency response activity. It further appeared that these services were not declared to the Department in the ST-3 returns filed by them. 13. It further appeared that the assessee was working under selfassessment scheme and they themselves were obligated to correctly assess the service tax liability and pay the same by the due date and also file their periodical returns. It appeared to Revenue that the assessee failed to declare their full service consideration in the periodical return(s) filed, nor they claimed any exemption from payment of service tax on any service. As such Revenue remained fully unaware of their activities. Thus, it appears that the assessee have not made proper disclosures amounting to suppression of the relevant facts in their ST-3 returns, filed with intent to evade payment of service tax. It further appeared had Revenue not initiated enquiry based on intelligence, the aforementioned activity would have escaped the tax liability. 14. Quantification of service tax liability was worked out according to the gross amount received towards the provision of taxable services during the period July 2012 to March 2017 based on the monthly extract of invoice reflected in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r penalties under section 76 Section 77 of the Finance Act, 1994?; and viii. Whether Sri K. Krishnam Raju, Director of M/s GVK EMRI is liable for penalty under Section 78A of the Finance Act, 1994? 16. The Learned Commissioner after examining the reply to show cause notice and hearing the Appellant assessee recorded the findings as follows: The crux of the allegation in the notice was that services of management and implementation of the operation of emergency response service fall under the category of taxable service under Clause 51 read with Clause 44 of Section 65B of the Finance Act 1994 and the said services were neither exempt under entry No. 2 of Notification No. 25/2012 ST nor fall under the negative list of the services under Section 66D of the Finance Act. It is further alleged that the exemption if any, be available only to the extent of cost of transportation of the patient, where fuel charges paid to them by the State Government, in ambulances provided by the respective State Governments, as a third party with effect from 01.04.2015 only and not to the management of emergency response activities which will fall under the taxable service. 17. The Learned Commissioner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearly falls under Serial Number 2(i) (ii) of Notification No. 25/2012 ST and thus the services were unconditionally and wholely exempted. It was also the contention that they do not collect any amount for the service provided from the beneficiary. The said service is provided against an agreement with the State Health Department and they receive their consideration from the Health Departments of the respective State Governments. Further, they have never collected any service tax from the respective State Governments as they were under bonofide belief that the subject service was clearly exempted under the above mentioned Notification. They also referred to the Board Circular No. 210/2/2018 ST dated 30.05.2018 wherein it was categorically stated that the subject service provided to the Government by way of public health was exempted under Notification No. 25/2012 ST. 19. The Learned Commissioner further examined the agreements which are relevant to decide the eligibility for the exemption being claimed under Notification No. 25/2012 ST. 20. The MOU dated 28.11.2015 between Government of Andhra Pradesh and GVK EMRI extracted in para-7 of the show cause notice, indicates that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia include the following: They shall provide a vital emergency management information and assistance to raise a societal awareness and capability in emergency management and response mechanisms to save lives and reduce the economic impact to the citizens, firms and the Government; that they should operate the ambulances and ensure that ambulance services are available on a 24-hour per day and 365 days a year basis; that they will recruit, train and position the required manpower, including pilots drivers and emergency medical technicians who will be present in the ambulances while shifting an emergency case to a hospital; that at least one pilot and one emergency medical technician shall be present at any given point of time to provide patient stabilisation, first-aid and other pre-hospital care; that they shall attend emergency calls that are received at emergency response centres as per the agreed performance benchmarks; that they assist Government when required in co-ordination of the hospitals in the State and such other matters from time to time; that they conduct training programs for paramedics, doctors and other academic activities as required for governmental doctors and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public and third by the PSP for the Government. In respect of the first and the second legs of activity that is the ambulance service being provided by the Government and PSP to the patients, neither the State Governments nor the PSP charges any fee from the patients to avail of these ambulance services. The PSP however charges a fee from the State Government for carrying out the third activity. 27. Any activity carried out by one person for another without any consideration, will not be covered under the definition of service under Section 65B(44) of the Finance Act 1994. Even if a consideration was charged by virtue of entry to II of Notification No. 25/2012 ST, services provided by way of transportation of a patient in an ambulance, other than healthcare service by a clinical establishment, authorised medical practitioner or paramedics, are exempted from the whole of service tax levy thereof. Thus the activities provided by the State Governments and the PSP to patients are not levied to service tax. 28. It was also clarified that the phrase public health is the general term and will cover a number of activities which ensure the health of the public. In reference to Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. 31. Learned Commissioner also noticed that against the total tax liability for dial 100 project Rs. 1,18,97,295/- for the period 4/2013 to 3/2016 the Appellant have already deposited Rs. 1,19,05,483/-, thus they paid Rs. 8,188/- in excess of their total liability. Accordingly, Learned Commissioner was pleased to appropriate the amount of Rs. 1,18,97,295/- in respect of the liability for dial 100 project as per annexure B3 to SCN. Further the Learned Commissioner was pleased to drop the demand of Rs. 355,04,65, 858/- (356,23,63,153-1,18,97,295) for the period July 2012 to March 2017 with respect to emergency response service of dial 102/104/108. The Learned Commissioner further ordered recovery of interest under Section 75 on the amount of service tax confirmed and further ordered appropriation of Rs. 46, 04,563/- deposited towards interest prior to SCN. Further penalty of Rs. 81, 19,495/- was imposed under Section 78 being @ 50% for the period April 2013 to April 2015 and at 100% of tax for May 2015 to March 2016. Further penalty of Rs. 10,000/- was imposed under Section 77 of the Finance act. The proposal to impose penalty on Mr K Krishnam Raju, Director was dropped. 32. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment under NHM is exempted. Further urges that the services were not rendered to a municipality. It is onus of the assessee claiming exemption to prove the entitlement to exemption, as held by Supreme Court in CC Vs Dilip Kumar [2018 (361) ELT 577]. 37. Learned Special Counsel further urges that there are agreements entered into by the appellant assessee under Dial 108/104/102 schemes indicates that the same is to cater to not only health and medical related emergencies but also those related to Police/fire emergencies as specifically mentioned therein. This have been also specifically mentioned by the authorised person Shri K. Marga Bandhu wherein he interalia stated that the MOU with the State Governments were meant to provide comprehensive emergency services for medical emergencies or other emergencies like police/fire, that it is a comprehensive emergency service for medical/police/ fire, but the quantum of services in relation to medical emergencies was maximum and services of fire and police very negligible and restricted to attending call/assigning only. Further urges that the impugned order evidently does not contain any consideration and findings with regard to the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited the service tax along with interest before issue of SCN. So far in respect of other contracts where the services are bundled and the major service was health service, it is urged that there was no such proposal in the SCN to bifurcate the gross in respect of comprehensive service and tax the taxable element separately with regard to Police/fire response service. The Learned Counsel further urges that under the comprehensive service the calls/response related to Police/fire was less than 5% or only minuscule. Further evidently the services under the contract where naturally bundled and no separate remuneration with respect to Police/fire have been billed and or received. Thus under the provisions of Sub Section (3) of Section 66F under Clause (a) it is provided that where various elements of the service are naturally bundled in the ordinary course of business, it shall be treated as the provision of a single service which give such bundle its essential character. It is further urged that in absence of such grounds raised in the show cause notice, the same is both legally wrong and also cannot be raised at this stage. 42. Considering the facts and circumstances and the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside. He further urges that accordingly penalty under Section 78 is not impossible there being no deliberate default in payment of service tax. 47. Learned Special Counsel for Revenue opposing the appeal of assessee reiterated the findings in the impugned order where in the Commissioner have observed that the assessee was well aware of the provisions of service tax as they had themselves got registered with the Service Tax Department and have paid certain amounts of service tax to the Department. The evasive nature of the assessee is evident from the fact that the assessee never bothered to include the total value of proceeds of the services under dispute in their ST3 returns, evidently to suppress the information from the Department with intention to evade payment of service tax. Thus the assessee have deliberately and wilfully ignored the aspect of payment of service tax. Further, reiterates the allegation in the SCN that the short payment of service tax would not have come to light but for the detailed investigation by the Officers of the Department. 48. Having considered rival contentions with respect to the appeal of the Appellant assessee, we find that the Appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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