TMI Blog2024 (4) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, for a service (not under negative list) rendered by the parent company to its unit. The Commissioner s finding is that when PGS was established, the appellant had negotiated with IOC to get PGS distributorship of gas. Therefore, according to the Commissioner, the appellant had rendered a service and what was paid was a consideration for it. There is nothing unusual about a parent company negotiating on behalf of one of its units. Such negotiation does not become a taxable service. Even according to the Commissioner, the negotiation had taken place in 1984-1986 at a time when there was no levy of service tax at all. The demand under this head needs to be set aside and is set aside. Legal Consultancy service - Reverse Charge Mechanism [RCM] - HELD THAT:- Service tax is to be paid on the consideration paid for a service which was a taxable service (up to 2012) or for service not under negative list (after 2012). It is not, as wrongly held by the Commissioner, on the expenditure booked by the assessee. Under the head Legal Consultancy Service, the appellant had booked some amounts of which to the extent they represented payments made for the legal services, it had paid service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not under negative list, is fallacious - The demand of Rs. 13,55,398/- on this head needs to be set aside and is set aside. Director s remuneration under reverse charge - HELD THAT:- The case of the appellant is that it paid the amounts to its full time Directors who are its employees. Unless any contrary evidence can be brought on record by the Revenue, this must be accepted and if so, any service rendered by the Directors to the appellant and amounts which the appellant paid as compensation are clearly excluded from the scope of service tax by section 65 (44) (b) of the Act - The demand on this head needs to be set aside and is set aside. Extended period of limitation - penalty under section 78 - HELD THAT:- The Central Excise officer has, evidently, not done his job of scrutinising the returns, calling for records and ascertaining if the service tax was correctly paid and later, the audit discovered the incorrect self-assessment by the appellant. This does not prove that the appellant had an intention to evade but only proves that the Central Excise officer under the Commissioner had not done scrutinised the returns as he was required to. Nothing in the entire impugned order e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it did not fall under the negative list. According to the appellant, PGS is a unit of the appellant created to supply LPG cylinders to its employees. PGS earned some profits though this trading and transferred some of the profits to the appellant (which is its parent company). The service rendered by PGS to the appellant or by the appellant to PGS is a self service. At any rate, what was transferred by PGS to the appellant was the profit and not any remuneration for its services. 7. Learned authorised representative reiterates the finding of the Commissioner that the appellant had, in fact, negotiated with Indian Oil Company [IOC] to obtain the distributorship in 1984-86 and as a result, PGS got the agency and it paid the appellant. Therefore, it is a service other than one in negative list. 8. Having considered the submissions, we do not find the essential requirements for levying service tax in this demand, viz., a service recipient, a service provider, a service (or which is not in the negative list) and a consideration for such service. Indisputably, PGS is a unit of the appellant. There is nothing unusual about a unit transferring profits to its parent company. Merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such amounts. The demand of Rs. 1,26,820/- on the amounts paid towards court fees and reimbursements of travel expenses cannot be sustained and needs to be set aside. Renting of immovable property service (from 2009-2010 to 2011-2012) 12. The appellant had let out its immovable property and earned rent of Rs. 21,91,118 during the period on which service tax of Rs. 6,30,786/- was demanded. The appellant paid Rs. 2,04,569/- and did not pay the rest of Rs. 4,26,217/- on the ground that these amounts were received as rent from its employees and these were not taxable. 13. Learned authorised representative supports the impugned order in which the Commissioner did not agree with the calculation of the appellant stating that the entries made in the sample salary slips of employees of the appellant do not correlate with the entries made in the general ledger and that the appellant had not provide any evidence to show from where the entries in the general ledger have been made. Therefore, he confirmed service tax on the entire income of the appellant under this head. 14. We have considered the submissions. The Commissioner confirmed the demand on the income received under this head witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 was service tax payable on income. If the investigation by the department shows that the income was a consideration on which service tax was payable, it can be levied. If the department cannot find any evidence to this effect, as is the case here, no service tax can be charged. The Commissioner s logic that, since the appellant is not a manufacturer but a service provider and has earned an income, it must be for rendering a service not under negative list, is fallacious. It is not necessary that a manufacturer receives income from only selling what it manufactured nor is it necessary that a service provider to receive income only from what it sells. Interest, for instance, is an income not from manufacture or rendering service. Similarly, are the various amounts which one may receive as fees or compensation, etc. The demand of Rs. 13,55,398/- on this head needs to be set aside and is set aside. Director s remuneration under reverse charge 18. Demand of Rs. 1,22,92,615/- was confirmed under reverse charge on the amounts which the appellant had paid to its Directors during the period July 2012 to March 2014. 19. The appellant s contention is that the Directors were its employees a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disclose the true facts in their ST 3 returns, which came into the notice of the department at the time of audit. I observe that the said party failed to declare true facts to the department and had failed to discharge service tax in contravention of the provisions of section 67 and section 68 of the Act. Thus, I observe that the said party has suppressed and mis-declared the information to the Department, with intent to evade payment of Service Tax liability, for which penalty under section 78 of the Finance Act, 1994 is imposable on them . 26. Evidently, the reasoning of the Commissioner is that: a) The appellant had not disclosed true facts and had not paid service tax correctly in its ST 3 returns; b) They came to the notice of the department during audit; c) By failing to disclose true value of taxable services, the appellant contravened the provisions of sections 67 68; d) Therefore, the appellant had suppressed and mis-declared information with an intent to evade. 27. What is evident from the above is that the self- assessment of service tax by the appellant was not correct in the opinion of the department because it had not disclosed certain amounts (which were taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
