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TMI Blog2024 (6) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 73(1) of the Finance Act, 1994 by applying the provisions of extended period; (b) I also confirm the demand of interest due on the aforesaid amount of Rs.1,65,88,643/-, and order for recovery of the same from the aforesaid party under the provisions of Section 75 of the Finance Act, 1994; (c) I confirm the demand of irregularly availed Cenvat Credit of Service Tax amounting to Rs.37,10,373/- (Rupees Thirty Seven Lakhs, Ten Thousand, Three Hundred Seventy Three only) (inclusive of Education Cess & Secondary & Higher Education Cess), and order for recovery of the said amount from the party under the provisions of Rule 14 of the Cenvat Credit Rules, 2004. (d) I also confirm the demand of interest due on the aforesaid amount of Rs.37,10,373/-, and order for recovery of the same from the aforesaid party under the provisions of Rule 14 of the Cenvat Credit Rules, 2004. (e) I also impose a penalty of Rs. 10,000/- (Ten Thousand only) under Section 77 (1)(a) of the Finance Act, 1994, for the afore-mentioned contraventions. (f) I also impose a penalty of Rs. 10,000/- (Ten Thousand only) under Section 77 (1)(b) of the Finance Act, 1994, for the afore-mentioned contravention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant was in from Renting of Commercial Property, Common Area Maintenance Charges and Power Supply Charges. Appellants were not charging service tax on the bills issued for rent of M/s Future Value Retail Ltd. and M/s Cinemax India Ltd., but they were affixing a stamp on the face of it which reads as 'service tax, if applicable, it will be charged separately'. These two are the major clients with whom appellants have rent agreement. 2.4 It was observe that during the period October, 2011 to March, 2012 appellants have shown Rs.2,03,74,068/- towards rent, which has been shown as exempted income and no service tax being paid thereon. Appellants were received rent of Rs.15,88,978/- per month to M/s Future Value Retail Ltd. (earlier M/s Pantaloon Retail India Ltd.) and Rs.12,77,040/- per month to M/s Cinemax India Ltd. Though appellants were regularly issuing bills to M/s Cinemax India Ltd. and M/s Future Value Retail Ltd. and receiving amount towards rent but no service tax has been charged and paid thereon and paying the same to government. It was also observed that certain bills were issued which were towards rent which was for a period of one day to one month. 2.5 However, reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. Section 70 of the Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994 inasmuch as they failed to assess the tax due on the service provided by them and failed to furnish periodical return of the proper amount and in a prescribed manner to the Superintendent of Central Excise." 2.9 A show cause notice dated 20.07.2014 was issued to the appellant asking them to show cause as to why- i. Service Tax amounting to Rs.1,65,88,643/- (Rupees one crore sixty five lakhs eighty eight thousand six hundred and forty three only) (inclusive of Service Tax amounting to Rs.1,61,05,478/- Education Cess amounting to Rs.3,32,111/- & Secondary & Higher Education Cess amounting to Rs.1,61,054/-) (Details are as per annexure- 1 to 5) not paid by them should not be demanded and recovered from them under the proviso to Section 73(1) of the Finance Act, 1994; ii. Interest at the appropriate rate should not be charged and recovered from them under Section 75 of the Finance Act, 1994; iii. Penalty under Section 76, 77 & 78 of Finance Act, 1994 should not be imposed upon them; iv. Cenvat credit of Service Tax amounting to Rs.37, 10,373/-(Rupees thirty seven lacs ten thousand three hundre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress its foot to crush the legal defences or the documentary defences available to a noticee. It is fully the choice of a noticee to raise all defences which are available to him under the law and the right of the department/ authority would only be to consider the defences and reject the same if the same are not in accordance with law or are based on mis-construction of the factual aspect or misconception of law. * A defence whether is genuine or misconceived whether is false or truthful cannot be decided before the defence is raised. It would be too much to say that a particular defence cannot be permitted to be raised because in the opinion of the department or its officers such defence may prove to be futile. * Once it is shown to the department or the department feels that the documents are not required by the department and the department is of the considered opinion that it is not relying upon the documents, then, it is duty bound to return the records. They have no authority either under the law or under the circulars to sit tight over the records and refuse to return the same. The department has no authority under the law to keep the records with it. [METHODEX SYSTEMS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the Assistant Commissioner (Prev.), Central Excise, Kanpur vide letter No.1709 dated 10.09.2013 forwarded the statements of the staff posted in the dispatch Section of the Commissionerate office. Both the staff stated that neither the stamp was of their Section nor had they received the letters. * However, in the following correspondences/ the reference of the letter dt. 30-07-2012 was specifically given;- (a) Summon vide F. No. DGCEI/KRU/INT/25/12/79 dt. 30-01-2013 duly replied on 08-02-2013; (b) Summon vide F. No. DGCEI/KRU/INT/25/12/131 dt 15-02-2013 which was replied on 25-02-2013 with Xerox Copy of entire set of documents with reply of Summon dt. 08-02-2013; (c) Summon vide F. No. DGCEI/KRU/INT/25/2012/364 dt. 06-05-2013 duly replied on 13-05-2013; (d) Summon vide F. No. DGCEI/KRU/INV/ST/30/11/749 dt. 12-08-2013 duly replied on 26-08-2013; (e) Summon vide F. No. DGCEI/KRU/INT/25/12/1246 dt. 18-12-2013 duly replied on 26-12-2013; * Once in series of correspondences, Xerox copy of such letter was also enclosed, the Department of DGCEI did not say anything on the same at any stage prior to the show cause notice and if there were any internal correspondences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be withdrawn. * And at the end, for the disallowance of CENVAT Credit, the party referred to its letter dated 30-07-2012, and submitted that the demand is absolutely incorrect. It is time barred also. PERSONAL HEARING 47. Three opportunities of Personal Hearing were given to the party, as provided in the law, vide letters dated 18.06.2014, 02.09.2014 and 10.09.2014, but none appeared on behalf of the party." 4.3 Further, in para no.51 onwards, impugned order records as follows:- "51. I have gone through the case file, and I observe that show cause notice dated 27.01.2014 alongwith copies of RUDs was served upon the party. Thereafter, the party had requested the department to provide them the copies of Non-RUDs vide their letters dated 25.02.14, 23.05.14 and 25.06.14. In compliance, besides various telephonic reminders, as many as six letters from the DGCEI dated 08.08.14, 22.08.14, 01.09.14, 16.09.14, 29.09.14 and 27.10.14 were sent to the party requesting them to attend their office at Kanpur for taking delivery of the Non-RUDs. I have gone through the said letters, and I observe that not once did the party sent its representative for the said purpose. I also obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the doctrine of natural justice and awarded the sufficient opportunities to the party to represent their case, but the party is in a habit not to cooperate with the revenue. Since the principles of natural justice have been followed and sufficient opportunities have been given to the party, which the party failed to avail, I am, therefore, left with no other option but to proceed to decide the case on the basis of the interim reply of the party vis-à-vis the provisions of the law. 54. I have gone through the allegations made against the party, the evidences in the form of relied upon documents as well as the provisions of law. In this backdrop, I find that the following issues are pending for consideration before me in the present case: (i) Whether the demand of Service Tax amounting to Rs. 1,65,88,643/- (inclusive of Education Cess & Secondary & Higher Education Cess), as detailed in Annexures- I to V, is sustainable or not? (ii) Whether the demand of Cenvat credit of Service Tax amounting to Rs.37,10,373/- (inclusive of Education Cess & Secondary & Higher Education Cess) wrongly availed by them is sustainable or not? (iii) Whether the demand of Interest under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect that Hon'ble Supreme Court has in the case of Retailers Association of India v. Union of India - 2012 (26) S.T.R. J96 (S.C.) have observed as follows:- "The learned Additional Solicitor General prays for time to file counter affidavit on behalf of the respondents. Let the needful be done within four weeks. Rejoinder affidavit, if necessary, may be filed within two weeks thereafter. Having regard to the issue and revenue involved, we expedite the hearing of the appeals. C.A. No. 8390/2011 M/s. Retailers Association of India v. Union of India & Ors. Having heard learned counsel for the parties on the question of stay with regard to the arrears of service tax due from the members of the appellant association prior to 30th September, 2011, we direct as follows : all members of the appellant association, namely, Retailers (i) Association of India, who are before us, shall deposit with the concerned department 50% of the arrears towards the said tax within six months in three equated instalments, on or before 1st November, 2011; 1st January 2012 and 1st March, 2012; (ii) for the balance 50% all the members shall furnish a solvent surety to the satisfaction of the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax, stayed in terms of this order, as may be directed by this Court at the time of final disposal of the appeals and (iv) the successful party in these appeals shall be entitled to interest on the amount stayed by this Court at such rate as may be directed at the time of final disposal of the appeals. It is clarified that this interim order shall apply only in the case of the appellants who shall file the requisite affidavits within the aforesaid period of four weeks from today. We further direct that any default in deposit of any one of the instalments by the dates fixed above, would result in vacation of this stay order and it will be open to the department to recover the balance amount in accordance with law." The Bombay High Court in the impugned order had held that Service tax on renting of immovable properties is a tax on taxable service. Measure of tax i.e. rental income is not indicative that the tax and its charge is on the land of building as a unit. In view of this Proposition, the Bombay High Court held that legislative basis that has been adopted by the Parliament in subjecting the taxable service involved in the renting of the property to the charge of Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the party has short paid Service Tax on account of providing aforementioned taxable services to the tune of Rs.59,85,924/- (including Education Cess and SHE Cess) (Annexure-I) for the period June, 2009 to September, 2013 under the proviso to Section 73(1) of the Finance Act, 1994." 4.7 In respect of demand of service tax made in the Common Area Maintenance Charges, Commissioner have categorically held as follows:- "68. I observe that the contention of the party in this regard was that the department did not point out how the figures have been calculated, and in absence of which they claim that the demand of Service Tax raised by the department is incorrect and. unreasonable. I have carefully gone through the facts on record, as well as the Annexures to the show cause notice. I find that in this issue as well, the methodology of arriving at the figures of demand of Service Tax has been clearly elaborated in the corresponding Annexure to the show cause notice. I have also gone through the defence submissions of the party in this regard, and I find that the party has disputed the figures alculated by the department, in Annexure No. II of the show cause notice, while cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 read with Section 65(105) (zzg) of the Finance Act, 1994 upto 01.06.2012, and providing taxable services even after 01.07.0212, as such services are neither covered in the negative list nor are they exempted services, to the tune of Rs.23,37,782/- (including Education Cess and SHE Cess) (Annexure-II) under the proviso to Section 73(1) of the Finance Act, 1994." 4.8 In respect of Power Supply Charges, Commissioner in the impugned order observed as follows:- "73. On analyzing the afore-said statutory provisions, it is clear that for any activity to be covered under 'Business Support Services' it must be related to business or commerce, it should be outsourced, and it should be related to infrastructural support. However, the party in its defence has just contended that such charges are for sale of electricity, which is outside the purview of Service Tax. I observe that in this case, there can be two possible scenarios. One, the charges being collected by the party were on actual electricity consumption, based on electric meter reading; and two, the charges were being collected for facilities extended, on lumpsun basis. 74. I am of the view that the activity of provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service knows that the goods and services for which payment has been made by the service provider shall be provided by the third party; (vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; (vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and (viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account. Explanation-1.-For the purposes of sub-rule (2), "pure agent" means a person who- (a) enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service; (b) neither intends to hold nor holds any title to the goods or services so procured or provided as pure agent of the recipient of service; (c) does not use such goods or services so procured, and (d) receives only the actual amount incurred to procure such goods or services. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice, I observe that on scrutiny of the Profit & Loss account of the party for the financial year 2012-13, it was noticed that the party had received income from parking of vehicles. The department was of the view that the same is taxable with effect from 01.07.2012, as the same is not covered under the negative list, therefore, the party is liable to pay Service Tax on this income. In this case, I observe that the party has not disputed the levy of Service Tax on the considerations received from parking of vehicles. However, their plea was only with regards to the date of applicability of Service Tax on such activities. 80. I observe that Notification No. 25/2012-ST dated 20.06.2012 was issued in supersession of Notification No 12/2012- ST dated 17.03.2012, wherein "Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility were made exempt from the whole of the Service Tax leviable thereon under Section 66B of the said Act. Further, Notification No. 03/2013 ST dated 01.03.2013 was issued, amending the Notification No.25/2012-ST dated 20.06.2012, which finally made considerations received from pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and extending other facilities such as uninterrupted electricity, parking, toilets etc. Such events were intended for marketing, promotion or advertisement of products or services for growth in respective businesses, and consideration for such facilities provided by the party was charged from the clients. On the basis of the statutory provisions and Circulars cited supra, I am of the considered view that Service Tax is payable by the party under Business Exhibition Service and Event Management Service, on the amounts realized on the strength of the bills issued to various parties. I observe that although the party has not disputed the leviability of Service Tax on such amounts realized by them, however, they have contended that they have already paid Service Tax on the same, by including the same in rent. Since no documentary evidences have been submitted by the party in support of their contention, no credence can be given to the claim of the party. In these circumstances, as per the aforesaid statutory provisions of the Finance Act, 1994 and the view taken by the Hon'ble Tribunal in the case of U.G. Sugar & Industries Ltd. Versus CCE, Meerut-II (2011 (266) E.L.T. 339 (Tri. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is neither subjected to central excise duty nor to service tax. Input credit of service tax can be taken only if the output is a 'service' liable to service tax or a 'goods' liable to excise duty. Since immovable property is neither 'service' or 'goods' as referred to above, input credit cannot be taken. 94. On going through the aforesaid Circular, I observe that it has explicitly clarified that Cenvat Credit is not admissible on the input service used in the construction of commercial building. In the instant case, the party has taken Cenvat Credit to the tune of Rs.37,10,373/-of Service Tax paid on the services related to construction of the building, like construction services, architect services etc. It is judicially settled that Circulars/clarifications are binding on the departmental authorities, and have the force of law. In view of the clarification provided by the aforesaid Circular, I hold that the Cenvat Credit to the tune of Rs.37,10,373/- of Service Tax availed for construction of the commercial building is not allowable, as the same is not covered under Input service for renting of immovable property service, and the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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