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BRIEF FACTS OF THE CASE
Intelligence was gathered that M/s. Raintech Industrial X-Ray Services situated at 1, D.K.
Complex, Below Dena Bank, Maninagar (E), Ahmedabad {also hereby referred to as the
noticee/firm} is engaged in business of providing Industrial X-Ray Services viz. Gamma Radiography
Testing and Inspection and having Service Tax Registration No. AALFR8453MSD001 under category
of “Technical Inspection and Certification Services” defined under section 65(105) (zzi) read with
65(108) and (109) of the Finance Act, 1994 and collecting applicable service tax from their client
but not depositing in government account.
2.
During the course of investigation, it was revealed that M/s. Raintech Industrial X-Ray
Services was previously registered under Service Tax Registration No. AOZPP5346MST001 under
taxable category of “Technical Inspection and Certification Agency Service” being a proprietor-ship
firm and Shri Jayantibhai Tejabhai Patel was the Proprietor of M/s. Raintech Industrial X-Ray
Services with a registered premises addressed at A/2/3, Lalbhai Centre, Opp. Aden Park Society,
Laxminarayan Char Rasta, Maninagar (E), Ahmedabad 380 008. Thereafter, the above Proprietor,
Shri Jayantibhai Tejabhai Patel converted M/s. Raintech Industrial X-Ray Services as partnership
firm with 5 other partners viz. Shri Riteshbhai J. Patel, Shri Vijaykumar Shantilal Nagar, Shri Shantilal
Pithabhai Nagar, Shri Jaydev Shantilal Nagar and Shri Durgaprasad Shamro Bagde from February,
2010 and got their new service tax registration No. AALFR8453MSD001 under taxable service
category of “Technical Inspection and Certification Agency Service” on 10.05.2010. M/s. Raintech
Industrial X-Ray Services (Proprietorship) vide their letter dated 27.03.2010 has applied for
surrender of Service Tax Registration No. AOZPP5346MST001.
3.
Letters were issued to M/s. Raintech Industrial X-Ray Services on 29.03.2011, 21.04.2011,
07.06.2011 and 10.06.2011. As no reply had been received, letter dated 20.07.2011 was issued to
all the partners of M/s. Raintech Industrial X-Ray Services requesting them to submit records /
documents related to service tax. Shri Shantilal Pethabhai Nagar, Shri Vijaykumar Shantilal Nagar
and Shri Jaydev Shantilal Nagar vide letter dated 01.08.2011 have jointly submitted documents
relating to M/s. Raintech Industrial X-Ray Services for both Proprietor-ship firm and Partnership
firm. Vide the letter dated 01.08.2011, the other partners of M/s. Raintech Industrial X-Ray
Services have informed that the partnership firm has been dissolved with effect from 30.11.2010
vide dissolution deed dated 08.12.2010 and all the service tax liabilities have to be borne by Shri
Jayantibhai T. Patel as per para 3 of dissolution deed dated 08.12.2010.
4.
In view of the above, letters dated 12.07.2012 and summons dated 19.07.2012, 31.07.2012,
27.09.2012, 22.10.2012, 08.01.2013, 05.03.2013 and 17.04.2013 had been issued to Shri
Jayantibhai T. Patel, Proprietor of M/s. Raintech Industrial X-Ray Services, Ahmedabad with a
request to submit relevant documents / information and directed to appear for recording of a
statement. However, the summons issued were returned back from the postal authorities
indicating remark as “REFUSED”.
5.
As the correspondences made with Shri Jayantibhai Tejabhai Patel, Proprietor of M/s.
Raintech Industrial X-Ray Services, Ahmedabad had been returned from postal authorities
indicating “REFUSED”, searches were conducted at 3 different premises viz. (i) A/2/3, Lalbhai
Centre, Opp. Aiden Park Society, Laxminarayan Char Rasta, Maninagar (East), Ahmedabad (ii) No. 9,
Matru Bunglow, Express Highway, C.T.M., Ahmedabad and (iii) No. 1, Matrubhumi Apartment, Near
Jaitul Park Society, Bhaipura Road, Maninagar (East), Ahmedabad. During the course of search,
documents/records pertaining to service tax were found at No. 9, Matru Bunglow, Express
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Highway, C.T.M., Ahmedabad and the same were seized / recovered under panchnama dated
11.09.2013.
6.
On scrutiny of the documents recovered under panchnama dated 11.09.2013 from the
premises of No. 9, Matru Bunglow, Express Highway, C.T.M., Ahmedabad, it was revealed that Shri
Jayantibhai T. Patel was the Proprietor of M/s. Raintech Industrial X-Ray Services, Ahmedabad and
holding service tax registration No. AOZPP5346MST001 and engaged in providing Industrial X-Ray
Services under category of “Technical Inspection and Certification Services” as defined under
section 65(108) of the Finance Act, 1994. It was further revealed that M/s. Raintech Industrial XRay Services, Ahmedabad had filed their Service Tax Returns for the Financial year 2007-08 to
2009-10. In the ST-3 Return for the year 2008-09 (April – September and October – March) and
2009-10 (April – September and October – March), he had shown his taxable income as NIL in the
relevant rows and column of the said ST-3 Returns. However, the Financial Records i.e. Profit and
Loss Account / Balance Sheet and IT returns for the financial year 2008-09 and 2009-10 apparently
showed that M/s. Raintech Industrial X-Ray Services had earned income of Rs. 24,05,150/- and Rs.
47,94,469/- respectively.
7.
Further, it was revealed that Shri Jayantibahi T. Patel, Proprietor of M/s. Raintech Industrial
X-Ray Services, Ahmedabad had converted his firm into partnership firm alongwith with 5 other
partners w.e.f. 01.02.2010. And, M/s. Raintech Industrial X-Ray Services, Ahmedabad had got its
Service Tax registration No. AALFR8453MSD001 w.e.f. 10.05.2010 and had not filed any service tax
return. M/s. Raintech Industrial X-Ray Services (Partnership firm) had been dissolved w.e.f.
30.11.2010 vide dissolution deed dated 08.12.2010. In para 3 of the dissolution deed dated
08.12.2010, service tax liability was to be borne by Shri Jayantibhai T. Patel. The financial records
seized/recovered vide panachama dated 11.09.2013, revealed that the income was Rs. 6,50,016/and Rs. 22,62,503/- for the period 2009-10 (February and March) and 2010-11 (upto November,
2010) respectively for the above partnership firm. It was further revealed that during the period
they had continuously collected service tax and paid service tax of Rs. 28,746/- vide challan No.
00001 dated 02.08.2010 but not filed any ST-3 return.
8.
Further, it was revealed that after dissolution of partnership firm of M/s. Raintech Industrial
X-Ray Services, Shri Jayantibhai T. Patel, had continued the firm M/s. Raintech Industrial X-Ray
Services as a Proprietor – ship firm w.e.f. December, 2010 and neither deposited service tax nor
filed ST-3 Return. As per the Profit and Loss Account / Balance Sheet and Income Tax Returns, it
revealed that the income earned by M/s. Raintech Industrial X-Ray Services, Ahmedabad was Rs.
33,84,184 and Rs. 7,56,138 for the period 2010-11 (from December, 2010 and onwards) and 201112 respectively.
9.
A statement of Shri Jayantibhai T. Patel, Proprietor / Partner of M/s. Raintech Industrial XRay Services, Ahmedabad was recorded on 15.10.2013 under Section 14 of Central Excise Act, 1944
read with Section 83 of the Finance Act, 1944 wherein he interalia stated that he was proprietor of
M/s. Raintech industrial X-ray Service, A-2/3, LAL BHAI CENTRE, OPP. EDEN PARK SOCIETY,
MANINAGAR, Ahmedabad upto January 2010 and thereafter, they have formed a Partnership
company in February, 2010 consisting of six partners namely Shri Riteshbhai J. Patel, Shri
Jayantibhai T. Patel, Shri Vijaykumar Shantilal Nagar, Shri Shantilal Pithabhai Nagar, Shri Jaydev
Shantilal Nagar and Shri Durgaprasad Shamro Bagde; that both the proprietorship & partnership
company were registered with the Service Tax department having registration no. AOZPP 5346M
ST001 & AALFR 8453M SD001 respectively under the category of “Test, Inspection & Certification
Service”.
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10.
He further stated that he had started a firm viz. M/s. Rain-Tech Industrial X-Ray Service in
2007 and the same was converted into partnership firm in February, 2010; that the partnership
firm was dissolved vide dissolution deed dated 08.12.2010 and thereafter he continued his
business in Proprietorship for some period. Thereafter, the same business was continued with all
the equipments in the name of M/s. Sun Industrial Radiography Services which has been started by
his son and he is authorised for all the day-to-day matter including its service tax related matters;
that the Inspection certification can be given by a person with license given by BARC (Bhabha
Atomic Research Centre), Mumbai and he had the license from BARC; that his son is not holding
any license from BARC which is mandatory for rendering the above services.
11.
He further stated that as a proprietor, he had filed ST-3 Returns regularly for the year 200809 and 2009-10, wherein the taxable value had been shown as NIL; that he had filed the ST-3 return
for the first and second half of 2008-09 on 23rd April, 2009; that he had intentionally shown such
wrong information in his ST-3 returns with malafide intention of evasion of service tax; that he had
collected the service tax from the customers continuously since inception of his firm but he had not
deposited the service tax amount to the Government account; that their firm was also making
agreement/ contracts with some of the customers for rendering the above services. He stated that
he had not correctly mentioned his income against the value of taxable service in my ST-3 returns
filed but he agreed with the fact that income shown in income tax return/P&L and Balance Sheet, is
the consideration received against the above taxable service rendered to his customers; that he
had short paid/ not paid the service tax on the income received against the service rendered by
both the firms; that the income against service rendered and service tax liability in respect of the
above firms is as under:(1) M/s. Raintech Industrial X-Ray Services - Proprietor – Shri Jayantibhai Tejabhai Patel
Year
Value of
taxable
Services
provided
Basic
Service tax payable
Ed. Cess S. & H.S.
Ed. Cess
2008-09
24,05,150
2,88,618
5,772
2,886
2009-10
47,94,469
4,79,447
9,589
4,795
2010-11 (from 33,84,184
3,38,418
6,768
3,384
December,
2010)
2011-12
7,56,138
75,614
1,512
756
(2) M/s Raintech Industrial X-Ray Services - Partnership firm
Year
2009-10
01.02.2010 to
31.03.2010
2010-11 (upto
30.11.2010)
2,97,276
4,93,831
3,48,570
0
0
0
Differenti
al service
tax
required
to pay
2,97,276
4,93,831
3,48,570
77,882
0
77,882
Total
Service
tax paid
Value of
taxable
Services
provided
6,50,016
65,002
1,300
650
66,952
28,746
Differential
service tax
required to
pay
38,206
22,62,503
2,26,250
4,525
2,262
2,33,037
0
2,33,037
Basic
Service tax payable
Ed. Cess S. & H.S.
Ed. Cess
Total
Service
tax paid
12.
Regarding above tabulated figure, he stated that the same was arrived from the total of the
summary of the invoices raised for the taxable services rendered by their firms wherein an element
of service tax separately mentioned and also appropriately charged on the consideration, already
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received. He further confirmed that the amounts shown above are true and correct; that all the
income earned by him was from the taxable services rendered in the category of “Test, Inspection
& Certification Service”; that he had not rendered any other taxable service and not earned any
income thereof; that he is fully aware of the provisions regarding becoming an offence under
Service tax Law i.e. Service tax collected from the customer but not deposited in the government
exchequer. He agreed to pay Rs. 12,17,558/- as a liability of M/s. Raintech Industrial X-Ray Services
(Proprietorship firm) for the financial year 2008-09 to 2011-12 (excluding income received during
partnership firm) and Rs. 2,71,243/- as a liability of M/s. Raintech Industrial X-Ray Services
(Partnership firm) for the financial year 2009-10 (February and March) and 2010-11 (upto
November, 2010) and in confirmation of his service tax liability, he had made payment willingly for
Rs. 1 Lakhs vide Challan No. 00001 dated 11.10.2013; that he had not rendered any taxable service
during 2012-13 in M/s. Raintech Industrial X-Ray Services (both Proprietor and Partnership) and not
earned any income thereof.
13.
Further, he stated that he had intentionally refused to receive numerous letters/ summons
sent by the service tax department to avoid submission of documents/ records of his firms, to
present himself before the investigating officer and to evade service tax liability; that their
partnership firm has been formed on 01.02.2010 which has been dissolved vide partnership
dissolution deed dated 08.12.2010 and as per condition no. 10 mentioned at page 8 of the
dissolution deed, all the liabilities as regards to service tax payment has to be borne by him; that he
is only responsible person for payment of service tax liability in respect of partnership firm.
14.
Letter was issued to M/s. Welspun Corp. Ltd., Bharuch, a major service recipient of M/s.
Raintech Industrial X-Ray Services, Ahmedabad requesting them to furnish details of service
received. M/s. Welspun Corp. Ltd., Bharuch vide their letter dated 17.10.2013 have submitted
summary of invoices raised by M/s. Raintech Industrial X-Ray Services, Ahmedabad and payment
made by them. And, also submitted copies of Invoices raised by M/s. Raintech Industrial X-Ray
Services. The invoices received from M/s. Welspun Corp. Ltd., Bharuch showed that M/s. Raintech
Industrial X-Ray Services, Ahmedabad had shown specifically and collected amount as Service Tax.
15.
As per the provision of Section 65 (108) of the Finance Act, 1994 the term
“Technical Inspection and Certification” means :
“ inspection or examination of goods or process or material or information technology
software or any immovable property to certify that such goods or process or material or
information technology software or immovable property qualifies or maintains the specified
standards, including functionality or utility or quality or safety or any other characteristic or
parameters, but does not include any service in relation to inspection and certification of
pollution levels”.
Further, Technical Inspection and Certification Agency as defined in Section 65(109) means
“any agency or person engaged in providing service in relation to technical inspection and
certification”
16.
Whereas it appeared that M/s. Raintech Industrial X-Ray Services, Ahmedabad was started
from 2007 as a proprietorship firm, Shri Jayantibhai T. Patel was the Proprietor of the said firm.
M/s. Raintech Industrial X-Ray Services, Ahmedabad was holding service tax registration No. AOZPP
5346M ST001 and filed service tax returns upto 2009-10. For the year 2008-09 and 2009-10 M/s.
Raintech Industrial X-Ray Services (Proprietorship firm) has filed ST-3 Return showing their taxable
income as NIL and he had not deposited any service tax. Further, M/s. Raintech Industrial X-Ray
Services, Ahmedabad was converted into partnership firm since from February, 2010. During May,
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2010, M/s. Raintech Industrial X-Ray Services, Ahmedabad (Partnership firm) got their service tax
registration No. AALFR 8453M SD001. However, they had only paid service tax of Rs. 28,746/- and
not filed any ST-3 Return. M/s. Raintech Industrial X-Ray Services (Partnership firm) had been
dissolved w.e.f. 30.11.2010 vide dissolution deed dated 08.12.2010 and in para 3 at Page 4 of the
said dissolution deed dated 08.12.2010, Shri Jayantibhai T. Patel has to borne all tax liability of M/s.
Raintech Industrial X-Ray Services (Partnership firm) on it’s dissolution.
17.
Whereas it appeared that Shri Jayantibhai T. Patel had continued his firm M/s. Raintech
Industrial X-Ray Services, Ahmedabad as a Proprietorship firm after dissolution of M/s. Raintech
Industrial X-Ray Services (Partnership firm). M/s. Raintech Industrial X-Ray Service had neither
deposited any service tax nor filed ST-3 return after 2009-10. Upon reconciliation of Balance
Sheet, Profit and Loss Account and Income Tax Return, it appeared that M/s. Raintech Industrial XRay Services, Ahmedabad had failed to pay appropriate service tax to the government account.
The amount not paid / short paid by M/s. Raintech Industrial X-Ray Service, Ahmedabad is as under
:Year
Proprietor
Value of
Service tax payable
Service Different
/
taxable
tax paid
ial
Basic
Ed.
S. &
Total
Partnershi Services/
service
Cess
H.S.
p
Income
tax
Ed.
shown in
required
Cess
Balance
to pay
Sheet
2008-09
Proprietor 24,05,150 2,88,618 5,772 2,886 2,97,276
0
2,97,276
2009-10
Proprietor 47,94,469 4,79,447 9,589 4,795 4,93,831
0
4,93,831
2009-10
Partnershi 6,50,016
65,002
1,300
650
66,952
28,746
38,206
(01.02.2010
p
to
31.03.2010)
2010-11
Partnershi 22,62,503 2,26,250 4,525 2,262 2,33,037
0
2,33,037
(upto
p
30.11.2010)
2010-11
Proprietor 33,84,184 3,38,418 6,768 3,384 3,48,570
0
3,48,570
(from
December,
2010)
2011-12
Proprietor 7,56,138
75,614
1,512
756
77,882
0
77,882
2011-12
Closing
Balance of
1,38,547
13,855
277
139
14,271
0
14,271
Debtor
Total
1,43,91,00 14,87,20 29,74 14,87 15,31,81
15,03,07
7
4
3
2
9 28,746
3
18.
According to section 67 of the Finance Act, 1994 as amended from time to time where
service tax was chargeable on any taxable service with reference to its value, then such value shall
be the gross amount charged by the service provider for such service provided or to be provided by
him. The gross amount charged for the taxable service shall include any amount received towards
the taxable service before, during or after provision of such service. Thus, the value to be
considered for calculation of service tax was the gross amount charged for providing the taxable
services. The noticee was not paying the service tax on the gross amount charged for the taxable
services rendered. In other words, they had short paid on the gross amount charged / received for
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the taxable services and thereby contravened the provisions of Section 67 of the Finance Act, 1994
read with Rule 6 of the Service Tax Rules, 1994.
19.
As per the provisions of the Finance Act, 1994 and rules made there under, the service
provider was required to assess correct value for the service provided by them as well as to pay
service tax on the actual amount of income received by them for services rendered in due course
as prescribed and to follow all the procedure laid down in the Act and Rules. In this case, the
service provider had short paid the Service Tax leviable on the taxable value though they had taken
service tax registration under the services provided as Technical Inspection and Certification
Services. The service provider had failed to file to file correct ST-3 returns for the taxable services
rendered by them and suppressed the facts of the services rendered and actual amount of Service
Tax collected by them for the period from 2008-09 to 2011-12. It also appeared that the service
provider had charged and collected Service Tax from the service recipients on invoice value in
respect of services rendered to their clients but short paid the same in government Account in
contravention of the provisions of Section 68 of the Act. It, therefore, clear that the service
provider had failed to make timely payment of the Service Tax as provided in Section 68 of the Act
read with Rule 6 of the Rules.
20.
It is provided under section 68 (1) of the act that ‘every person providing taxable
service to any person shall pay service tax at the rate specified in section 66 in such a manner and
within such period which is prescribed under Rule 6 of the Service Tax Rules, 1994. In the instant
case M/s. Raintech Industrial X-Ray Services had not paid service tax amounting to Rs. 15,31,819/(Rupees Fifteen Lacs Thirty One Thousand Eight Hundred and Nineteen Only) (Service Tax of Rs.
14,87,204/- plus Education Cess and Secondary & Higher Secondary Education Cess of Rs.44,615/-)
towards their service provided as Technical Inspection and Certification Agency for the taxable
amount of Rs. 1,43,91,007/- and thereby violated the provision of Section 68(1) of the Act read
with Rule 6 of the Service Tax Rule, 1994.
21.
Whereas, as per section 70 of the Finance Act 1994, every person liable to pay service tax is
required to himself assess the tax due on the services provided by him and thereafter furnish a
return to the jurisdictional Superintendent of Service Tax by disclosing wholly & truly all material
facts in their service tax returns (ST-3 returns). The form, manner and frequency of return are
prescribed under Rule 7 of the Service Tax Rules, 1994. In this case, it appeared that the noticee
had not assessed the tax due, properly, on the services provided by him, as discussed above, and
failed to file correct ST-3 Returns in time thereby violated the provisions of Section 70(1) of the act
read with Rule 7 of the Service Tax Rules, 1994.
22.
The government has from the very beginning placed full trust on the service provider so far
service tax is concerned and accordingly measures like Self-assessments etc., based on mutual trust
and confidence are in place. Further, a taxable service provider is not required to maintain any
statutory or separate records under the provisions of Service Tax Rules as considerable amount of
trust is placed on the service provider and private records maintained by him for normal business
purposes are accepted, practically for all the purpose of Service tax. All these operate on the basis
of honesty of the service provider; therefore, the governing statutory provisions create an absolute
liability when any provision is contravened or there is a breach of trust placed on the service
provider, no matter how innocently. From the evidence, it appears that the service provider has
not taken into account the incomes received by them for rendering taxable services for the
purpose of payment of service tax and thereby, service tax liabilities are not properly discharged by
them. The non filing of ST-3 returns thereby non-declaration of the value of taxable service
correctly in ST-3 returns and not paying the amount of service tax is utter disregard to the
requirements of law and breach of trust deposed on them such outright act in defiance of law
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appears to have rendered them liable for stringent penal action as per the provisions of Section 78
of Finance Act 1994 for suppression, and concealment or non furnishing value of taxable service
with intent to evade payment of service tax .
23.
In view of above discussion, it clearly comes out that all these material information and
value of taxable services had been concealed from the department deliberately and consciously to
evade payment of service tax purposefully by not declaring the amount received against the
services rendered. From all the above acts of contravention on the part of the noticee have been
committed with an intention to evade the payment of service tax by suppressing the facts and to
commit fraud. Therefore, service tax was required to be demanded and recovered from them
under Section 73 (1) of Finance Act, 1994 by invoking extended period of five years under the
proviso to Section 73(1) of the Finance Act, 1994 (32 of 1994) as the service provider had
suppressed/not declared the nature and value of the taxable services. Thus, the amount of Service
Tax Rs.15,31,819/- was required to be recovered from the noticee by applying the extended period
of five years.
24.
Whereas, from the foregoing paras and discussion made herein above, it appeared that the
noticee had contravened the provisions of
(i)
Section 67 of the Finance Act, 1994 in as much as they had failed to assess and
determine the correct value of taxable services provided by them, as explained in
foregoing paras for the period 2008-09 to 2011-12;
(ii)
Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 in
as-much-as they failed to make payment of service tax amounting to Rs. 15,31,819/(Rupees Fifteen Lacs Thirty One Thousand Eight Hundred and Nineteen Only) (Service Tax
of Rs. 14,87,204/- plus Education Cess and Secondary & Higher Secondary Education
Cess of Rs.44,615/-) during the period 2008-09 to 2011-12, to the credit of the
Government account within the stipulated time lime;
(iii)
Section 70 of the Finance Act 1994 as amended read with Rule 7 of the Service Tax
Rules, 1994 in as much as they have failed to self-assess the Service Tax on the taxable
value and to file ST-3 returns properly for their service provided as Technical Inspection
and Certification Agency Services during 2008-09 to 2011-12.
25.
In view of the foregoing paras, it appeared that the noticee had contravened provisions of
Finance Act, 1994 and the rules made there under with intent to evade payment of Service Tax and
therefore the amount of Service Tax Rs.15,31,819/- was required to be recovered along with
interest under sections 73 and 75 of the Finance Act, 1994 by invoking the extended period of five
years as per the proviso to Section 73(1) of the Finance Act, 1994.
26.
Further, as per Section 75 ibid, every person liable to pay the tax in accordance with the
provisions of Section 68, or rules made there under, who fails to credit the tax or any part thereof
to the account of the Central Government within the prescribed period is liable to pay the interest
at the applicable rate of interest. Since the service provider has failed to pay their Service Tax
liabilities in the prescribed time limit, they are liable to pay the said amount along with interest.
Thus, the said Service Tax was required to be recovered from the noticee along with interest under
Section 75 of the Finance Act, 1994.
27.
Whereas, the value of taxable service in respect of aforesaid services rendered by them
had not been subjected to assessment. Eventually, they had willfully made the mis-statement and
not paid Service Tax. Thus, the noticee had failed to self-assess the Service Tax payable on the
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taxable value received correctly; failed to file S.T-3 returns correctly as per provisions of the
Finance Act, 1994, and also failed to pay the Service Tax at the applicable rate on the taxable value.
Thus, on going through the facts and circumstances of the instant case, it appeared to lead towards
a conclusion that the noticee had deliberately and also willfully evade payment of service tax on
commission income received as discussed above.
28.
It further appeared that on account of all the above narrated acts of commission and
omissions on the part of the noticee, they had rendered themselves liable to penalty under the
following provisions of the Finance Act, 1994, as amended:
(i) Section 76 of the Finance Act, 1994, in as much as they failed to classify their services
under proper and correct taxable service and failed to pay the appropriate Service Tax on due
dates within the stipulated time;
(ii) Section 77 of the Finance Act, 1994, in as much as they failed to furnish the correct details
in their returns;
(iii)
Section 78 of the Finance Act, 1944, in as much as they have mis-stated the taxable
value of the services provided by them to the service recipients and they have, knowingly and
willfully, not paid the correct amount of Service Tax leviable on such amount.
29.
All the above acts of contravention of the various provisions of the Finance Act, 1994, as
amended from time to time, and Rules framed there under, on the part the noticee had been
committed by way of suppression of facts with an intent to evade payment of service tax and,
therefore, the said service tax not paid is required to be demanded and recovered from them
under the proviso to Section 73 (1) of the Finance Act, 1994, as amended from time to time, by
invoking extended period of five years. All these acts of contravention of the provisions of Section
65, 67, 68 & 70 of the Finance Act, 1994, as amended from time to time read with Rules 6 and 7 of
the Service Tax Rules, 1994 appears to be punishable under the provisions of Section 78 of the
Finance Act, 1994 as amended from time to time.
30.
Now, therefore, M/s. Raintech Industrial X-Ray Services situated at A/2/3, Lalbhai
Centre, Opp. Aiden Park Society, Maninagar (East), Ahmedabad – 380 008 was issued a show cause
notice no. STC/4-39/O&A/2013-14 dated 22.10.2013 by the Additional Commissioner of Service
Tax, Ahmedabad as to :(i)
why the amount of Rs. 1,43,91,007/- collected from various clients should not be
considered as “taxable value” under the category of “Technical Inspection and
Certification Services” as specified in clause (zzi) of Section 65(105) read with Section 65
(108) and (109) of the Finance Act, 1994 as amended.
(ii)
why service tax amounting to Rs. 15,31,819/- (Rupees Fifteen Lacs Thirty One Thousand
Eight Hundred and Nineteen Only) (Service Tax of Rs. 14,87,204/- plus Education Cess
and Secondary & Higher Secondary Education Cess of Rs.44,615/-) on the taxable value
referred in above para should not be charged and recovered from them under the
provision of section 73(1) read with section 68 of the Finance Act, 1994, as amended by
invoking larger period of five years as discussed hereinabove. They also required to show
case as to why the service tax paid vide Challan No. 00001 dated 02.08.2010 for Rs.
28,746/- and Challan No. 00001 dated 11.10.2013 for Rs. 1,00,000/- should not be
appropriated against the said demand.
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(iii)
why interest on such service tax at the appropriate rate prescribed under the provisions
of Section 75 of the Finance Act, 1994, as amended should not be demanded and
recovered from them;
(iv)
why penalty may not be imposed upon them under section 76 of the Finance Act, 1994
as amended for contravention of section 68(1) of the Finance Act read with Rule 6 of the
Service Tax Rules, 1994 for the failure to make the payment of service tax payable by
them within stipulated time.
(v)
Penalty should not be imposed upon them under section 77 of the Finance Act, 1994, as
amended, for contravention of Section 70 of the Finance Act, 1994; and
(vi)
why penalty under section 78 of the Finance Act, 1994, as amended, should not be
imposed on them for suppressing the taxable value received under Technical Inspection
and Certification Service and material facts before the department resulting into nonpayment of Service Tax, Education Cess and Secondary & High Secondary Education cess
as mentioned hereinabove.
DEFENCE REPLY
31.
The noticee filed their defence reply vide letter dated nil received by this office on
19.02.2014, in which they submitted as under:

That M/s. Raintech Industrial X-Ray Services proprietorship (the Assessee) is situated at A2/3, Lalbhai Center, Aiden Park Society, Maninagar (EAST), Ahmedabad-380008, and is
engaged in rendering service falling under category of Technical Inspection and Certification
Services.

That the department during investigation noticed that they were registered as a
proprietorship firm having registration no. AOZZPP5346MST001 and Shri Jayantibhai T.
Patel was proprietor.

That they continued to provide service as proprietorship firm up to January-2010 and
surrendered Service Tax Registration Number on 27-03-2010.

That in February, 2010 proprietor Shri Jayantibhai Tejabhai Patel along with Shri Riteshbhai
J. Patel, Shri Vijaykumar Shantilal Nagar, Shri Jaydevbhai Shantilal Nagar, Shri Shantilal
Pithabhai Nagar, Shri Durgaprasad Shamro formed partnership firm and obtained service
tax registration no. AALFR8453MSD001 at registered office. The said firm was dissolved
with effect from 31.11.2010 under dissolution deed dated 08.12.2010. The copy of said
dissolution deed attached as annexure A.

That from December 2010 Mr. Jayantibhai T. Patel one of the partners started
proprietorship concern with the same name Raintech Industrial X-Ray Services.

That they continued to work as proprietor from December 2010 till May 2011.

That the definitions under “Technical Inspection and Certification Service” are as follows:
As per Section 65 (105) (zzi) of Finance Act, 1994,
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“Taxable Service” means any service provided or to be provided to any person, by a
technical inspection and certification agency, in relation to technical inspection and
certification.
As per Section 65(108) of Finance Act, 1994,
"Technical Inspection and Certification" means inspection or examination of goods or
process or material or information technology software or any immovable property to certify
that such goods or process or material or information technology software or immovable
property qualifies or maintains the specified standards, including functionality or utility or
quality or safety or any other characteristic or parameters, but does not include any service
in relation to inspection and certification of pollution levels.

That as per Section 65(109) of Finance Act, 1994,
"Technical Inspection and Certification Agency" means any agency or person engaged in
providing service in relation to technical inspection and certification.

That according to department taxable value without considering cum-duty, service tax
payable and paid is as under:
1.
As proprietorship firm in the name and style of Raintech Industrial X-Ray Services
Period
Value
of Service
Service Service Tax
Taxable
Tax
Tax
Not
Service (incl Payable
Paid
Paid/Short
service tax
Paid
2008-09
2405150
297277
0
297277
2009-10
4794469
493830
0
493830
April-10 to
3384184
348571
0
348571
December2010
2011-12
756138
77882
0
77882
2011138547
14270
0
14270
12(Closing
balance of
deters)

As per section 67(2) of the Finance Act, 1994,
“Where the gross amount charged by a service provider, for the service
provided or to be provided is inclusive of service tax payable, the value of such
taxable service shall be such amount as, with the addition of tax payable, is equal to
the gross amount charged.”

That the value of service provided considering cum-duty value is as under:
Period
2008-09
2009-10
Value of
Taxable
Service
(incl.
service
tax
2405150
4794469
Value of Service Service Service
taxable Tax
Tax
Tax Not
service
Payable Paid
Paid/Short
(excl.
Paid
service
tax)
2140575 264575
0
264575
4346753 447716
0
447716
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April-10 to 3384184 3068163
December2010
2011-12
756138 685529
2011138547 125609
12(Closing
balance of
deters)

0
316021
70609
12938
0
0
70609
12938
As partnership firm in the name and style of Raintech Industrial X-ray Services
Period
Value of Service Service Service
Taxable
Tax
Tax
Tax
Not
Service(incl Payable Paid
Paid/Short
service tax)
Paid
February2010
to
March2010
April-2010
to
November2010

316021
650016
66,952
28,746
38,206
2262503 233,038
0
233,038
That as per section 67(2) of the Finance Act, 1994, the cum-duty value for this purpose,
service tax payable and paid is as
under:
Period
Value of
Taxable
Service(incl
service tax)
February650016
2010
to
March2010
April-2010 2262503
to
November2010
Value of
Taxable
Service
(excl
service
tax)
589316
Service
Tax
Payable
Service Service
Tax
Tax Not
Paid
Paid/Short
Paid
60,700
28,746
2051226 211,276 0
31,954
211,276
That they have paid Rs.1,00,000/- on 11-10-2013.

That Provision of notification no. 06/2005-ST dated 01.03.2005 as amended from time to
time, is as follows:
“In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994
(32 of 1994) (hereinafter referred to as the said Finance Act), the Central Government, on
being satisfied that it is necessary in the public interest so to do, hereby exempts taxable
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services of aggregate value not exceeding ten lakh rupees in any financial year from the
whole of the service tax leviable thereon under section 66 of the said Finance Act”.



That according to department they have contravened provisions of section 67, 68, 70 and
73(1) of the Finance Act,1994 and rule 6 and 7 of the service tax rule 1994 and intended to
evade payment of service tax and invoked extended periods five years under provisions to
section 73(1).
That the adjudicating authority issued SCN No. STC/04-39/O&A/13-14 served in the name of
Raintech Industrial X-Ray services on 22.10.2013 to show cause as to why:
(1) Amount of Rs. 1,43,91,007/- should not be considered as taxable value under
“Technical, Inspection, Certification Service”,
(2) Amount of Rs. 15,31,819/- should not be charged and recovered as service tax under
provision of section 73(1) of the act, ibid. and also amount of Rs. 1,28,746/- should not
be appropriated against the said demand,
(3) Interest under section 75 of the act ibid should not be imposed,
(4) Penalties under section 76, 77 and 78 of the act ibid should not be imposed upon the
assessee.
That though the proprietorship and partnership firms are separate, entity is liable to pay tax
separately. That the Show cause notice was issued in the name of Raintech Industrial X-Ray
Services. For both the concerns i.e. Raintech Industrial X-Ray Services and Sun Industrial XRay Services single SCN can not be issued. Thus, SCN issued is vague.
Provision of services:
32.
That they are engaged in the business of capturing of X-ray of pipe lines. The pipe lines
are implanted under ground and are for supply of gas from one place to another place. That
they are using radioisotopes to check for cracks can be accomplished with a technique
called gamma radiography. That Gamma radiography involves placing a radiation source on
one side of the gas pipeline, and a photographic plate on the other. The radiation that can
pass through cracks will show up on the photographic plate. That the exact process is done
by taping a special photographic film over the weld or suspected crack of a pipeline. A pipe
crawler carrying the sealed radiation source is then dispatched down the pipe to the weld
position. The field technician performing the check then sends a remote control message to
the crawler to tell it to expose the radiation. When this happens, the radiation passes
through any cracks that may exist, onto the photographic film taped on the outside. This
film is then developed and checked for cracks or welding deterioration. That the service of
capturing of X-ray includes work provided to the private concern as well as government
entity. That while capturing of X-ray they are required to use material such as X-ray films,
Dosimeter, Lead screen, PVC Cassettes, Digital ultrasonic flow ditector, Lead intensifying
screen etc.
32.1
32.2
That from the transaction involved, it is very well understood that along capturing of Xray service is sale of goods. i.e. films, chemicals, whereas in definition of testing, analysis
service it is mentioned that any services will be taxable.
That in case of works contract, there is transfer of property in goods involved on the
execution of such contract
33. That the activity carried out falls under category of works contract.
33.1 That they are engaged in providing technical inspection and certification service as
defined under section 65(105)(zzi) as under:
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
Taxable service means, any service provided or to be provided to any person, by a
technical inspection and certification agency, in relation to technical inspection and
certification.

"Technical Inspection and Certification Agency" means any agency or person engaged
in providing service in relation to technical inspection and certification.
33.2
That they rendered technical inspection certification service for this purpose and they
had obtained necessary license from Bhabha Automnic Research Centre. For this
purpose, they had to purchase various types of materials and instruments such as X-ray
films, Dosimeter, Lead screen, PVC Cassettes, Degital ultrasonic flow ditector, Lead
intensifying screen etc. The assessee as a proprietorship purchased this material worth
Rs.6,56,359 during September, 2008 to April, 2009 and October, 2010 to December,
2011 and as a partnership firm purchased material worth Rs 3,800 During May 2010 to
October, 2010.
That for the purpose of technical inspection and certification two items are involved. (a)
material and instruments and (b) certification service. This means for the providing of
this service both the components are required. So, service tax can be charged on total
value reduced by value of material and instruments as it is done in works contract.
That Photography service, which is similar to technical inspection and certification
service. Where, value of goods and value of service is included. It is held that
photography service is a works contract and only service portion can be subject to
service tax.
Various judicial pronouncements declared in photography service as a works contract
are as under:
33.3
33.4
33.5

Jain Brothers Vs. CCE, Bhopal (2009) 13 STR 633(CESTAT, New Delhi)

CCE, Raipur Vs. Ajanta Color Labs (2009) 14 STR 468 (CESTAT, New Delhi)

Agrawal Color Photo Industries Vs. Asst. Commr. Of Cus. & C. Ex., Jabalpur (M.P.)
33.5
Therefore, Show cause notice is issued under the category of "Technical Inspection
and Certification" is vague and is required to be quashed.
34 That the SCN is issued in vague manner and requires to be dropped.
34.1
34.2
34.3
34.4
34.5
34.6
That the adjudicating authority has issued single SCN to the two different assesses.
That the assessee was running his business in the name of M/s. Raintech Industrial X-Ray
Services being the proprietorship concern till February 2010. Thereafter they have
constituted a partnership firm the run the business in the partnership.
That the partnership firm of the assessee and proprietorship firm of the assesses are
different persons as recognized under the Finance Act, 1994.
That being the different persons as recognized under the act, the assessee have correctly
surrendered the registration under proprietorship firm as soon as they have formed the
partnership and stopped doing any business from proprietorship. Moreover they have
correctly obtained a new service tax registration number in the name of partnership firm.
The allotment of different registration numbers by the department is the acceptance of the
fact that both the proprietorship and partnership of the assessee are different persons.
Therefore, the adjudicating authority is incorrect in issuing a single SCN to the different
assesses.
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15
34.7
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Therefore SCN is issued in vague manner and required to be quashed.
Works contract service specified other than section 65(105)(zzzza)(ii)
35.1
That they are providing services to the private entity as well as government entity.
35.2
As per section 65(105)(zzzza), the works contract means
““works contract” means a contract wherein,—
(i) transfer of property in goods involved in the execution of such contract is leviable to tax
as sale of goods, and
(ii) such contract is for the purposes of carrying out,—
(a) Erection, commissioning or installation of plant, machinery, equipment or structures,
whether pre-fabricated or otherwise, installation of electrical and electronic devices,
plumbing, drain laying or other installations for transport of fluids, heating, ventilation
or air-conditioning
including related pipe work, duct work and sheet metal work, thermal insulation, sound
insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or
elevators; or
(b) Construction of a new building or a civil structure or a part thereof, or of a pipeline or
conduit, primarily for the purposes of commerce or industry; or
(c) Construction of a new residential complex or a part thereof; or
(d) Completion and finishing services, repair, alteration, renovation or restoration of, or
similar services, in relation to (b) and (c); or
(e) Turnkey projects including engineering, procurement and construction or commissioning
(EPC) projects;”
35.3
That the Capturing of X-ray is not covered under above mentioned definition of works
contract.
36.
Without prejudice to whatever stated above , they further submitted as follows:
36.1
That they are eligible for benefit of small scale service providers exemption.
36.2
Under notification no. 6/2005-ST dated 01-03-2005, as amended from time to time, an
exemption scheme for small service providers has been prescribed. Service providers whose
aggregate value of taxable service provided during the preceding financial year upto
Rs.10,00,000, have been exempted from service tax up to an aggregate value of taxable
service of Rs.10,00,000 in a financial year from 2008-09.
36.3
They started rendering service as a proprietor from September-2007. The assessee
rendered taxable service less then Rs. 7,00,000/- during September-2007 to March-2008.
Therefore they were eligible for benefit ad-hoc exemption of Rs. 10,00,000/- during 200809.
36.4
That the proprietorship firm was converted in to partnership firm from 01-02-2010 and
obtained new registration no. AALFR8453MSD001. The assessee has became a partnership
firm from 01-02-2010 and therefore the assessee was eligible for ad-hoc exemption of Rs.
10,00,000/- during February-March-2010 and Rs.10,00,000/- for the period April-2010 to
November-2010.
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36.5 In view of above facts providing the threshold exemption to the assessee available at
different point of time being different assesses shall be as follows, service tax liability of the
assessee would be reduced as under:
a) As a proprietor:
As a Proprietor during 2008-09 taxable value of the assessee would be Rs. 11,40,575/instead of Rs. 24,05,150/- and on which liability of Rs. 1,56,302/- is required to be
reduced.
b) As a partnership firm:
i) As a Partnership Firm taxable value of the assessee under Service Tax for the period
January-February-2010 would be nil as against 5,89,316/- and therefore service tax
liability of Rs. 60,700/- is required to be reduced.
ii) For the period April-2010 to November-2010 taxable value would be Rs.12,62,503/instead of Rs. 20,51,226/- service tax liability would be required to be reduced by
Rs.1,24,762/36.6 Therefore total tax liability of Rs.2,92,952/- which is raised in SCN requires to be reduced on
account of admissibility of ad-hoc exemption as a small service providers.
37
That Cum-Duty Benefit to be given to them.
37.1
The provision of section 67(2) of the Finance Act, 1994 provides as under:
Where the gross amount charged by a service provider, for the service provided or to be
provided is inclusive of service tax payable, the value of such taxable service shall be such
amount as, with the addition of tax payable, is equal to the gross amount charged.
37.2
That it is judicially held in following cases that when assessee has not collected service tax
from recipient of service consideration received has to be treated as cum-tax.




Turret Industrial Security Pvt. Ltd. vs. CCE& C, Jamshedpur 2008-TIOL-45-CESTAT-KOL
CCE, Patna vs. M/s Advantage Media Consultant 2008-TIOL-548-CESTAT-KOL
Municipal Corpn of Delhi vs. Commissioner of Service Tax, Delhi 2009-TIOL-975-CESTAT-DEL
M/s Robot Detective & Security Agency CCE, Chennai vs. CCE, Chennai 2009-TIOL-238CESTAT-MAD
M/s ABN Amro Bank vs. CCE, Noida 2011-TIOL-1147-CESTAT-DEL
M/s Speedway Carriers Pvt Ltd vs. Commissioner of Central Excise, Jaipur 2012-TIOL-1230CESTAT-DEL
Professional Couriers vs. Commissioner of Service Tax, Mumbai 2013 (32) S.T.R. 348 (TriMumbai)
CCE, Delhi vs. Maruti Udyog Ltd. 2002-TIOL-34-SC-CX-LB




37.3
38
That they have not collected service tax from the service receiver. Therefore, consideration
received is to be treated as cum-tax in terms of section 67(2) of the Act ibid and various
judgments cited above.
That they are eligible for exemption under notification no. 12/2003:
16
17
38.1
38.2
OIO No. 46/STC/AHD/ADC(JSN)/2013-14
That the value charged by them is inclusive of value of material and value of service
provided.
As per the notification no. 12/2003 dated 20.06.2003 the value of material charged is not
subject to service tax.
The relevant extract for the said purpose is as under;
“…..the Central Government, being satisfied that it is necessary in the public interest so to
do, hereby exempts so much of the value of all the taxable services, as is equal to the value
of goods and materials sold by the service provider to the recipient of service, from the
service tax leviable thereon under section (66) of the said Act, subject to condition that there
is documentary proof specifically indicating the value of the said goods and materials.”
38.3
39
Therefore, they are eligible for the exemption on the value of goods sold by them to the
service recipient.
That they are eligible for CENVAT credit:
39.1
Rule 2(l) of CENVAT Credit Rules, 2004, defines “input service”, as reproduced after
amendment made as on 01.03.2011 for the period of April,2011 to June, 2013 :“Input service” means any service,
(i) used by a provider of taxable service for providing an output service; or
(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the
manufacture of final products and clearance of final products upto the place of removal,
and includes services used in relation to modernization, renovation or repairs of a
factory, premises of provider of output service or an office relating to such factory or
premises, advertisement or sales promotion, market research, storage upto the place of
removal, procurement of inputs, accounting, auditing, financing, recruitment and quality
control, coaching and training, computer networking, credit rating, share registry,
security, business exhibition, legal services, inward transportation of inputs or capital
goods and outward transportation upto the place of removal;
39.2
That it was clear from the above mentioned facts that the material purchased by them is
regarding to the renderation of service. Without presence of these materials they cannot
render the service.
Therefore, the material purchased are treated as input goods and are eligible for CENVAT
credit.
39.3
40
40.1
That Provisions of extended period of five years is not applicable:
Extract of provisions of section 11A of Central Excise Act, 1944 is as under;
“Where any duty of excise has not been levied or paid or has been short-levied or shortpaid or erroneously refunded, for any reason, other than the reason of fraud or collusion
or any wilful misstatement or suppression of facts or contravention of any of the
provisions of this Act or of the rules made thereunder with intent to evade payment of
duty,—
the Central Excise Officer shall, within one year from the relevant date, serve notice on the
person chargeable with the duty which has not been so levied or paid or which has been so
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short-levied or short-paid or to whom the refund has erroneously been made, requiring him
to show cause why he should not pay the amount specified in the notice;
Where any duty of excise has not been levied or paid or has been short levied or short-paid
or erroneously refunded, by the reason of(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of the rules made thereunder with
intent to evade payment of duty,
by any person chargeable with the duty, the Central Excise Officer shall, within five years
from the relevant date, serve notice on such person requiring him to show cause why he
should not pay the amount specified in the notice along with interest payable thereon
under section 11AA and a penalty equivalent to the duty
40.2
Honourable Supreme Court of India in case of Continental Foundation Jt. Venture
Vs. CCE, Chandigarh-I 2007 (216) E.L.T. 177 (S.C.) held as under. The said judgment is
enclosed as annexure D. That “Suppression” used in the proviso to section 11A of the
Central Excise Act, 1944 accompanied by very strong words as “fraud” or “collusion” and,
therefore, has to be constructed strictly. That near omission to give correct information is
not suppression of facts unless it was deliberate to stop the payment of duty. That
suppression means failure to disclose full information with intent to evade payment of duty
when the facts are known to both the parties, omission by one party to do what he might
have been done would not rendered it suppression. That when the Revenue invokes the
extended period of limitation under section 11A the burden is cast upon it to prove
suppression of facts. That as far as fraud and collusion are concerned, it is evident that
intent to evade duty is built into these words. That as far as mis-statement or suppression
of facts are concerned, they are clearly qualified by the word “wilful”, preceding the words
“mis-statement or suppression of the facts” which means with intent to evade duty. The
next set of words “contravention of any of the provisions of this Act or Rules” are again
qualified by the immediately following words “with intent to evade payment of duty”.
Therefore, there cannot be suppression or mis-statement of facts, which is not wilful and
yet constitute a permissible ground for the purpose of the proviso to section 11A. Misstatement of facts must be wilful. Therefore, requires to be recovered by invoking
provisions of extended period of 5 years. That the adjudicating authority has not justified
how suppression or mis-statement involved with intent to evade duty. When the Revenue
invokes the extended period of limitation under section 11A the burden is cast upon it to
prove suppression of facts. The revenue has not proved suppression of facts in show cause
notice. Therefore, SCN cannot be issued beyond period of 12 months as mentioned in
section 11A of Central Excise Act, 1944.
41
That Simultaneous imposition of penalty under both sections 76 and section 78 of the
Finance Act 1994.
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41.1
That it is judicially held that simultaneous imposition of penalty under section 76 and 78 is
not allowed. Illustrative case laws are as under.
 CCE Raipur Vs. Raj Wines (2012) 35 STT 17 (CESTAT, New Delhi)
 Hind Tele Links Vs. CCE Jalandhar 2012 (25) STR 36 (CESTAT, Delhi)
 Rahul Trade Links Vs. CCE Rajkot 2012 (25) STR 178 (CESTAT, Ahmedabad)
 CCE Vs. First Flight Courier Ltd. (2011) 22 STR 622 (P & H)
 Desert Inn Ltd. Vs. CCE Jaipur (2011) 23 STR 234 (CESTAT, New Delhi)
 Ideal Securities Vs. CCE Allahabad (2011) 33 STT 26 (CESTAT, New Delhi)
 Shashi Kant Mishra Vs. CCE Allahabad (2011) 24 STR 673 (CESTAT, New Delhi)
 Chansama Taluka Sarvoday Mazoor Kamdsar Sahakari Mandli Ltd. Vs. CCE
Ahmedabad 2012 (25) STR 444 (CESTAT, Ahmedabad)
 United Communications, Udupi Vs. CCE (2012) 34 STT 285 (Karnataka)
 Jekson Hydraulic Ltd. Vs. CCE, Ahmedabad (2012) 23 taxmann.com 320; (2012) STT
370 (CESTAT, Ahmedabad)
41.2 That according to amendment made in section 78, with effect from 10-05-2008 if the
penalty is payable under section 78 the provisions of section 76 shall not apply. In case of Jivant
Enterprise V. CST Ahmedabad (2012) 37 STT 691 held that in view of amendment made in section
78 with effect from 10-05-2008, Penalty under section 76 cannot be levied under section 78.
42.
In view of the foregoing submissions, the noticee requested to drop the proceedings sought
to be initiated by the SCN No. STC/04-39/O&A/13-14 dated 22/10/2013.
PERSONAL HEARING
43.
The noticee was granted personal hearing on 13.03.2014. Shri Bishan R Shah (CA)
represented on behalf of the noticee and reiterated the submissions made in their reply dated
19.02.2014, which is taken on record.
DISCUSSIONS AND FINDINGS
44.
I have carefully gone through the facts on records, the show cause notice under reference
and submissions made by M/s. Raintech Industrial X-Ray Services, Ahmedabad vide their letter
dated 19.02.2014 and during the personal hearing.
45.
The main point to be decided in the instant case is whether the taxable amount of Rs.
1,43,91,007/- and the service tax amount of Rs. 15,31,819/- collected from various clients by M/s.
Raintech Industrial X-Ray Services, Ahmedabad, but not deposited into the govt. account, falls
under the category of “Technical Inspection & Certification Services.”
46. I find that M/s. Raintech Industrial X-Ray Services, Ahmedabad has contended the following :
(i)
That when proprietorship and partnership firms are having different entities, the tax
is to be separately paid, and that the issuance of a single SCN is incorrect.
(ii)
That their activity falls under the category of “Works Contract” and not under
“Technical Inspection & Certification Services.” and are eligible for exemption under
notification No. 12/2003 ST dated 20.06.2003
(iii)
That they are eligible for benefit of small scale service providers exemption under
Notification No. 6/2005-ST dated 1.03.2005.
(iv)
That cum-duty benefit is to be given to them.
(v)
That they are eligible for CENVAT Credit .
47. To decide the issue, I find it relevant to produce the facts of the case as under :
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47.1 I find that M/s. Raintech Industrial X-Ray Services, Ahmedabad was started from 2007 as a
proprietorship firm, where Shri Jayantibhai T. Patel was the Proprietor of the said firm and they
were holding service tax registration No. AOZPP 5346M ST001 . For the year 2008-09 and 2009-10
M/s. Raintech Industrial X-Ray Services (Proprietorship firm) had filed ST-3 Return showing their
taxable income as NIL and had not deposited any service tax.
47.2 Further, M/s. Raintech Industrial X-Ray Services, Ahmedabad was converted into
partnership firm from February, 2010. During May, 2010, M/s. Raintech Industrial X-Ray Services,
Ahmedabad (Partnership firm) got their service tax registration No. AALFR 8453M SD001.
However, they had only paid service tax of Rs. 28,746/- and not filed any ST-3 Return.
47.3 M/s. Raintech Industrial X-Ray Services (Partnership firm) was thereafter dissolved w.e.f.
30.11.2010 vide dissolution deed dated 08.12.2010.
47.4 After dissolution of partnership firm of M/s. Raintech Industrial X-Ray Services, Shri
Jayantibhai T. Patel, had continued the firm M/s. Raintech Industrial X-Ray Services as a Proprietor
– ship firm w.e.f. December, 2010 and neither deposited service tax nor filed ST-3 Return.
47.5 Thus, I find that whether being a proprietor or in a partnership, M/s. Raintech Industrial XRay Services, Ahmedabad have always evaded payment of service tax. They had paid just Rs.
28,746/- from the years 2008-09 to 2011-12 to the govt. account, instead of Rs. 15,31,819/- ,
though collecting the same from their customers , detailed as under :
Year
2008-09
2009-10
2009-10
(01.02.2010 to
31.03.2010)
2010-11 (upto
30.11.2010)
Proprietor
Proprietor
Partnership
Value of
taxable
Services/
Income
shown in
Balance
Sheet
24,05,150
47,94,469
6,50,016
Partnership
22,62,503
2,26,250
4,525
2,262
2,33,037
0
2,33,037
2010-11 (from
December,
2010)
2011-12
2011-12
Proprietor
33,84,184
3,38,418
6,768
3,384
3,48,570
0
3,48,570
Proprietor
Closing
Balance of
Debtor
7,56,138
75,614
1,512
756
77,882
0
77,882
1,38,547
13,855
277
139
14,271
0
14,271
1,43,91,007
14,87,204
29,743
14,872
15,31,819
Total
Proprietor/
Partnership
Basic
Service tax payable
Ed.
S. &
Cess
H.S. Ed.
Cess
2,88,618
4,79,447
65,002
5,772
9,589
1,300
Total
Service
tax paid
Differential
service tax
required to
pay
2,886
4,795
650
2,97,276
4,93,831
66,952
0
0
28,746
2,97,276
4,93,831
38,206
28,746
15,03,073
48.
Regarding the first contention of the noticee, I find that the show cause notice has been
issued to M/s. Raintech Industrial X-Ray Services, the proprietary firm, run by Shri Jayantibhai
Tejabhai Patel. No doubt that M/s Raintech Industrial X-Ray Services, the Proprietorship and the
Partnership firms were different entities, with different service tax registration numbers, and that
any tax liability in a Proprietorship firm lies with the proprietor and in case of a partnership firm,
the tax liability lies among the partners of the firm. However, looking at the exceptional and
peculiar nature of the case, the following facts are observed :
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(i)
(ii)
(iii)
(iv)
(vi)
OIO No. 46/STC/AHD/ADC(JSN)/2013-14
M/s Raintech Industrial services, Ahmedabad was run as a proprietary firm and the
proprietor was Shri Jayantibhai Tejabhai Patel from 2008 onwards.
Shri Jayantibhai Tejabhai Patel continued M/s Raintech Industrial services,
Ahmedabad as partnership firm, with him being one of the partners, and which was
in existence for only 10 months from 01.02.2010 to 30.11.2010, and then it was not
in existence any more.
As per para 3 at Page 4 of the dissolution deed dated 08.12.2010 Shri Jayantibhai T.
Patel, had to borne all tax liability of M/s. Raintech Industrial X-Ray Services
(Partnership firm) on it’s dissolution, and all other partners are therefore not liable
for any tax liabilities.
Shri Jayantibhai Tejabhai Patel was involved intrinsically whether in the Proprietor
firm or the Partnership firm. In his statement dated 15.10.2013, Shri Jayantibhai
Tejabhai Patel has stated that “ the Inspection certification can be given by a person
with a license give by BARC (Bhabha Atomic Research Centre), Mumbai and I have
the license from BARC.” Thus it is clear that the services of Shri Jayantibhai Tejabhai
Patel, that of testing & issuance of certificates, could be done only by him and which
is the only work of the firm, whether proprietary or in partnership..
Shri Jayantibhai T. Patel has also admitted that the equipments had been initially
used by his proprietary firm for rendering taxable services and then after the same
had also been used by the partnership firm.
48.1 Thus looking at the unique nature of the case, as discussed above, wherein Shri Jayantibhai
Tejabhai Patel who runs the proprietary firm and who is also responsible for all the liabilities of the
now defunct partnership firm, there was no need to issue separate demands, splitting it into the
Proprietorship firm and the Partnership firms, to demand tax liability from M/s. Raintech Industrial
X-Ray Services, Ahmedabad. Further, the partnership firm is no more in existence and the liabilities
have to be borne by the present owner of M/s. Raintech Industrial X-Ray Services, Ahmedabad.
49.
Now I come to the second issue in which M/s. Raintech Industrial X-Ray Services,
Ahmedabad contends that their services do not fall in the category of “Technical Inspection &
Certification Services.”, but under “Works Contract Services”.
49.1 I find that the above contention of the noticee to be without any weight. First of all they
have themselves registered under the category of “Technical Inspection and Certification Service”
mis-spelt as “Test, Inspection and Certification Service” , which is seen in their ST 3 returns.
Secondly, all through the years from 2008 onwards they have collected the service tax at the full
rates , under the category of ‘Test, Inspection and Certification Service” and which is also
noticeably seen in the Invoices raised by them. Thirdly, the license give by BARC (Bhabha Atomic
Research Centre), Mumbai was for Inspection and certification of capturing X Ray can be classified
under the category of “Technical Inspection & Certification Services.” only. Further, I find that
when M/s. Raintech Industrial X-Ray Services, Ahmedabad has collected service tax, they have to
pay the same to the Govt. whether under “Technical Inspection & Certification Services.” or under
“Works Contract services”, and such an afterthought as to applicability of the Notification no.
12/2003-ST is vague, irrelevant and infructous.
50.
The third issue that M/s. Raintech Industrial X-Ray Services, Ahmedabad has raised is that
they are eligible for benefit of small scale service providers exemption under Notification No.
6/2005-ST dated 1.03.2005 as amended. I find from the Invoices/documents/ledger and the
statement dated 15.10.2013, Shri Jayantibhai Tejabhai Patel, that M/s. Raintech Industrial X-Ray
Services, Ahmedabad had collected service tax continuously since the inception of the firm but had
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not deposited the same to the Government account. I find that the Para 2(i) of the said notification
has clearly stated the following :
“G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the
Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance Act), the Central
Government, on being satisfied that it is necessary in the public interest so to do, hereby
exempts taxable services of aggregate value not exceeding four lakh rupees in any financial
year from the whole of the service tax leviable thereon under section 66 of the said Finance
Act:
…………..
“2. The exemption contained in this notification shall apply subject to the following
conditions, namely:(i) the provider of taxable service has the option not to avail the exemption contained
in this notification and pay service tax on the taxable services provided by him and such
option, once exercised in a financial year, shall not be withdrawn during the remaining
part of such financial year;
……”
(emphasis supplied)
50.1 Thus, when a service provider has not availed the option of exemption, he has to pay
service tax. In the instant case, M/s. Raintech Industrial X-Ray Services, Ahmedabad has
continuously collected service tax from its inception till 2011-12, and therefore the Notification
6/2005-ST as amended is not applicable to them.
51.
The fourth contention of M/s. Raintech Industrial X-Ray Services, Ahmedabad is that cumduty benefit is to be given to them. I find that Shri Jayantibhai Tejabhai Patel in his statement dated
15.10.13 has admitted that the income shown in Income Tax return/P&L and Balance Sheet was
the consideration received against the taxable service rendered to their customers. The fact that
the firm has collected service tax on the said income and not deposited, proves that the said
Income is excluding the service tax component, and therefore the contention of M/s. Raintech
Industrial X-Ray Services, Ahmedabad is baseless.
52.
With regard to eligibility of cenvat credit on materials purchased, it is seen that the M/s.
Raintech Industrial X-Ray Services, Ahmedabad has shown NIL figures regarding ‘Cenvat credit’ in
their ST 3 returns. Further, they have also failed to provide any documentary evidence in this
regard. In view of the above, I am not able to give any benefit in this regard.
53.
In view of the above, I confirm the service tax liability of Rs. 15,31,819/- on the taxable
value of Rs. 1,43,91,007/- under the category of “Technical Inspection and Certification Services”
and order it to be recovered under Section 73 read with Section 68 of the Act.
54.
As discussed above, the demand has been held to be sustainable on merits. Thus I find that
it was the duty of M/s. Raintech Industrial X-Ray Services, Ahmedabad to declare such activities,
and receipt towards the same in their ST-3 returns filed by them from time to time. I further find
that the service provider had refused various letter and summons issued to them and showed NIL
ST 3 Returns for the years 2008-09 and 2009-10, and had thereby operated a clever modus
operandi of changing the firm from proprietorship to partnership to proprietorship again with a sole
aim to evade payment of service tax and the same was noticed only when investigation was carried
out by the Preventive section. They had charged and collected Service Tax from the service
recipients on invoice value in respect of services rendered to their clients but short paid the same
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in government account in contravention of the provisions of Section 68 of the Act. It, was
therefore, clear that they had failed to make timely payment of the Service Tax as provided in
Section 68 of the Act read with Rule 6 of the Rules. I also find that they were well aware of the
facts regarding such transactions had not been disclosed before the department and therefore
their contention that they have not suppressed the facts is not acceptable in this case. In this
connection, I refer to the judgment in the case involving Aircel Digilink India Ltd. v/s Commissioner
of Central Excise, Jaipur, as reported in 2006 (3) STR 386 (Tri.-Del) and the case involving Bharti
Cellular Ltd. v/s Commissioner of Central Excise, Delhi, as reported in 2006 (3) S.T.R. 423 (Tri.-Del).
In both the cases, the Hon. Tribunal upheld invocation of extended period after taking note of the
fact that appellants had not disclosed certain details and mode of computation in their ST-3 details
and that there was nothing on record to suggest that appellants ever approached the office of the
service tax authorities to ascertain the details of their liability to pay the service tax. Similarly, in
case of Insurance & Provident Fund Department v/s. Commissioner of Central Excise, Jaipur-I, 2006
(2) S.T.R. 369 (Tri.-Del.), Hon. Tribunal held that non-disclosure of full amount of premium collected
would attract invocation of extended period. The ratio of the above judgments can be applied to
the present case also as M/s. Raintech Industrial X-Ray Services, Ahmedabad had kept the
Department in dark about its activities and had not only suppressed the material facts from the
department but has also failed to comply with law and procedures, including payment of service
tax. In view of the above, I hold that in the facts and circumstances of the present case, proviso to
section 73 (1) of Finance Act, 1994, is rightly invoked for raising the demand for service tax against
the noticee. Thus, the suppression with an intent to evade payment, on their part, is proved
beyond doubt and proviso to Section 73(1) of the Finance Act, 1994 has rightly been applied in the
instant case and therefore, by their such act of omission and commission, the noticee have
rendered themselves liable for penalty.
54.1 Hon’ble High Court of Gujarat in the case of CCE, Surat – I Vs Neminath Fabrics Pvt. Ltd.,
reported at 2010 (256) ELT 369 (Guj), while deciding the similar issue in Central Excise, has held
that proviso can not be read to mean that because there is knowledge, suppression which stands
established disappears – concept of knowledge, by no stretch of imagination, can be read into
provisions – suppression not obliterated, merely because department acquired knowledge of
irregularities. The relevant para is reproduced below ;
“20. Thus, what has been prescribed under the statute is that upon the reasons stipulated
under the proviso being satisfied, the period of limitation for service of show cause notice
under sub-section (1) of Section 11A, stands extended to five years from the relevant date.
The period cannot by reason of any decision of a Court or even by subordinate legislation be
either curtailed or enhanced. In the present case as well as in the decisions on which reliance
has been placed by the learned advocate for the respondent, the Tribunal has introduced a
novel concept of date of knowledge and has imported into the proviso a new period of
limitation of six months from the date of knowledge. The reasoning appears to be that once
knowledge has been acquired by the department there is no suppression and as such the
ordinary statutory period of limitation prescribed under sub-section (1) of Section 11A would
be applicable. However such reasoning appears to be fallacious inasmuch as once the
suppression is admitted, merely because the department acquires knowledge of the
irregularities the suppression would not be obliterated.”
54.2. In view of the above, I find that extended period for recovery of service tax on category of
“Technical Inspection and Certification”, on rendering of taxable services, under the proviso to
section 73(1) of the Finance Act, 1994 was rightly invoked and the SCN is sustainable on limitation.
Therefore, the service tax amount of Rs. 15,31,819/- is recoverable from M/s. Raintech Industrial
X-Ray Services, Ahmedabad along with Interest as provided in proviso to Section 73(1) of the
Finance Act, 1994 read with Section 75 of the Act ibid.
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55.
Further, since M/s. Raintech Industrial X-Ray Services, Ahmedabad had not discharged
service tax liability on the amount of taxable value on the services mentioned in the foregoing
paras and as demanded under the show cause notice and therefore, they have contravened the
provisions of Section 67 and 68 of the Finance Act, 1994 and thereby rendered themselves liable to
penal action under Sections 76,77 & 78 of Finance Act 1994.
56.
As regards the issue of imposition of penalty under Section 76 of the Finance Act, 1994, I
observe that penalty under Section 76 and 78 of the Finance Act, 1994 are mutually exclusive w.e.f.
10.05.2008 and once penalty under Section 78 is imposed, no penalty under Section 76 can be
imposed in terms of the proviso inserted in Section 78 w.e.f 10.5.2008 in this regard. Therefore, no
penalty under Section 76 is imposable for the period from 10.5.2008 onwards. In the case before
me, the demand of service tax is for the period from 2008-09 to 2011-12, therefore, I hold that
penalty under Section 76 of the said Act is imposable on M/s. Raintech Industrial X-Ray Services,
Ahmedabad. I find that as M/s. Raintech Industrial X-Ray Services, Ahmedabad has not paid service
tax within the stipulated time period as prescribed under Section 68 of the Finance Act, 1994 read
with Rule 6 of the Service Tax Rules, 1994, I hold them liable to penalty under Section 76 of the
Finance Act, 1994. My conclusion is also based on various decisions of Hon’ble High Courts &
Tribunals as mentioned below ;
 CCE & ST Vs First Flight Couriers Ltd reported at 2007(8) STR 225 (Kar.)
 UOI Vs Aakar Advertising, reported at 2008 (11) STR.5 (Raj.)
 UOI Vs Shiv Ratan Advertisers reported at 2008 (12) STR 690 (Raj.)
 Shiv Network Vs CCE, Daman reported at 2009 (14) STR 680 (Tri-Ahmd)
 CCE, Vapi Vs Ajay Sales Agencies reported at 2009 (13) STR 40 (Tri–Ahmd)
 Siddhi Motors Vs CCE, Rajkot reported at 2009 (15) STR 422 (Tri-Ahmd)
56.1 I further observe that the Hon’ble CESTAT in the case of M/s Gujarat Industrial Security
Force Society Vs CST, Ahmedabad, vide order No. A/1110/WZB/AHD/2010 dated 05.08.2010, has
held that no lenient view can be taken under section 76 of the Finance Act, 1994. The relevant
paras are reproduced below;
“2.
After hearing both the sides, I find that in this case, the assessee was registered more
than 6 years back and no explanation has been given by them for delayed filing of return and
delayed payment of service tax. Under these circumstances, I am not finding fault in stand
taken by the lower authority that penalty is imposable under section 76 and once it is held
that penalty is imposable under section 76, the amount fixed as per the provision of section
76 is required to be imposed. Under these circumstances, even though the Ld. Advocate
submitted that the appellant is a non profit organization, no lenient view can be taken in
view of the provisions of law.
3.
Accordingly, the appeal is rejected.”
56.2 Hon’ble High Court of Gujarat in the case of CCE & Cus. Vs Port Officer, reported at 2010
(19) STR 641 (Guj) has now settled the issue of penalty under Section 76. The relevant para is
reproduced below ;
“10. A plain reading of Section 76 of the Act indicates that a person who is liable to pay
service tax and who has failed to pay such tax is under an obligation to pay, in addition to
the tax so payable and interest on such tax, a penalty for such failure. The quantum of
penalty has been specified in the provision by laying down the minimum and the
maximum limits with a further cap in so far as the maximum limit is concerned. The
provision stipulates that the person, who has failed to pay service tax, shall pay, in
addition to the tax and interest, a penalty which shall not be less than one hundred rupees
per day but which may extend to two hundred rupees for everyday during which the
failure continues, subject to the maximum penalty not exceeding the amount of service
tax which was not paid. So far as Section 76 of the Act is concerned, it is not possible to
read any further discretion, further than the discretion provided by the legislature when
legislature has prescribed the minimum and the maximum limits. The discretion vested in
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the authority is to levy minimum penalty commencing from one hundred rupees per day
on default, which is extendable to two hundred rupees per day, subject to a cap of not
exceeding the amount of service tax payable. From this discretion it is not possible to read
a further discretion being vested in the authority so as to entitle the authority to levy a
penalty below the stipulated limit of one hundred rupees per day. The moment one reads
such further discretion in the provision it would amount to re-writing the provision which,
as per settled canon of interpretation, is not permissible. It is not as if the provision is
couched in a manner so as to lead to absurdity if it is read in a plain manner. Nor is it
possible to state that the provision does not further the object of the Statute or violates
the legislative intent when read as it stands. Hence, Section 76 of the Act as it stands does
not give any discretion to the authority to reduce the penalty below the minimum
prescribed.”
56.3 The Hon’ble High Court of Gujarat has further confirmed the above view in the case of CCE
Vs S J Mehta & Co., reported at 2011 (21) STR 105 (Guj.) and CCE Vs Bhavani Enterprises reported
at 2011 (21) STR 107 (Guj.).
57.
Further, I find that M/s. Raintech Industrial X-Ray Services, Ahmedabad has failed to furnish
the correct details in their ST 3 returns and thereby contravened of the provisions of Sections 68 &
70 of Chapter V of the Finance Act, 1994 read with Rules 4 and 7 of the Service Tax Rules, 1994.
Therefore the instant case is a fit case for imposition of penalty under Section 77 of Chapter V of
the Finance Act, 1994.
58.
Now I come to the issue of imposition of penalty under Section 78 of the Finance Act,
1994. I find that as the noticee had suppressed the facts with intention to evade payment of
service tax, penalty under Section 78 of the Finance Act, 1994 is mandatorily imposable as has been
held by the Apex court in the case of Dharmendra Textile Mills Ltd-2008 (231) ELT 3 (SC) and
Rajasthan Spinning & Weaving Mills Ltd-2009 (238) ELT 3 (SC). Therefore, I hold that penalty is
imposable on the noticee under Section 78 of the Finance Act, 1994. I, therefore, hold that they
have rendered themselves liable to penalty under Section 78 of the Finance Act, 1994. My above
view also gets support from below mentioned case laws;
 Shiv Network Vs CCE, Daman reported in 2009 (14) STR 680 (Tri.Ahmd.)
 CCE, Vapi Vs Ajay Sales Agencies reported in 2009 (13) STR 40 (Tri. Ahmd.)
 Order No. A/754/WZB/AHD/2010 dt. 09.06.2010 / 23.06.2010 in the case of M/s Bajrang
Security Services Vs CST, Ahmedabad.
 Order No. A/1937/WZB/AHD/2010 dated 08.10.2010 / 20.12.2010 in the case of M/s Dhaval
Corporation Vs CST, Ahmedabad.
58.1 I further observe that recently hon’ble High Court of Punjab & Haryana, in the case of CCE
Vs Haryana Industrial Security Services reported at 2011 (21) STR 210 (P&H), has also upheld the
penalty equal to service tax imposed under Section 78 of the Finance Act, 1994. Hon’ble Karnataka
High Court has also taken similar view in the case of CCE, Mangalore Vs K Vijaya C Rai reported at
2011 (21) STR 224 (Kar.)
58.2 I also find that penalty under Section 76 ibid is provided for failure to pay service tax
whereas penalty under Section 78 ibid is for suppressing value of taxable service. In the instant
case, service tax liable to be paid in terms of Section 68 read with Rule 6 of the Service tax Rules,
1994, have not been found paid as well as service tax has not been paid by suppressing value of
taxable service by reason of wilful mis-statement and suppression of facts. Of course these two
offences may arise in the course of same transaction, or from the same action of the person
concerned. But the incidents of imposition of penalty are distinct and separate and even if the
offences are committed in the course of same transaction or arises out of the same act the penalty
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is imposable for ingredients of both offences, this aspect was also considered by the Hon’ble High
Court of Kerala in the case of Assistant Commissioner, C.Ex. Vs Krishna Poduval – 2006 (1) STR 185
(Ker). I also find that the Hon’ble Mumbai Tribunal in the case of Golden Horn Container Services
Pvt. Ltd. v/s Commr. of C. Ex., Raipur reported at 2009 (16) S.T.R. 422 (Tri.-Mumbai), has held that
Section 76 provides for a penalty who commits default simpliciter in payment of the tax whereas
section 78 is a more stringent penal provision, which provides harsher penalty who commits
default with mens rea. Since in this case also, the noticee has committed default with mens rea, the
decision of the tribunal is squarely applicable.
59.
Further, as regards imposition of simultaneous penalty, I place my reliance on the judgment
of Hon’ble High Court of Kerala in the case of Assistant Commissioner of Central Excise v. Krishna
Poduval (supra) which is aptly applicable to the present case. I find that the imposition of penalty
under sections 76 and 78 of the Act is for non payment of service tax and suppression of value of
taxable service respectively which are two distinct and separate offences attracting separate
penalties. I find that the noticee have committed both the offences and therefore penalties under
section 76 and 78 of the Finance Act, 1994 are imposable on the said noticee for the period upto
9.5.2008. Therefore, I am of the view that in the facts and circumstances of the case, it is justifiable,
if the penalty is imposed under the provisions of Section 76 and 78 of the Finance Act, 1994,
separately, following the decisions of Hon’ble Kerala High Court and Mumbai tribunal (supra). My
views are also further supported by various decisions of tribunals in the cases of ;
a) Shiv Network v/s Commissioner of Central Excise & Customs, Daman reported at 2009 (14)
S.T.R. 680 (Tri.-Ahmd.)
b) Commissioner of Central Excise, Vapi v/s Ajay Sales Agencies reported at 2009 (13) S.T.R. 40
(Tri.-Ahmd.), and
c) Mett Macdonald Ltd. v/s Commissioner of Central Excise, Jaipur reported at 2001 (134)
E.L.T. 799 (Tri.-Del.).
d) M S Shah & Co., Vs CST, Ahmedabad – Order No. A/1328/ WZB/ Ahd/ 2010 dated
30.06.2010 / 26.08.2010.
e) Bajarang Security Services Vs CST, Ahmedabad – Order No. A/745/ WZB/Ahd/2010 dated
09.06.2010 / 23.06.2010.
f) CESTAT, Principal Bench, New Delhi in the case of Bajaj Travels Ltd., Vs CCE, Chandigarh –
2009 (16) STR 183 (Tri.Del.)
60.
In light of the aforesaid discussions and findings, I hold that the service tax amount of Rs.
15,31,819/- alongwith interest is liable to be confirmed against M/s. Raintech Industrial X-Ray
Services, Ahmedabad under Section 73 of the Finance Act,1994 read with Section 75 of the Act ibid
and they are also liable to penalty under the provisions of Section 76, 77 and 78 of the Finance Act,
1994.
61.
Accordingly, I pass the following order:-
ORDER
(i)
I consider the amount of Rs. 1,43,91,007/- collected from various clients by M/s.
Raintech Industrial X-Ray Services, Ahmedabad, as “taxable value” under the category of
“Technical Inspection and Certification Services” as specified in clause (zzi) of Section
65(105) read with Section 65 (108) and (109) of the Finance Act, 1994 as amended.
(ii)
I confirm the demand of service tax amounting to Rs. 15,31,819/- (Rupees Fifteen Lacs
Thirty One Thousand Eight Hundred and Nineteen Only) (Service Tax of Rs. 14,87,204/26
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plus Education Cess and Secondary & Higher Secondary Education Cess of Rs.44,615/-)
on the taxable value referred in above para and order it to be recovered from them
under Section 73 read with section 68 of the Finance Act, 1994, as amended. I
appropriate the service tax paid by them vide Challan No. 00001 dated 02.08.2010 for
Rs. 28,746/- and Challan No. 00001 dated 11.10.2013 for Rs. 1,00,000/- against the said
demand.
(iii)
I direct the noticee to pay Interest as applicable on the amount of service tax liability for
the delay in making the payment, under Section 75 of the Finance Act, 1994 as
amended.
(iv)
I impose a penalty of Rs. 200/- (Rupees Two Hundreds Only) per day /{ Rs. 100/(Rupees One Hundred only) w.e.f. 8.04.2011 per day} or at the rate of 2% of the service
tax amount per month/ {1% of the service tax amount per month w.e.f. 8.04.2011} ,
whichever is higher, subject to maximum of the outstanding tax amount, from the date
on which such tax was due till the actual payment of outstanding tax amount, whichever
is earlier, under the provisions of Section 76 of the Finance Act, 1994, as amended, for
failure to pay Service Tax within the stipulated period as required under the provisions
of Section 68 (1) of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules,
1994, as amended.
(v)
I impose a penalty of Rs 10,000/- (Rupees Ten Thousand Only) under Section 77 of the
Finance Act, 1994 on M/s. Raintech Industrial X-Ray Services, Ahmedabad.
(vi)
I also impose a penalty of Rs. 15,31,819/- (Rupees Fifteen Lacs Thirty One Thousand
Eight Hundred and Nineteen Only) upon them under Section 78 of the Finance Act,
1994 for suppressing the value of taxable services provided by them before the
Department with an intent to evade payment of service tax. If the service tax amount is
paid along with appropriate interest as applicable, within 30 days from the date of
receipt of this order, then the amount of penalty under Section 78 shall be reduced to
25% of the service tax amount, provided if such penalty is also paid within such period
of 30 days.
( J.S. Negi )
Additional Commissioner
Service Tax, Ahmedabad
F.No. : STC/04-39/O&A/13-14
Ahmedabad, Date : 25.03.2014
By R.P.A.D./Hand Delivery
To,
M/s. Raintech Industrial X-Ray Services,
A – 2/3, Lalbhai Centre,Aiden Park Society,
Maninagar (East),Ahmedabad – 380 008.
Copy to :1. The Commissioner, Service Tax, Ahmedabad ( Attn RRA Cell)
2. The Deputy Commissioner (Preventive), Service Tax (HQ), Ahmedabad.
3. The Assistant Commissioner, Service Tax, Division-II, Ahmedabad.
4. The Superintendent, Range VI, Division – II, Ahmedabad.
5. Guard File.
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