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TMI Blog2024 (8) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... d order to withdraw the immunity granted to him under Section HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) 108 of the Finance Act-2013 against the VCES declaration dated 24.12.2013. (ii) I reduce the demand of Rs. 37,00,432/- proposed in the Show cause notice by Rs.16,34,960/- for adjustment of advances standing at the beginning of the financial year, and, order to demand and recover Service Tax along with Education Cess and S.& Higher Ed. Cess amounting to Rs. 20,65,472/- (Rupees Twenty Lacs Sixty Five Thousand Four Hundred and Seventy Two only) from Shri Uday Veer Singh against Real Estate Agent Services provided by him during the period April 2009 to March 2013 under the provisions of sub- section (1) of the Section 73 read with Section 111(1) of the Finance Act, 2013 amended. (iii) I order to demand and recover a sum of Rs. 1,01,347/- Rupees One Lac One Thousand Three Hundred Forty Seven only) collected by Shri Uday Veer Singh from his clients but not paid to the exchequer and written off by him during the F. Year 2010-11 from Shri Uday Veer Singh under Section 73A(3) of the Finance Act- 1994. (iv) Further, I also orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services amounting to Rs 8,90,37,974/- rendered by his two proprietorship concerns whereas he had paid Service Tax only against the taxable value of services amounting to Rs.5,43,02,657/-; thus during the aforesaid period he appears to have short paid Service Tax along with education Cess and S.& Higher Ed. Cess amounting to Rs. 37,00,430/-, on the suppressed value of Taxable services amounting to Rs. 3,47,35,317/-. 2.3 Appellant had written off Rs. 1,01,347/- collected as Service Tax, in his books of accounts for the F.Y. 2010-11, which was also required to be paid by them under Section 73A(1) of Finance Act,1994. 2.4 They opted for VCES Scheme to pay their aforesaid service tax liability and M/s Jyoti Syndicate filed VCES application in Form VCES-1 dated 24.12.2013 for the period April' 2011 to September' 2012 declaring value of services Rs. 1,10,63,198/- and applicable Service Tax dues Rs. 11,52,802/-. Out of Total Service Tax dues Rs. 11,52,802/- declared by Shri Uday Veer Singh, Proprietor M/s Jyoti Syndicate Rs. 536714/- was deposited vide challan dated 19.12.2013 Rs. 39688/- deposited vide challan dated 23.12.2013. The remaining 50% of amount alongwith interest am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (e) of section 77(1) of Finance Act 1994 and, 3. Rule 7C of Service Tax Rules-1994. 27. In terms of Section 111(3) of the Finance Act-2013 this show cause notice shall be deemed to have been issued under Section 73 and the provisions of Chapter V of the Finance Act-1994 shall apply accordingly. 2.6 The show cause notice has been adjudicated as per the impugned order referred in para 1 above. 2.7 Aggrieved appellant has filed this appeal. 3.1 We have heard Shri Rajesh Kumar Yadav, Advocate for the appellant on 19.10.2023, when he was directed to file "reconciliation statement taking figures of the OIO and VCES duly certified by the Chartered accountant and file his vakalatnama". Matter was listed on 30.11.2023. 3.2 Arguing for appellant learned counsel submitted that: ⮚ The notice and impugned order are bad in law as the demand of service atx was determined in consolidated manner in respect of two proprietorship firms registered separately and filing separate ST-3 return. Hence, demand against appellant by clubbing the assessment of service tax, is arbitrary and without any basis. ⮚ The service tax being an indirect tax, attaches to a transaction r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dependent of its proprietor? 2) Whether the Best Judgment method enumerated in Section 72 of the Finance Act,1994 may be applied to present proceedings? 3) Whether Shri Uday Veer Singh had not determined his Service Tax dues correctly with an intent to evade payment of Service Tax. 4) Whether the demand should remain limited to the period covered in the VCES declaration filed by the noticee? 3.1. The defence has vehemently pointed out that the demand has been raised wrongly upon Shri Uday Veer Singh instead of his two registered proprietary concerns namely M/s Jyoti Estate and M/s Jyoti Syndicate; Demand cannot cover the activities undertaken by its proprietor as shown in Income Tax Returns but not recorded in the accounts of either of the two registered proprietary concerns;. Thus they have tried hard to carve out case as if the proprietors of a proprietary concern and its proprietor ship concerns are distinct entities independent of each other. Now I proceed to examine the defence plea. I find that the issue is no more a res-integra. There exist no doubt or confusion that the proprietor and its proprietary concerns cannot be distinguished from each other being one and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohan v. Sri Suresh Bafna, 1999-1 L.W. (Crl.) 405, B. Akbar Basha Khadiri, J. held that Anas Industries is the accused and it is not a juridical person and the prosecution against the proprietorship suffers inherent defect and liable to be quashed. In yet another decision in Vaidyanathan, etc. V. Dodla Dairy Limited, etc. 1999-1 L.W. (Crl.) 395, M. Karpagavinayagam, J. held that it is a settled position of law that the proprietorship concern by itself iS not legal entity apart from its proprietor; the proprietary concern and the proprietrix are one and the same person. The learned Judge further held, that both proprietorship and proprietrix are one and the same and it can be put in the cause title of the complaint, while prosecuting the drawer either as proprietorship concern represented by proprietrix or the proprietrix, representing the proprietorship concern, as both the things convey the same meaning. Anyhow this question does not arise in the facts of the present case. 6. In this case, accused No. 1 is the proprietary concern and accused No. 2 is the proprietor and both the accused are one and the same person. Accused No. 1 is not a legal entity or juridical person and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e title of the complainant also. Therefore, by following the above proposition, it can be safely held that the prosecution by the proprietor representing the proprietorship concern or the proprietorship concern represented by its proprietor are one and the same, as both things convey the same meaning 15. Therefore, even without amendment the complaints are maintainable, because the complainant in these cases is only the proprietor Subramaniam representing the proprietorship concern. ● Hon'ble Punjab and Haryana High court in the case of Vinod Kumar Gupta Vs. CCE 2013 (287) E.L.T. 54 (P & H) again affirmed the above view,Relevant part of the Judgment has been reproduced below:- 9. Having heard learned counsel for the parties, we are of the considered opinion that proprietorship firm or proprietor thereof cannot be treated as two different legal entities. Partnership firm is a firm in mercantile usage, however, penalty imposed on the proprietorship or partnership firms would mean penalty on the proprietor or- partners hereof, therefore, imposition of penalties one on the proprietorship firm and second on the proprietor would amount to imposition of penalty twice, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also prescribe that person liable to pay tax shall further observe that registration No. of the two proprietorship concerns i.e. M/s Jyoti Syndicate (Registration No. AFHPS2425MSD001) and M/s Jyoti Estate (Registration No. AFHPS2425MSD002) contains the very same PAN No. AFHPS2425M. It leaves no doubt that both the registration have been granted to very same person having that PAN No. i.e. AFHPS2425M. This is not the case for defence that any other person except Shri Uday Veer Singh had obtained the registration for M/S Jyoti Estate and also for M/s Jyoti Syndicate. Further Rule 2(C) of Central Excise Rules 2002 also relevant for Service Tax matters for the terms not defined in Finance Act-1994 or Service Tax Rules 1994, defines the term 'assessee' as person liable to pay Tax. Since in the case of both the proprietorship concerns of Shri Uday Veer Singh, namely M/s Jyoti Estate or M/s Jyoti Syndicate, only Shri Uday Veer Singh happens to be the person liable to pay tax hence he is liable to be treated as assessee to pay any differential taxes short paid if any. Since these two proprietorship concerns do not have any seperate legal identity therefore Shri Uday Veer Singh alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be considered necessary by him to determine the correct amount of tax payable by him. I further observe that in the show cause notice it has been discussed at length as to how correct amount of tax has not been paid by Shri Uday Veer Singh i.e. the person liable to pay tax. As regards requiring separate accounts /Balance sheet in respect of each of the two proprietor ship concerns of Shri Uday Veer Singh, I observe that up to 31.03.11 service Tax was required to be paid on the basis of actual amount received by the service providers thus it is imperative to know the quantum of opening and closing debtors; the value of services rendered during the F.Y. separately in respect of two proprietorship concerns of Shri Uday Veer Singh to ascertain the correct amount of Service Tax payable by each of these two proprietor ship concerns In the SCN it has been alleged and discussed in detail that difference exists between the figures reported by the proprietor in his Income tax Return and the combined figures of his two proprietorship concerns. In view of such existing difference non-availability of separate figures in respect of two proprietorship concerns can not be used by the proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the case for defence that such gross receipts includes any item of income which is not liable to be taxed under the provisions of Finance Act1994 More over they have also accepted in Para D.3 of their defence reply that that there is no set norm under which transactions takes place between him (real estate agent) and the builders. The whole transactions are undertaken based on mutual trust in general and wisdom of the builder in particular. For the sake of ease Para D.3 has been reproduced as follows:- D.3 That in order to discuss the position of point of taxation w. e. f, 01.04.2011, it is pertinent to understand the peculiar nature of transactions and levy of service tax on the Real Estate Agents Services'. Before further going in to the manner of transactions it would be necessary to understand that there is no set norm under which transactions takes place between real estate agent and the builders. The whole transactions are undertaken based on mutual trust in general and wisdom of the builder in particular. Therefore real estate agent undertakes with reliable builders of trust only. While undertaking this business the role of real estate agent is limited to get the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m yet they did not have any formal mechanism to know about the same till the end of the financial year. As such despite showing such utter disregard to Service Tax law and procedure now they have been daring the department to prove individual transactions On the one hand they have been showing regards for the provisions of Income Tax Act to avoid penalty on the other hand they choose to ignore the provisions of Service Tax laws and procedure blatantly, which requires them to keep records that include invoices for providing services in respect of each transactions, without having any regard for the same or fear of penal action for such contraventions. In the absence of specific details about each transactions it would be sufficient to rely on the annual summary of such transactions being shown by the assessee in his Income Tax Returns and Balance sheet and Profit and Loss Account. In view of legal position discussed in earlier paragraph that a proprietor and his proprietorship concerns are one and same it would be wrong to conclude that noticee Shri Uday Veer Singh is not the service provider liable to pay service Tax. also find that the - Amount of Service Tax proposed to be demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional assessment in As already accepted by the defence in Para D2 that under the terms of Rule 6(4) ibid in the cases where the invoice are not provisions of the Point of Taxation Rules, 2011, issued within the time period specified in rule 4A of the Service Tax Rules, 1994, the point of taxation would be the date of completion of provision of the service or receipt of payment whichever is earlier.It is surprising that despite being aware with the legal provisions on the - subject they had not bothered to ensure compliance. Thus find that the defence plea lacks merit and cannot be used as an alibi to not to pay Service Tax Dues. 3.9. I find that not on each and every financial transaction shown in the Income Tax return and balance sheet has been considered for determination of amount of service Tax payable and the items not liable for levy of service Tax have been duly excluded from the computation. Thus it is wrong to conclude that Service Tax has been levied on all incomes mentioned in the Income Tax Return. Revenue has a right to use the information disclosed by any assessee in his income Tax Return and/ or Balance sheet to determine the quantum of taxable services rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontents of these documents should not be considered as truth. is no Moreover the defence has not indicated any infirmity in the Balance sheet and Income Tax Return. In this regard I am also placing reliance on the case of Kothari Shah Texturisers P Ltd. 200(196)ELT 116 (Tri Mumbai). 3.12. I observe that after amendment of Section 65(105) wef 16.06.2005 to include services to be rendered even advance and deposits are liable to be taxed on receipt basis even prior to provision of service, In-case services are not provided assessee has been granted relief under Rule 6(3) of Service Tax Rules-1994. Rule 3 of Point of Taxation Rules 2011 states that point of taxation would be the time when the invoice for service provided or to be provided is issued, however in case where service provider receives the payment before issuance of invoice, it would be the time when such payment is received by him. As such Service Tax is required to be paid on all advances collected by a service provider. It is generally accepted principle of taxation that whoever claims exemption has to prove eligibility therefore onus was shifted upon the noticee to prove that a particular advance appearing in his bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the benefit of Exemption Notification ● In CCE Vs. Paranteral drugs (2009(236) ELT 625 SC ) The Supreme Court reaffirmed the above principle. The Para 8 of the judgement is reproduced below:- "We may add that exemption notifications have to be read strictly. We may also add that the burden is on the assessee to prove that the item falls within the four corners of the exemption notification" 3.13. However I have noticed that it would have helped the noticee to produce relevant documents such as contracts of loan showing terms and purpose of loan certificate from the person advancing the loan/ details of payment of interest to such person on the amount borrowed by the noticee / details of repayment of such loans/ details of payment of Service Tax on advances raised in earlier year/ Auditors report in Form 3 CD etc. The Noticee neither produced any of such evidence in support of their claim nor even a certificate to said effect by a Chartered Accountant. Instead they prefer to complain and curse about the knowledge of accounting of investigating officials or the Authority who had issued the Show Cause Notice. I think that since the noticee does not have any such evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigating Officer despite being given enough opportunity However in order to avoid possibility of taxing repeatedly the very same amount, I hold that the Advances standing at the beginning of the Financial year need to be adjusted; this will ensure that only incremental Advances of a year are subjected to tax in that year 3.15. I find the noticee had submitted only part information/ documents requisitioned by the investigating officer and did not provide information/documents such as details of sub- brokerage paid along with Account ledger of all sub-brokers, Form 26AS, Trial Balance/Balance Sheet for the year 2013-14. further observe that the noticee vide letter dated 21.09.2014 (RUD-15), had also stated they did not issue any bills to Builders because broker is only a selling Agent and keep only booking form and booking list in a project. The builders release commission on the basis of payment received from customers. They had further accepted that they had not maintained any clients ledger account because they sell flat on behalf of builders. They maintain only booking form. Clients pay directly to builder, who maintains clients' ledger account in proper manner. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hence such Debtors accounts were written off in past 2-3 years, however Service Tax amounting to Rs. 1,01,347/- payable against such income remained out standing in their books hence the same has also been written off in 2010-11. d. In support of his aforesaid claims he had assured to provide the relevant evidences along with Certificate to the effect by a Chartered Accountant at the earliest. Similarly Service Tax payable against the aforesaid written off advance of Rs.5,60,252 /- had been paid by him to the exchequer. 3.18. I have noted that he did not provide any documentary evidence or other relevant support or even a certificate of chartered accountant to confirm the claims made by him that Rs. 9,13,688/ standing credit to 10 parties was the amount payable to such persons on account of services rendered by them to the noticee and did not represent the advance received by the noticee for any services provided or intended to be provided. Similarly Service Tax of Rs.1,01,347/- written off by them may also be the amount of Service Tax paid by the clients to the noticee but not paid by the noticee to the exchequer despite collecting the same from clients instead of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for not being accepted by him in lieu of providing service, therefore I hold that in the absence of any evidence or a certificate from a Chartered Accountant to the contrary, the amount having Credit Balance of Rs.15,75,287/- and 7,14,759/- written off by the noticee during 2010-11 and 2011-12 are nothing but IV. Advances paid by the clients of the noticee against which either services had not been provided or if provided had not been recorded in accounts V. Advances received by the noticee from builders for which no service had been claimed to be provided hence written off by the noticee against which Service Tax had not been paid by the noticee VI. Amount of Service Tax written off by the noticee had been collected by the noticee from his clients but not paid by him to the Government 3.22. I have also noted that the noticee had been time and again repeating that they had been paying service tax whenever they had been realising the same from builder on cash basis. This leaves no possibility that the noticee would have paid the service Tax on the unrealised amount of due commission etc. being shown in the balance sheet as debtors Debtors standing at the beginning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Service Tax has been claimed to be paid by the noticee has been mentioned therein clearly. At this stage, except adjustment of advances standing at he beginning of a Financial year, no further modification is required in the Computation of Service Tax shown in Table-6. I have also perused the workings of tax payable by the defence and notice that:- ● Defence has insisted to assume actual receipts as that mentioned by them in ST-3 Return without considering opening and closing debtors having bearing on the amount actual realised by them. ● The defence has fully ignored the amount of advances raised by them for provision of services and thus liable to be taxed in terms of Section 65(105) of the Finance Act-1994 read with Rule 6 of Service Tax Rules-1994. 3.24. In view of above glaring deficiencies in computing Taxable value and receipts of the service in gross violation of Rule 6 of service Tax Rules 1994, and Rule 3 of Point of Taxation rules-2011, the calculation shown by the defence cannot be accepted for determination of amount of Service Tax payable by the noticee in financial year 3.25. I have noted that a sizeable volume of the defence reply has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be recovered under Section 73A of the Finance Act-1994. 3.26 The defence has made efforts to dispute the leviability of Service Tax on the consideration received by the noticee for undertaking the marketing on underwriting basis Underwriting is nothing but an assurance by the Real Estate Agent to the principal that the order for sales of real estate shall be booked for the minimum prices and in case orders are booked below that price the difference between the minimum guaranteed price and actual price shall be made good by the agent. For additional amount of sales realised in excess of minimum guaranteed sales price the agent shall be eligible to higher commission which may extend up to 100% of additional as may be agreed upon between them. In sum this is nothing but a method for marketing of real Estate. Thus the activity is duly covered under Section 65(89) read with Section65(105)(v) of the Finance Act-1994 which read as follows:- '65(105)(v) "taxable service" means any service provided or to be provided to any person, by a real estate agent in relation to real estate.' "Section 65(89) " 'real estate consultant" means a person who renders in any manner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of immovable property'. In this process gross receipt of the business relating to profit derived from business or profession and mentioned in the Income Tax Return also get verified along with the fact that such receipts pertain to Business of the noticee and include no non-profession receipts. In the show cause notice only such gross receipts had been used to verify the correctness of the Service Tax payable by the noticee as mentioned in the Service Tax Returns filed by the noticee. 3.30. I observe that with the introduction of Point of Taxation Rules 2011, w.e.f. 01.04.2011 amount of Service Tax payable is required to be paid on accrual basis or payment basis whichever is earlier. I have noted that figures of Balance Sheets for the Financial Year 2009- 10 to 2012-13 along with acknowledgement of ITR & calculation of income (RUD-19) and value of Taxable services reported in Service Tax Returns for the period 2009-10 to 2012-13 (except ST-3 for the period April'09 to Sept'09 of M/s lyoti Estate) (RUD-20) filed by Shri Uday Veer Singh through his two proprietor ship firms i.e. M/s Jyoti Syndicate and Jyoti Enterprises, combined Balance sheets of Shri Uday Veer Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liminate the possibility of inclusion of Service Tax on the Rs. 37,00,430 amount of advance which had been collected by the noticee in earlier year and not in current year the amount of advances standing at the commencement of Financial Year need to be subtracted. Therefore amount of service Tax liable to be paid by the noticee is required to be determined as follows:- 2009-10 2010-11 2011-12 2012-13 Total 11 Gross taxable value of services on which Service Tax was required to be paid by Shri Uday Veer Singh 9+10 10980433 10924011 56099227 11034303 89037974 11A Less :- Amount of advance receipts from clients at the beginning of the 2474802 4552579 4705455 3450455 15183291 11B Gross taxable value of services after adjusting advance receipts at the beginning of the year on which Service Tax was required to be paid by 11- 11A 8505631 6371432 51393772 7583848 73854683 12 Less value of services on which service Tax paid as per ST-3 returns filed by M/s Jyoti Syndicate 5485971 4907438 38830897 5078351 54302657 13 Value of taxable services suppressed in ST- 3 Returns filed by Shri Uday Veer Singh for M/s ly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period covered by the said return. Provided further that where a notice or an order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period (2) Where a declaration has been made by a person against whom, (a) an inquiry or investigation in respect of a service tax not levied or not paid or short: levied or short-paid has been initiated by way of- (i) search of premises under section 82 of the Chapter; or (i) issuance of summons under section 14 of the Central Excise Act, 1944, as made applicable to the Chapter under section 83 thereof; or (ii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or (b) an audit has been initiated, and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration SECTION 107. Procedure for making declaration and payment of tax dues. - (1) Subject a to the provisions of this Scheme, a person may make a declaration to the designated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 7) of section 107 and no matter shall be reopened thereafter in any proceedings under the Chapter before any authority or court relating to the period covered by such declaration. 8. Failure to make true declaration 111. (1) Where the Commissioner of Central Excise has reasons to believe that 1 the declaration made by a declarant under this Scheme was substantially false, he may, for reasons to be recorded in writing, declarant in respect of such declaration requiring him to show cause why he should not pay the tax dues not paid or serve notice on the short-paid. the (2) No action shall be taken under sub-section (1) after the expiry of one year from the date of declaration (3) The show cause notice issued under sub-section (1) shall be deemed to have been issued under section 73, or as the case may be, under section 73A of the Chapter and the provisions of the Chapter shall accordingly apply. 3.33. I have already discussed that as per his own books of account a sum of Rs. 1,01,347/- had been recovered by Shri Uday Veer Singh from his clients, and thus liable to be paid by him under Section 73A(1); however instead of paying the said amount he had written off the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaving the remaining period as open. In fact in terms of Section 105(e) he has to declare tax dues for the entire period specified therein. Therefore even if he prefers to declare tax dues for only part of the specified period it would amount to conclude that he had declared tax dues for remaining period as Nil. Therefore even if the noticee had filed declaration for the period 01.04.2011 to 30.09.2012, any amount of Service Tax payable by him during the period 01.10.2007 to 31.12.2012 but not paid by him and also remained unreported in his VCES-1 declaration would amount to filing of a substantially false declaration. Thus 1 hold that inclusion of demand for the period, beyond the period specified by the noticee in his VCES-1 Declaration dt.24.12.2012, but duly covered not only under the period specified under Section 105(e) of Finance Act-1994 i.e. 01.10.2007 to 31.12.2012, but also under the 5 years period of limitation specified under Section 73 of Finance Act-1994 cannot be used to vitiate the proceedings initiated for withdrawl of immunity sought under VCES-2013 . I further find that in the present case unreported tax dues have been duly spread over F.Years 2009-10,2010-11,20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding evade payment of Service Tax as he was required to determine his liability for Service Tax paragraphs with an intent to Dues on the basis of payment of taxable services received by him in a quarter which he ignored wholly, as during the Financial Year 2009- 10 to 2010-11 and onwards he did not consider the payment received in respective quarters to determine his Service Tax liability. He had determined the same in the manner contrary to statutory provisions on the subject i.e Rule 6 of Service Tax Rules-2006 read with Section 68 of the Finance Act- 1994, and also the statutory provisions contained in Point of Taxation Rules-2011 3.37. Shri Uday Veer Singh, Proprietor of M/s Jyoti Syndicate and M/s Jyoti Estate failed to pay Service Tax amounting to Rs. 20,65,472/- along with Rs. 1,01,347/- collected from his clients but not paid to exchequer and written off during the F. Year 2010-11 during the period from April 2009 to March 2013 on or before the due date in contravention of the provisions of Section 68 of the Finance Act, read with Rule 6 of Service Tax Rules 1994, as discussed above. Thus I also hold that Service Tax dues amounting to Rs.11,52,802/- already deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be demanded and recoverable from them under Section 73 of the Finance Act 1994 together with interest due thereon under Section 75 of the said Finance Act. 3.40,. have also noted that Shri Uday Veer Singh, Proprietor of M/s Jyoti Estates had not filed the Service Tax Returns for the period April 2009 to September 2009 and also failed to file ther ST-3 returns with in the stipulated time prescribed for filing the ST-3 Returns as detailed below in the Table. Defence has not offered any explanation for the same. Thus I hold that defence agrees with the allegation and has nothing to say in the matter SI. No. Return Period Half Prescribed Due Date Details of Filing of ST-3 Return Jyoti Syndicate Jyoti Estate Actual date of filing Delay in no of days Penalty amount (in Rs) Actual date of filing Delay in no of days Penalty amount (in Rs) 1 2009- 10 1st 25.10.09 30.01.10 97 7700 Not yet filed 20000 2 2009- 10 2nd 25.04.10 26.04.10 1 500 26.04.10 1 500 3 2010- 11 1st 25.10.10 25.10.10 0 0 25.10.10 0 0 4 2010- 11 2nd 25.04.11 21.04.11 -4 0 04.05.11 (By post) 9 500 5 2011- 12 1st 25.10.11 24.12.11 60 4000 23.12.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad resulted into short payment of Service Tax along with Ed.Cess and S.& H.Ed. Cess amounting to more than Rs. 21.66 Lacs, consequently the liability to pay interest automatically accrued upon them at the rate(s) applicable during the material period Therefore I hold that interest at applicable rate(s) is chargeable and recoverable from them in terms of section 75 of Finance Act-1994. In this regard I also place reliance on the verdict given by the Hon'ble Supreme Court of India in the case of Pratibha Processors Vs. Union Of India 1996(88) ELT12 (SC) wherein it was held that interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. Para 13 of the judgment reads as follows:- 13. In fiscal Statutes, the import of the words "tax", "interest", penalty" etc. are well known. They are I different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by public authority for public purposes the payment of which is enforce by law. Penalty is a ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (38) S.T.R. 884 (Tri. - Mumbai) Honble Tribunal held that when the assessee had been operating under self-assessment procedure during the relevant period invocation of extended period of time to confirm the tax demand cannot be faulted at all for their failure to declare the complete particulars with regard to services rendered to foreign advertisers in ST-3 return ● Hon'ble Apex Court in the case of Grauer & Weil (India) Ltd.1994 (74) E.L.T. 481 (S.C.) uphold the invocation when Declaration regarding the second unit, situated on the same plot of land, claimed to have been filed before Excise Department found to be in a different context, It was held that it was not a case of simple inaction or failure but one of wilful and deliberate mis-statement and suppression. ● Hon'ble CESTAT in the case of Rajasthan State Beverage Corporation Limited 2013(TIOL) 1110-CESTAT (Delhi) held that:- "Despite the clear obligation enjoined by the unambiguous provisions of the Act the appellant neither obtained registration as a taxable service provider nor filed periodical returns nor remitted Service Tax provisions of the Act. The tax evasion by the appellant came to notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vol. 85, at p. 580, para 1023, it is stated thus : A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws. (Quoted with approval in the case of Chairman Sebi (supra) ● R.S. Joshi v. Ajit Mills Ltd.: (SCC p. 110, para 19) "Even here we may reject the notion that a penalty or a punishment cannot be cast in the form of an absolute or nofault liability but must be preceded by mens rea. The classical view that no mens rea, no crime has long ago been eroded and several laws in India and abroad, especially regarding economic crimes and departmental penalties, have created severe punishments even where the offences have been defined to exclude mens rea. Therefore, the contention that Section 37(1) fastens a heavy liability regardless of fault has no force in depriving the forfeiture of the character of penalty. [Quoted with approval in the case of Chairman: SEBI (supra)) ● In the case of Satellite Engineering Ltd 1983 (14) E.L.T. 2177 (Bom.) Honble bombay high court held that imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2) of Section 11A." 3.46 Therefore proceeding further it would be pertinent to mention that w.e.f. 14.05.2015, the penal provisions envisaged under Section 76 and 78 of Chapter V of Finance Act-1994 have been changed significantly vide Finance Act2015. Section 78B inserted vide Finance Act- 2015 to the Chapter V of Finance Act-1994, also provides that n respect of cases, where notice under sub-section (1) of section 73 or under the proviso thereto has been served prior to 14.05.2015 but no order has been passed under sub-section (2) of section 73 prior to 14.05.2015,the provisions of section 76 or section 78, as the case may be, as amended by the Finance Act, 2015 shall be applicable. The text of section 78B reads as follows:- SECTION 78B. Transitory provisions. - (1) Where, in any case,- (a) service tax has not been levied or paid or has been short levied or short- -paid or erroneously refunded and no notice has been served under sub-section (1) of section 73 or under the proviso thereto, before the date on which the Finance Bill, 2015 receives the assent of the President; or (b) service tax has not been levied or paid or has been short levied or short- paid or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 21,66,819/- therefore penalty is liable to be imposed upon him under Section 78 and not under Section 76, both amended vide Finance Act-2015. 4.3 The issues have been framed in impugned order. 4.4 Whether a proprietorship concern has an identity independent of its proprietor? We do not find any merits in any submissions which run contrary to the preposition that proprietorship concern has no independent identity. It has the identity of the proprietor. Commissioner has in the impugned order referred to series of decisions holding so. Hon'ble Allahabad High Court has in case of Manoj Singh [Neutral Citation No. - 2019:AHC:79899] observed as follows: "15. Besides, in the case of a sole proprietary concern, there are no two persons in existence. Therefore, no vicarious liability may ever arise on any other person. The identity of the sole proprietor and that of his 'concern' remain one, even though the sole proprietor may adopt a trade name different from his own, for such 'concern'. Thus, even otherwise, conceptually, the principle contained in section 141 of the Act is not applicable to a sole-proprietary concern. 16. In the case of Ashok Transport Age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis supplied) 18. Directly relevant to the question raised in the present proceedings, in Raghu Lakshminarayanan v. Fine Tubes, (2007) 5 SCC 103, it was observed: "8. The concept of vicarious liability was introduced in penal statutes like the Negotiable Instruments Act to make the Directors, partners or other persons, in charge of and control of the business of the company or otherwise responsible for its affairs; the company itself being a juristic person. 9. The description of the accused in the complaint petition is absolutely vague. A juristic person can be a company within the meaning of the provisions of the Companies Act, 1956 or a partnership within the meaning of the provisions of the Partnership Act, 1932 or an association of persons which ordinarily would mean a body of persons which is not incorporated under any statute. A proprietary concern, however, stands absolutely on a different footing. A person may carry on business in the name of a business concern, but he being proprietor thereof, would be solely responsible for conduct of its affairs. A proprietary concern is not a company. Company in terms of the Explanation appended to Section 141 of the Negotiabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sole proprietor. It is evident from the ST-2 filed by the appellant that he had been providing same services from the same premises under the guise of two separately registered entities. 4.5 Whether the Best Judgment method enumerated in Section 72 of the Finance Act, 1994 may be applied to present proceedings? Undoubtedly appellant has not filed the ST-3 returns regularly by the prescribed date and have not assessed the tax liability on the receipts made. The fact of the appellant having not filed or irregularly filing the return beyond the due date is noted in para 3.40 of the impugned order and also penalties have been imposed for the same in manner as prescribed by the Finance Act, 1994. In such a situation resort made to the provisions of Section 72 prescribing for best judgement assessment cannot be faulted with. Hon'ble Delhi High Court has in the case of National Building Construction Company [2019 (20) G.S.T.L. 515 (Del.)] observed as follows: "24. Reference was made to Section 72 of the Fin Act, which reads as under :- "72. Best judgement assessment.- If any person, liable to pay service tax, - .........." Section 72 of the Fin Act, as the heading e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 73 which prescribes a detailed procedure with limitation periods with regard to the period for which show cause notice can be issued quantifying the demand raised as also the time period within which the show cause notice is to be adjudicated. Said prescriptions and stipulations made in Section 73 are missing in Section 72 of the Fin Act, for the Section 72 only allows the Central Excise Officer to make 'best judgment assessment'. Section 72 of the Fin Act does not prescribe a procedure for taking up the Service Tax returns for assessments, except when refund of tax is due as per the return and has to be adjudicated." 4.6 In similar circumstances upholding the best judgement assessment made under Section 722, Bangalore Bench has in case of Fort Health Club [2010 (17) S.T.R. 154 (Tri. - Bang.)] held as follows: "5. First and foremost, we find that the objection raised by the appellant regarding the invocation of Section 72 of the Finance Act, 1994 seems to be mis-placed. On perusal of the show cause notice, we find that the show cause notice specifically says that the service tax liability has been worked out based upon the best judgment method as there were no evidence c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Accountant on the basis of the books of account in fact certifies the calculations made by the adjudicating authority in para 3.31 of the impugned order. As the figures in the impugned order have been reconciled with the books of account we do not have any reason to doubt the correctness of figures arrived in the para 3.31 of impugned order and hold that appellant had in fact evaded the payment of this amount as service tax. 4.8 Whether the demand should remain limited to the period covered in the VCES declaration filed by the noticee? To answer this question we look at the provisions of Section 111 of the Finance Act, 2013 which provides as follows: 111. Failure to make true declaration. (i) Where the Commissioner of Central Excise has reasons to believe that the declaration made by a declarant under this Scheme was substantially false, he may, for reasons to be recorded in writing, serve notice on the declarant in respect of such declaration requiring him to show cause why he should not pay the tax dues not paid or short-paid. 2. No action shall be taken under sub-section (i) after the expiry of one year from the date of declaration. 3. The show cause notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en issued or made before the 1st day of March, 2013. Further provided that where a notice or an order of determination has been issued to any person, therefore, Section 106 debars that person to avail the benefit of the Scheme against whom an order of determination has been issued. In the present case, petitioner submitted a declaration form in which he had wrongly declared that no inquiry or investigation or audit is pending against him which is a basic disqualification to avail the benefit of the Scheme, therefore, by virtue of Section 106 the declaration submitted by the petitioner was liable to be rejected. Section 101 is applicable to a situation where the assessee is entitled for availing the benefit of the Scheme, however, the issue in respect of tax dues not paid or short-paid is involved and in such a situation the limitation period of one year is provided. If the issue of entitlement to avail the Scheme is to be decided then provisions of Section 106 would apply and in the present case respondents/authority has rightly exercised the powers under Section 106 by passing the impugned order dated 16-10- 2014." 4.9 Appellant have contended that the demand made on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is a demand of Rs 1,01,347/- in respect of the amounts collected by the appellant but not deposited with the exchequer under Section 73A of the Finance Act, 1994. Appellant have contended that they have written of this amount in their book of accounts. There is no provision to write of the amounts collected as service tax from their customer's in the book of account. In the present case the sums collected representing service tax were to be deposited with the exchequer in terms of section 73A. Further we are at loss to make out anything from the submissions made by the appellant to counter the demand. How can anybody write of the amounts collected? He could have written off the amounts due and not the amounts collected. If no service was provided against the amounts which were collected including this amount of service tax, then the said amount along with this amount should have been refunded back to the person from whom these were collected or deposited with the exchequer as per the provisions of Section 73A. We do not find any merits in the said submission of the appellant. 4.11 Further we note that the demand has been made in the present case on two counts namely- ● ..... X X X X Extracts X X X X X X X X Extracts X X X X
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