OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 1 of 24
BRIEF FACTS OF THE CASE:M/s. Shapoorji Pallonji & Co. Ltd., Iscon Centre, 210 Shivranjani
Char Rasta, Satellite , Ahmedabad-380015 (hereinafter referred to as
‘the said assessee’) are engaged in providing ‘Commercial or Industrial
Construction” service, “Erection, Commissioning and Installation” service,
“Transport of Goods by Road” service, “Construction of Residential
Complex” service and “Works Contract” service. They are registered with
Service Tax department under Registration No. AAACS6994CST017.
2.
The said assessee filed their ST-3 returns for the period from Oct.,
2010 to March, 2011 electronically on 19.05.2011. On scrutiny of the
said ST-3 returns, it was observed that the said assessee had short paid
service tax amounting to Rs. 18,69,803/- under the taxable category of
“Commercial or Industrial Building and Civil Structures”. The details of
service tax payable and paid are as under:Period
Taxable
amount
received
Value on
which
Service tax
payable
@12.36%
Value on
which
Service tax
payable
@10.30%
Service tax
payable
@12.36%
Service tax
payable
@10.30%
Total
service tax
payable
Service
tax paid
Service
tax
required
to be
paid
Oct-10
0
0
0
0
0
0
0
0
Nov-10
0
0
0
0
0
0
0
0
Dec-10
214381171
0
214381171
0
22081261
22081261
22081261
0
Jan-11
74341812
0
74341812
0
7657207
7657207
7657207
0
Feb-11
71632131
2645974
68986157
327042
7105574
7432617
5562814
1869803
Mar-11
19363405
0
19363405
0
1994431
1994431
1994431
0
379718519
2645974
377072545
327042
38838472
39165515
37295713
1869803
Total
Source: ST-3 Return for the period from Oct-2010 to March-2011
3.
The jurisdictional Range Superintendent, vide letter F. No.STC/R-
XV/Scruitny/10-11 dated 28.07.2011, requested the said assessee to pay
up the short paid service tax amount but the said assessee, vide their
reply
dated
02.08.2011,
submitted
that
their
company
provides
construction related services and they were awarded a construction
contract by M/s Tata Motors Ltd., Sanand, Gujarat in F.Y. 2008-09; that
they had then opted to pay service tax at full rate on the entire contract
value; that the tax rate prevailing in F.Y. 2008-09 was 12.36%; that in
the month of Dec., 2008, M/s. Tata Motors Ltd. paid Rs. 49,25,29,565/as mobilization advance, on which the said assessee paid service tax of
Rs. 5,41,80,005/- (@ 12.36 on Rs. 49,25,29,565/- inclusive of Service
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 2 of 24
Tax) as service tax is also payable on advance payment received; that
they then, started rendering service and raising invoices for the same to
their client; that they charged M/s Tata Motors Ltd. the prescribed tax
rates in each invoice; that the tax rate was reduced to 10.30% w. e. f.
24.02.2009; that it is a normal trade practice in their business whereby,
whenever the client certifies their invoice for payment, they deduct some
portion from it against the mobilization advance already paid; that
against their invoice, they get a lesser payment which is due to an
adjustment of advance payment made earlier; that if there is a change in
the tax rate in between, then the tax payable will get reduced or
enhanced as some tax has already been paid on the invoice being
generated later; that in their case, they paid tax @ 12.36% on the
advance received in F.Y. 2008-09, which was adjusted against an invoice
wherein tax was charged @ 10.30%, hence normal working will always
show a short payment; that this would be clear from the worksheet
attached with the letter; that the worksheet contained the month-wise
break-up of service tax payable on account of Tata Motors work; that in
the said worksheet, it could be noticed that in all, a mobilization advance
of Rs. 13,67,85,385/- had been adjusted by their client in F.Y. 2010-11;
that they had paid service tax on this mobilization advance @ 12.36%
whereas, the same was adjusted from an invoice bearing tax @ 10.30%;
that the following table would clarify the whole issue;
Month
Mobilzation
Tax @ 12.36%
Tax @ 10.30%
Advance
(
(
Adjusted
12.36 )
Adv
112.36*
Adv
Difference
110.30*
10.30 )
Apr-10
1,21,03,080
13,31,382
11,30,206
2,01,176
May-10
1,02,94,900
11,32,476
9,61,355
1,71,121
18,96,931
2,08,669
1,77,139
31,531
Sub-total
2,42,94,911
26,72,527
22,68,700
4,03,827
Feb-11
11,24,90,474
1,23,74,353
1,05,04,550
18,69,802
G.Total
13,67,85,385
1,50,46,879
1,27,73,250
22,73,629
Jun-10
They further submitted that the above table gives a clear understanding
of how the difference came about; that now they clarify why this
difference did not get reflected in the ST-3 return (i) The present format
of the ST-3 does not have any column for reflecting the difference; that
they had to reflect the exact taxable amount received from their client in
the return but the tax payable on the same was less due to the reasons
given above (ii) in the attached worksheet, it could be found that the net
taxable receipt for the F.Y. 2010-11 ( excluding Mobilisation Advvance)
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 3 of 24
was Rs. 27,68,76,782/- on which, tax ( @ 10.30% ) was worked out to
be
Rs.
2,85,72,816/-;
that
the
differential
excess
tax
paid
on
mobilization advance as explained in table above, was Rs. 22,73,629/which needed to be reduced from the tax payable; that therefore, the net
tax payable was worked out to be Rs. 2,62,99,186/- and this amount
was aptly reflected in the return filed by them; that in nutshell, the
taxable amount received by them was Rs. 27.69 Crores whereas, the tax
payable on the same after adjustment was Rs. 2.63 Crores; that both
these amounts were reflected in the return; that to their knowledge, the
present return format as said earlier does not provide for such
adjustment; that Rule 6(1A) and 6 (4A) of the Service Tax Rules are
either for voluntary advance tax payments or where excess tax is paid
mistakenly; that therefore, they could not use the columns for these
rules to adjust the above tax payments as the excess tax of Rs. 22.73
lacs was neither voluntarily nor was it paid mistakenly.
4.
From the above reply, it appeared that the said assessee had in
fact, received mobilization advance amounting to Rs. 49,25,29,565/- for
the services to be provided to M/s Tata Motors Ltd., Sanand, Gujarat
under the taxable category of “Commercial or Industrial Construction
Service” in the month of December, 2008 as mentioned by the said
assessee in their above mentioned letter and had discharged Service Tax
liability @ 12.36% (prevailing rate at the material time) on the above
receipt by adopting reverse calculation method i. e. treating the amount
received inclusive of service tax. They had then started providing such
services and issuing taxable invoices. In the meantime, w. e. f.
24.02.2009, the rate of service tax was reduced from 12.36% to 10.3%.
4.1
Since the said assessee had made the payment of service tax
@ 12.36% on their mobilization advance, it appeared from their above
letter that they had adjusted the differential amount of service tax (i. e.
difference between 12.36% - 10.30% = 2.06%) in their ST-3 returns for
the period from Oct., 2010 to March, 2011 by making less payment of
service tax on the taxable value, but no reasons for the said short
payment had been reflected either in the ST-3 returns or by separate
correspondence to the jurisdictional office.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
5.
Page 4 of 24
Further, the said assessee in their above cited letter had also
stated that the reasons for not mentioning the short payment of service
tax were that the present format of ST-3 return does not have any
column for reflecting such event/difference, ST-3 return has the only
column for the events covered under Rule 6(1A) and Rule 6(4A) of the
Service Tax Rules,1994 in which they were not covered as the event of
(i) the payment of service tax in advance on own volition of service
provider and (ii) the amount of service tax paid excess in a month or
quarter, are covered under Rule 6(1A) and Rule 6(4A) of the Service Tax
Rules 1994.
6.
From the facts and circumstances of the case as narrated above,
it appeared that in the instance case, the provisions of Rules 6(1A) and
6(4A) of the Service Tax Rules,1994 were not applicable because of the
fact that they had not paid the service tax in advance on their own
volition to the credit of central government nor they had indicated the
details of so called advance payment made and its adjustment if any, in
the subsequent return to be filed under Section 70 of the Finance Act,
1994 (proviso (ii) to Section 6(1A) of the Finance Act, 1994. Further,
there appeared no uncertainty of the calculation of taxable value as well
as service tax liability in the present case, the question of provisional
assessment and payment of service tax did not arise. It thus appeared
that they had wrongly interpreted the law in their convenience and
escaped with due service tax liability of Rs. 18,69,803/-. Further, on
going through the relevant columns of ST-3 returns for the period from
Oct., 2008 to March, 2009 and for the year 2009-10, it was noticed that
there was column for gross amount received in advance for service to be
provided, but the said assessee had not shown the mobilization advance
of Rs. 49,25,29,565/- in the ST-3 returns for the above period, which
was received by them in the month of Dec., 2008 from their client M/s
Tata Motors Ltd., Sanand, nor they had mentioned the details of
payment made towards service tax upon such mobilization advance in
any of their ST-3 returns filed by them. The department came to know
about payment of service tax on the above said mobilization advance
only after receipt of letter dated 02.08.2011 from the said assessee in
compliance
to
the
letter
F.
No.
STC/R-XV/Scrutiny/10-11
20.07.2011 of the jurisdictional Range Superintendent.
dated
OIO No. 45/STC-AHD/ADC(AS)/2012-13
7.
Page 5 of 24
Further, it is pertinent to mention here that there was a column
no 4A (a)(iii) under the head “Service Tax Paid” in the ST-3 return filed
for the period Oct., 2008 to March, 2009 wherein, the particulars
regarding advance payment of service tax “By Adjustment of Taxes
amount Paid Earlier and Adjusted in this period under Rule 6(3) of
Service Tax Rules” were required to be mentioned but the said assessee
had not shown any amount in that column during the material time. The
contents of Rule 6(3) of the Service Tax Rules, 1994 are reproduced
below:
“Where an assessee has paid to the credit of Central Government service tax in
respect of a taxable service, which is not so provided by him either wholly or
partially for any reason, the assessee may adjust the excess service tax so paid
by him (calculated on a pro rata basis) against his service tax liability for the
subsequent period. If the assessee has refunded the value of taxable service and
the service tax thereon to the person from whom it was received.”
7.1
It was clear from the above provisions that the cases where
the adjustment is required for any payment received against a service to
be provided which is not so provided for any reason or where the amount
of invoice is negotiated due to deficient provision of service or any terms
contained in a contract, the same was required to be reflected against
the column provided in ST-3 returns, as discussed herein above.
7.2
Therefore, the contention of the said assessee that there was
no column in the ST-3 return to reflect their case, appeared to be wrong
as they had thus, failed to disclose the fact before the department as
they had never mentioned in their ST-3 returns or through separate
intimation to the proper officer in this regard. Further this case did not
fall under the provisions of Rule 6(1(A) and 6(4(A) of the Service Tax
Rules, 1994 as also admitted by the said assessee. Therefore, in view of
this, it was very clear that the said assessee had tried to misguide the
department by mentioning that they had adjusted the excess amount of
service tax paid earlier, while it was clear from the above discussion that
the provisions of Rule 6[1(A)] and 6(4A) of the Service Tax Rules, 1994
were in fact not applicable to them.
7.3
It was also noticed that the said assessee had neither
disclosed the amount of mobilization advance to the department through
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 6 of 24
proper procedures/documents, nor they had disclosed the payment of
service tax on such advance, (they paid) at the relevant time of filing of
ST-3 for the period from Oct., 2008 to March, 2009. Hence, their claim
that they had not short paid any service tax amount during Oct., 2010 to
March, 2011 and had adjusted the excess payment of service tax made
due to change in rate was not acceptable.
8.
Rule 6:- Payment of service tax
[(1) The service tax shall be paid to the credit of the Central Government,(i) by the 6th day of the month, if the duty is deposited electronically through
internet banking; and
(ii) by the 5th day of the month, in any other case, immediately following the
calendar month in which the payments are received, towards the value of
taxable services:
Provided that where the assessee is an individual or proprietary firm or
partnership firm, the service tax shall be paid to the credit of the Central
Government by the 6th day of the month if the duty is deposited electronically
through internet banking, or, in any other case, the 5th day of the month, as the
case may be, immediately following the quarter in which the payments are
received, towards the value of taxable services:
Provided further that notwithstanding the time of receipt of payment towards the
value of services, no service tax shall be payable for the part or whole of the
value of services, which is attributable to services provided during the period
when such services were not taxable:
Provided also that the service tax on the value of taxable services received
during the month of March, or the quarter ending in March, as the case may be,
shall be paid to the credit of the Central Government by the 31st day of March of
the calendar year.]
[Explanation.- For the removal of doubts, it is hereby declared that where the
transaction of taxable service is with any associated enterprise, any payment
received towards the value of taxable service, in such case shall include any
amount credited or debited, as the case may be, to any account, whether called
‘Suspense account’ or by any other name, in the books of account of a person
liable to pay service tax.]
[(1A)
Without prejudice to the provisions contained in sub-rule (1), every
person liable to pay service tax, may, on his own volition, pay an amount as
service tax in advance, to the credit of the Central Government and adjust the
amount so paid against the service tax which he is liable to pay for the
subsequent period:
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 7 of 24
Provided that the assessee shall,(i) intimate the details of the amount of service tax paid in advance, to the
jurisdictional Superintendent of Central Excise within a period of fifteen days
from the date of such payment; and
(ii) indicate the details of the advance payment made, and its adjustment, if
any in the subsequent return to be filed under section 70 of the Act;]
9.
As per the provisions of Section 68 of the Finance Act, 1994 read
with Rule 6 of the Service Tax Rules, 1994 as amended,
“every person providing or receiving taxable service to any person is liable to
pay service tax at the rate prescribed in Section 66 to Central Government by
the 5th of the month / quarter immediately following the calendar month /
quarter in which the payments are received towards the value of taxable
services (except for the month of March which is required to be paid on 31 st
March).”
10.
According to Section 70 of the Finance Act, 1994,
“every person liable to pay service tax is required to assess the tax himself due
on the services provided by him and thereafter furnish a return to the
jurisdictional Superintendent of Service tax by disclosing wholly & truly all
materials facts in ST-3 returns.”
11.
As per section 73(1) of Finance Act 1994,
“Where any service tax has not been levied or paid or has been short-levied or
short paid or erroneously refunded, the jurisdictional officer may within one year
from the relevant date, serve notice on the person chargeable with the service
tax which has not been levied or paid or which has been short-levied or shortpaid or the person to whom such tax refund has erroneously been made,
requiring him to show cause why he should not pay the amount specified in the
notice:
Provided that where any service tax has not been levied or paid or has
been short levied or erroneously refunded by reason of –
a)
b)
c)
d)
e)
fraud; or
collusion; or
wilful mis-statement; or
suppression of facts; or
contravention of any of the provisions of this chapter or of the
rules made there under with intent to evade payment of service tax, by
the person chargeable with the service tax or his agent, the provisions of
this sub-section shall have effect, as if, for the words “One year”, the
words “five years” had been substituted.
In the instant case, the said assessee had short paid the service
tax during the period from 1/10/10 to 31/03/2011 for their taxable
category of “Renting of Immovable Property service”, thereby they were
liable to make payment of service tax recoverable under the Section
73(1) of the Finance Act, 1994, which they had not paid.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
12.
Page 8 of 24
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 period prescribed is liable to
pay simple interest (as such rate not below ten per cent and not exceeding thirty
six per cent per annum, as is for the time being fixed by the Central
Government, by Notification in the Official Gazette) for the period by which such
crediting of the tax or any part thereof is delayed.
13.
It further appeared that they had failed to discharge their tax
liability in the manner and method prescribed under relevant provisions
of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service
Tax Rules, 1994. Therefore, the said assessee was also liable to pay
interest at prescribed rate recoverable under Section 75 of the Finance
Act, 1994 as they had failed to pay the tax amounting to Rs.
18,69,803/- (inclusive of Edu. Cess and S. & H. Edu. Cess) in
accordance with the provisions of Section 68 of the Finance Act, 1994.
14.
In view of the above, it appeared that the said assessee had
contravened the provisions of:
i). Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules,
1994 as amended, as they have failed to discharge the service tax liability
correctly and thereby there is non payment/short payment of service tax as
mentioned in foregoing paras for the period as discussed in forgoing paras and
failed to credit the service tax in Government account within the stipulated time
limit;
ii). Section 70 of the Finance Act, 1994, as they have failed to assess the correct
tax liability.
15.
All the above acts of contravention on the part of the said
assessee appeared to have been committed by way of not paying the
service tax amounting to Rs. 18,69,803/- (inclusive of Edu. Cess and S.
& H. Edu. Cess) which was required to be demanded and recovered from
them under Section 73(1) of the Finance Act, 1994 for such acts of
contravention of the provisions of Finance Act, 1994 as discussed herein
above, the said assessee had rendered themselves liable for penalty
under Section 76 and Section 77 of the Finance Act, 1994.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 9 of 24
16.
In view of above, the said assessee were called upon to show
cause as to why:
(i)
The service tax amounting to Rs. 18,69,802/- (Eighteen Lakh Sixty
Nine Thousand Eight Hundred One only) short paid
as stated above
should not be demanded and recovered from them under Section 73(1)
read with Section 68 of the Finance Act, 1994;
(ii)
Interest, at appropriate rate, should not be charged upon them under
Section 75 of the Finance Act, 1994;
(iii) Penalty should not be imposed upon them under Section 76 of the Finance
Act, 1994, for contravention of Section 68(1) of the Finance Act, 1994; and
(iv) Penalty under Section 77 (2) of the Finance Act, 1994 should not be
imposed upon them for the contravention of the provision of Section 70 of
the Finance Act, 1994 for the reasons discussed in the foregoing paras.
Defence Reply :17.
The said assessee filed their defence reply dated 24.12.2012
wherein they, inter-alia, submitted that they deny all the allegations,
averments and contentions raised in the subject Show Cause Notice
issued against them; that the Show Cause Notice is not legally tenable
as the same is based upon presumptions not permitted by law and
inferences not permitted by facts and hence the same should be
dropped in the interest of justice; that they specifically say and submit
that they have not contravened any of the provisions of the Act; that
the fact is that their company provides construction related services and
were awarded a construction contract by M/s. Tata Motors Ltd. to
construct the Tata Nano factory at Sanand, Gujarat in F.Y. 2008-09;
that they had then opted to pay service tax at full rate on the entire
contract value; that the tax rate prevailing in F.Y. 2008-09 was 12.36%;
that in the month of Dec., 2008, M/s. Tata Motors Ltd. paid Rs.
49,25,29,565/- (Rs. 49,55,02,581/- less VAT Rs. 29,73,015/-) as
mobilization
advance
and
they
paid
tax
of
Rs.
5,41,80,005/-
(49,25,29,565 / 112.36% * 12.36%) thereon, as service tax is also
payable on advance payments received; that they then started
rendering services and raising invoices for the same to their client; that
they charged them the prescribed tax rates in each invoice; that tax
rates were reduced to 10.30% w. e. f. 24.02.2009; that it is a normal
trade practice in their business whereby whenever the client certifies
their invoice for payment, they deducts some portion from it against the
mobilization advance already paid by them, so against their invoice,
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 10 of 24
they get a lesser payment which is due to an adjustment of advance
payment made earlier; that if there is a change in tax rate in between
period, then the tax payable will get reduced or enhanced as some tax
has already been paid on the advance received earlier. They further
submitted that they had received a total advance of Rs. 49.25 Crores
which was adjusted by M/s. Tata Motors Ltd. against the payments
made by it to them in 2009-10 and 2010-11; that in F.Y. 2009-10, it
adjusted a total of Rs. 35.87 Cr. and remaining Rs. 13.67 Cr. were
adjusted in 2010-11; that in their case, they paid tax @ of 12.36% on
the advance received in F.Y. 2008-09, which was adjusted against an
invoice wherein, tax was charged @ 10.30%, hence normal working will
always show a short payment; that this would be clearer from the
worksheet attached with this letter for second half of FY 2010-11; that
the worksheet contained the month-wise breakup of service tax payable
on account of Tata Motors work; that in all, a mobilization advance of
Rs. 11,24,90,474/- had been adjusted by their client in the period Feb.,
2011; that they had already paid service tax on this mobilization
advance @ 12.36% whereas, the same was adjusted from an invoice
bearing tax @ 10.30%. – difference being an EXCESS tax paid of Rs.
18,69,803/-. They further stated that the following table would clarify
the whole issue:
Month
Feb-10
Mobilisation
Advance
Adjusted
11,24,90,474/-
17.1
Tax at 12.36%
Tax at 10.30%
(Adv
/112.36*12.36)
(Adv
/110.3*10.30)
1,23,74,353/-
10,04,550/-
Diff
18,69, 803/-
They further submitted that earlier, one Show Cause
Notice was issued to them for the first half of the F.Y. 2010-11 on the
same issue which is currently pending before the Hon’ble Ahmedabad
CESTAT and they have got the stay on the same. They attached
following documents to substantiate the above facts:
a. Copy of Tata Motors Mobilization advance ledger for the FY 2008-09 to 2010-11 –
Annexure A.
b. Challan through which we paid the said tax – Annexure B.
c. Worksheet showing how the excess tax came about – Annexure C.
d. Copy of the stay order passed by the Hon’ble Ahmedabad CESTAT on first SCN –
Annexure D.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
17.2
Page 11 of 24
They further submitted that the difference got reflected in
the ST-3 return because, in their bonafide belief, the present ST-3
format does not have any column for reflecting the above discussed
difference and the fact that they had to reflect the exact taxable amount
received from their client in the return but the tax payable on the same
was less due to the reasons given above; that in the attached worksheet
adjudicating authority would find that the NET taxable receipt for second
half of the F.Y. 2010-11 (excl. Mob Adv) was Rs. 16,33,39,844/- on
which
tax
(@
10.30%/12.36%)
came
to
Rs.
1,68,78,511/-
and
differential excess tax paid on mobilization advance as explained above
was Rs. 18,69,803/- which needed to be reduced from the tax payable
so net tax payable came to Rs. 1,50,08,709/-; that this amount was
aptly reflected in the returns filed by them; that in a nutshell, the taxable
amount received by them was Rs. 16.33 Crore whereas the tax payable
on the same after adjustment was Rs. 1.50 Crore; that both these
amounts were reflected in the return; that to their bonafide knowledge,
the present return format as said earlier, does not provide for such
adjustments; that Rule 6 (1A) of the Service tax Rules is for voluntary
advance tax payments, hence, they could not use the column for this
Rule to adjust the above tax payments as the excess tax of Rs. 18.70
lacs which were not paid voluntarily; that in F.Y. 2009-10, they had
adjusted the similar excess tax under Rule 6 (1A) which was never
disputed by the department; that they had also given letter to that effect
as prescribed under said rule. They also attached a copy of one such
letter and marked as Annexure E. Against the allegation that
advance received was inclusive of TAX, made in the SCN, they
submitted that Para 6 of the SCN alleges that they had received the
Mobilisation and Material advance inclusive of service tax, they would like
to rebut the allegation because advances were never received with tax
and in their case also, Service tax was not received and that service tax
cannot be charged and collected without rendering services and as
explained earlier, they started rendering service after receipt of advance;
that they had entered into a contract with M/s. Tata Motors Ltd (TML)
and the total contract value (EXCLUSIVE OF SERVICE TAX) was Rs.
297.28 Cr. (building and road) on which, they were eligible to receive
mobilization advance of 15% (of contract value) which came to Rs. 44.59
Cr.; that they were also eligible to receive Rs 5 Cr. against material
advance – total advance receivable came to Rs. 49.59 Cr. against which,
they received Rs. 49.55 Cr. only ( Copies of contract entered into
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 12 of 24
between us and TML were attached and marked as Annexure F); that
following table would clarify the issue in detail:
Particulars
Contract Value
Amount
2,97,28,17,202
(Excluding ST)
Mob Adv @ 15%
Material Adv
44,59,22,580
5,00,00,000
Total Adv Receivable
49,59,22,580
Total Adv Received
49,55,02,581
Short Received
4,19,999
; that as the contract value was exclusive of service tax so in the same
flow the above calculation for advance would also be exclusive of service
tax; that TML did not pay them anything in the name of service tax. They
attached copies of 2 e-mails claiming to have confirmed the break-up of
the amount received by them from TML (Annexure G). They further
stated that it clearly shows deduction for TDS and VAT (WCT) – there
was no reference to Service tax in it and that the above discussion aptly
clarifies that the advance received was not inclusive of service tax, rather
they paid the tax from their own pocket so to say that the adjudicating
authority is requested to drop the allegation that the advance was
inclusive of tax hence the tax paid in excess cannot be allowed to be
adjusted.
LEGAL ISSUES
17.3
Further they discussed why the law is on their side. In this
regard, they submitted that Section 64 (3) stipulates that Finance Act,
1994 shall apply only to those services which provided on or after the
commencement of this chapter; that Section 68 of the Act stipulates that
the taxable event is provision/rendering of service and tax becomes
payable as soon as the service is rendered, the activity of paying the tax
is pre or post phoned to the event of receipt of payment; that as per the
above legal discussion, the differential tax paid by them on advances
received wherein no services were rendered could be said to be tax paid
in ‘excess’ and the same could be later on adjusted against their future
liabilities; that in the hindsight even though they did not claim it
accordingly adjustment provisions of Rule 6(4A) read with sub Rule 4B
make it possible for them to claim the adjustment; that the limit of Rs. 1
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 13 of 24
lac shall not apply to them as they are registered under rule 4 (2)
meaning being centralized registration.
17.4
They further submitted that generally a typical fiscal statute
contains the following types of provisions:—

Charging provision - It provides who and what is liable for taxation.

Computation provision - It provides method of computation for the purpose of
levy of tax.

Assessment, appeal and revision provision - It provide for assessment and
grievances redressal system.

Collection and recovery provision - It provides method of collection and
recovery in case of default.

Penal provision - It provides for penal consequences in case of default.
17.5
They further submitted that charging provisions are one of
the most important parts of any fiscal law; that who is liable for tax and
under what circumstances, is provided under the charging provisions;
that under the charging provisions, liability of taxation is accrued on the
happening of taxable event; that regarding accrual of statutory liability,
the decision of the Apex Court in the case of Kedarnath Jute Mfg. Co.
Ltd. v. CIT is the undisputed authority; that the Supreme Court had
made the following pertinent observations in respect of taxable event:
“Now, under all sales tax laws including the statute with which we are concerned,
the moment a dealer makes either purchases or sales which are subject to
taxation, the obligation to pay the tax arises and taxability is attracted. Although
that liability cannot be enforced till the quantification is effected by assessment
proceedings, the liability for payment of tax is independent of the assessment...”.
(p. 366)
17.6
Regarding Taxable Event under Service Tax, they
submitted that as per Section 66 of the Finance Act, 1994, there shall be
levied service tax at the rate of twelve per cent on the value of the
taxable services referred to in sub-clauses of clause (105) of section 65
and collected in such manner as may be prescribed; that as per Section
68 of the Finance Act, 1994, every person providing taxable service to
any person shall pay service tax at the rate specified in Section 66 in
such manner and within such period as may be prescribed; that as per
Section 64(105) ‘taxable service’ means any service provided or to be
provided; that Rule 6 of the Service Tax Rules, 1994, prescribed the
mode of payment of service tax; that as per these provisions, service tax
has to be paid on receipt basis (in certain cases, service tax has to be
paid on accrual basis with effect from May 10, 2008), but it is not clear
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 14 of 24
when the charge of service tax is created; that whether the charge of
service tax gets fixed on provision of service or receipt of value of
service, is not clear; that as per Section 66, service tax at the rate of
twelve per cent is levied on value of taxable service; that as per Section
65(105) ‘taxable service’ means any service provided or to be provided;
that thus, twelve per cent is to be levied on value of service provided or
to be provided; that simply put, it means even if service is not provided,
service tax at the rate of twelve per cent has to be levied on value of
taxable service; that Rule 6 provides that notwithstanding the time of
receipt of payment towards the value of services, no service tax shall be
payable for the part or whole of the value of services, which is
attributable to services provided during the period when such services
were not taxable; that thus, it is provided that service tax is not leviable
when that service is not taxable; that but nowhere it is provided in clear
terms, what should be the rate of service tax; that in some of the old
clarifications of the CBEC, it has been clarified that the enhancement in
the rate of service tax would be applicable only when the Finance Bill is
passed; that if payments are received after the Finance Bill is passed, the
rate of tax applicable would be old rate so long as the billing has been
made prior to the date of passing of the Finance Bill; that if the billing is
made subsequent to the date of passing of the Finance Bill, service tax
would be applicable at the enhanced rate (Circular No. 56/5 of 2003-ST,
dated April 25, 2003); that the position is also clarified by Circular No.
65/14 of 2003, dated November 5, 2003 in the following manner :—
“(2) In this regard it may be noted that rule 6 only prescribes the procedure of
payment of tax. The liability to tax is created by section 66 of the Finance Act,
1994 as amended from time to time. The liability to pay tax is fastened on the
service provider by section 68 of the said Act. These two sections read together
imply that service tax is payable by the service provider on the value of taxable
services. Thus if a service provided is taxable, tax has to be paid on its value.
Section 67 also clarifies value of service as the amount charged for the taxable
service by the service provider. In other words, an amount becomes value of
taxable service only when it has a nexus with the service provided. That is the
reason why the expression used in rule 6 is ‘value of taxable services’ and not
amount. The implication is that the tax has to be paid on the value of taxable
services attributable to the service provided in a month/quarter as and when it is
received. Thus, rule 6(1) cannot be read in isolation. When read along with the
provisions of the Act, it becomes clear that where the value of taxable service
has been received in advance for a service which became taxable subsequently,
service tax has to be paid on the value of service attributable to the relevant
month/quarter which may be worked out on pro rata basis.”
Clarifications of CBEC - The following clarifications of CBEC will also be relevant
to decide the taxable event:

CIRCULAR NO. 62/11/2003 DATED AUGUST 21, 2003
Subject : Miscellaneous issues relating to the services on which service tax has
been imposed with effect from 1-7-2003.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 15 of 24
3. Maintenance or repair service :
3.1 Maintenance or repair services rendered under contracts entered into prior to
July 1, 2003 are exempted from service tax if the bills are raised, and payment
also made, prior to July 1, 2003 (Notification No. 11/2003-ST, dated June 20,
2003). In this context a doubt has been raised as to whether service tax would
still be chargeable in cases where though the bills are raised, or payment made,
after July 1, 2003, but the service was rendered prior to July 1, 2003.
3.2 It is a basic principle that no tax can be charged except under
authority of law. Thus, if the levy of service tax on a particular service
comes into force on a given date, that service will not be taxable if
rendered before that date. The levy of service tax on ‘Maintenance or
repair service’ has come into force on July 1, 2003. Accordingly any
maintenance or repair service rendered prior to July 1, 2003 will not be
taxable, irrespective of when the bills are raised or payment made. This
will apply to other services as well which were rendered prior to the
imposition of service tax on them.”

LETTER F. NO. B1/6/2005-TRU, DATED 27-7-2005
27. Amendments have been made in section 65(105), section 67 and rule 6 of
Service-tax Rules, 1994 to link payment of service tax with the receipt of
payment for the taxable services provided or advance payment received towards
taxable services to be provided in future. When payments relatable to taxable
services are received during the course of provision of service, service tax is
liable to be paid to the extent of receipt of payment. In other words, a person is
liable to pay the tax as soon as the consideration towards the taxable services is
received.
27.1 In case of continuous supply of services (such as construction services)
which are provided for a period of time and the consideration (payment), the
whole or part of it, is determined as payable, periodically from time to time, the
services are treated as provided separately and successively each time the
payment is due or each time the payment is received by, the service provider.
27.2 However, when advance payment is received for a service which is
non-taxable at the time of receipt of payment but becomes taxable
during the course of provision of service, such payments would have to
be apportioned appropriately between the two periods and that part of
service provided on or after the service becomes taxable service, is only
liable for service tax. Similarly, when payment is received in advance for
services to be provided but subsequently the services are not actually
provided, then in such cases service tax paid is liable to be refunded.
17.7 In their defense they have relied upon below mentioned judicial
pronouncements:

In the case of The CCE Vadodara-II Vs Schott Glass India Pvt Ltd 2009-TIOL-82HC-AHM-ST – the honorable Gujarat High Court has said
“The Service Tax, which has been imposed by way of Finance Act, 1994 (the
Act), levies Service Tax as provided in Section 64(3) of the Act to all taxable
services provided on or after commencement of Chapter 97 of the Act.
Thus, neither the Section nor the Rule even suggest that the taxable event is
the raising of an invoice for making of payment. It is well settled in law that
a taxing statute has to be read and plain meaning assigned to the provisions
without importing any extraneous consideration on a presumption.”
 In the case of RELIANCE INDUSTRIES LTD Vs CCE, RAJKOT 2008 (10) S.T.R. 243
(Tri. - Ahmd.) – The honourable Tribunal has held that the rate of tax applicable
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 16 of 24
to the service tax shall be the rate prevailing on the date of rendering of the
services and that prevailing on the date of receipts.
“6.1 We have carefully considered the submissions from both sides. The liability
to service tax is on account of rendering of the services. There are variations in
matters relating to manner of collection when compared to other taxes. It shall
be normally paid by the person rendering services but in certain cases it shall be
paid by the recipient of the services. Similarly, it need not be paid on the date of
rendering of services but subsequently at the time of receiving the service
charges. When the service tax is introduced for the first time on any service, in
respect of the services already rendered on the dates prior to introduction of
service tax, even if the payments are received on a subsequent date, no tax shall
be leviable. Similarly, we hold that in absence of specific provision, the rate of
tax applicable to the service tax shall be the rate prevailing on the date of
rendering the services.”
 The above order has been upheld by the Hon’ble Gujarat High Court – citation –
COMMISSIONER OF C. EX. & CUS. Vs RELIANCE INDUSTRIES LTD. 2010 (19)
S.T.R. 807 (Guj.)
They attached copies of above three quoted cases and marked as Annexure H.
 In the case of CCE v. Matsushita T.V. & Audio India Ltd. [2006] 3 STT 374 (New
Delhi - CESTAT), in 1993, ‘P’ Ltd., an Indian company, entered into a
collaboration agreement with the appellant, to obtain technical know-how and
training for the purpose of manufacturing colour T.V. and audio products. In
terms of the agreement, the Indian company paid royalty to the appellant. The
revenue demanded service tax on said royalty for period March 1, 1999 to
March 31, 2001. But the Tribunal held that where taxable event took place
much before the levy was introduced, demand of service tax raised on basis of
dates of payment was not sustainable.
 In the case of Lumax Samlip Industries v. CST [2007] 8 STT 82 (Chennai CESTAT), the appellant received technical know-how from a foreign company on
May 6, 1997. The consideration for that service, i.e., royalty, was paid on
September 5, 2002. The lower authorities treated the transfer of technical
know-how as ‘consulting engineer’s service’ and demanded service tax thereon
by adopting the date of payment of royalty as relevant date. Following the
decision in Matsushita T.V. & Audio India Ltd.’s case (supra), the Tribunal held
that for determination of tax liability, the relevant date is the date on which the
service was received by the appellant. Hence, the relevant date in the present
case was May 6, 1997. On that date, neither consulting engineer’s service nor
transfer of intellectual property was a taxable service. For the reasons noted
above, the appellant was held not to be liable to pay service tax on the royalty
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 17 of 24
paid by it to the Korean company for the service rendered by the latter in May,
1997.
18.
SUBMISSION AGAINST LEVY OF PENALTIES:
The said assessee submitted that as explained above that the tax
adjustment done by them were bonafide and as per the applicable law
they would like to humbly request that penalties under section 76 and 77
are not warranted and may be dropped. Having regard to the foregoing
grounds, submissions, expositions, statutory provisions as well as judicial
decisions, they requested that the subject show cause notice may please
be vacated.
Personal Hearing:19.
A personal hearing was fixed on 02.11.2012 and the said
assessee
was
intimated
vide
this
office
letter
dated
04.10.2012
requesting to appear on the date and time fixed. However, no one
appeared for the said hearing but the said assessee, vide their letter
dated 29.10.2012, informed that since an identical matter pertaining to
the period from April to Septemeber, 2010, is pending before CESTAT,
Ahmedabad, the present SCN may be kept in abeyance till the outcome
of their said appeal and adjourn the hearing till final order is passed by
the CESTAT. Another opportunity of personal hearing was given to the
said assessee on 06.12.2012 but once again, the said assessee failed to
avail the opportunity and therefore, one more hearing was fixed on
26.12.2012 wherein Shri Nitesh Desai, Chartered Account remained
present as an Authorized Representative of the said assessee and
submitted written submission dated 24.12.2012 and stated that the issue
pertains to 2010-11 and that the period of first half i. e. April to Sept,
was taken up in an earlier SCN which was adjudicated by the A.C. and
the issue is pending at CESTAT. CESTAT order was produced. The instant
SCN was for Oct., 2010 to March, 2011 and requested to adjudicate
independently on merit.
Discussions and findings20.
of
I have carefully gone through the case records, defence reply
the
said
assessee
and
submission
made
by
the
Representative of the said assessee during personal hearing.
Authorized
OIO No. 45/STC-AHD/ADC(AS)/2012-13
21.
Page 18 of 24
I find that the said assessee had received mobilization
advance of Rs.49,55,02,581/- in terms of a contract entered by them
with M/s Tata Motors Ltd., Sanand, Gujarat in the month of December,
2008. The said amount included VAT of Rs. 29,73,015/- & service tax
amounting of Rs. 5,41,80,005/- as shown under:(Amt. in Rs.)
Total receipt
Total Receipt
excluding VAT
amounting to
Rs.
29,73,015/-
Taxable value
as Cum duty
vale
Taxable value
Service
Tax
rate
(%)
Service
Paid
49,55,02,580/
-
49,25,29,565/
-
49,25,29,565/
-
43,83,49,559/-
12.36
5,41,80,005/
-
22.
Tax
Further, I find that for the H.Y. Oct., 2010 to March, 2011,
they had paid Rs. 3,72,95,713/- as against the service tax liability of Rs.
3,91,65,515/- and thereby short paid the Service Tax of Rs.18,69,803/-.
The reason given for the said short payment by the said assessee in their
defense reply was that they had adjusted excess payment of service tax
arisen due to reduction of Service Tax rate ( 12.36% - 10.30% = 2.06%)
against the amount of Service Tax payable on the net receipt, and
therefore, there was no short payment of Service Tax. On being pointed
out by the concerned Range Superintendent and requesting to pay the
differential amount of Service Tax, the said assessee had clarified
regarding the said adjustment made, that the adjustment was made
under Rules 6(1A) and 6(4A) of the Service Tax Rules, 1994 which they
could not show as excess payment in their ST-3 returns for the reason
that the present format of ST-3 return does not provide any column to
show such adjustment.
23.
In view of the above, I am required to decide the following issues:
(i) Whether Service Tax paid by the said assessee at the prevailing rate of
12.36% on mobilization advance received by them from their client was correct
or not;
(ii)
Whether the claim of the said assessee that the subsequent reduction of rate
of Service Tax gave rise to excess payment of Service Tax already paid by
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 19 of 24
them against their actual liability at the material time, is acceptable or
otherwise;
(iii) Whether the adjustment of Service Tax made by the said assessee under Rules
6(1A) and 6(4A) of the Service Tax Rules, 1994 on the ground that they could
not show as excess payment in their ST-3 returns for the reason that the
present format of ST-3 return does not provide any column to show such
adjustment, was available to them and whether there was a short payment of
service tax or otherwise.
23.1
Regarding point no. (i) above, I find that as per Section
65(105) of the Finance Act, 1994,
“Taxable Service” means any Service provided or to be provided to the client.
As per Section 67(2) of the Finance Act, 1994,
“when the Service Tax is not charged separately, then the advance received will
be taken as inclusive of Service Tax.”
Accordingly, I find that the said assesses had correctly treated the
mobilization advance received, as inclusive of Service Tax and had
appropriately paid Service Tax at the rate prevalent at the time of receipt
of advance. The rate of Service tax prevalent at the time of receipt of
advance is not under dispute. In view of this, it is crystal clear that the
said assessee had rightly paid the Service Tax @ 12.36% prevalent at
the time of receipt of Advance. I find that the contention of the said
assessee in their written submission that they had not received Service
tax from their client at the time of receipt of advance but the same had
been received subsequently at the time of raising the bills at the rate of
10.30% when the actual services were provided does not find any
substance. In this regard, I also find that even if the said assessee had
not received Service Tax amount on the advance, they were liable to pay
Service Tax on the advance at the time of its receipt as they had already
considered the advance as inclusive of Service Tax, in para 3.1 of their
written submission dated 24.12.2012. As per Section 67(3) of the
Finance Act, 1994, the gross amount charged for the taxable service
shall include any amount received towards the taxable service, before,
during or after providing of such service. In view of this, the said
assessee was liable to pay Service Tax on the amount of advance
received by them.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
23.2
Page 20 of 24
My above discussion regarding point no. (i) also answers the
point no. (ii) that since the payment of Service Tax on the amount of
Advance received was made correctly, the same could not give rise to
any excess payment as a result of reduction of rate of Service Tax.
Therefore, the said assessee’s claims that they had collected service tax
only at the rate of 10.30% at the time of providing actual service and
raising of invoice, and they were adjusting the part of advance given in
the subsequent bills raised and since they had already paid service tax
on the advance received at the time of receipt of advance, they were not
liable to pay Service Tax on the amount of advance adjusted in the
regular bills and were supposed to pay only on the balance amount at
the prevailing rate of 10.30%, are not sustainable.
23.3
In view of the foregoing discussion regarding points (i) and
(ii), I find that there was no question of adjustment of Service Tax.
Further, since there was no excess payment, there could not be any
adjustment. Therefore, I hold that the Service Tax paid at the rate of
12.36% at the time of receipt of advance was in order and there was no
excess payment of Service Tax. I also find that in the instance case, the
provisions of Rules 6(1A) and 6(4A) of the Service Tax Rules,1994 were
not applicable because of the fact that they had not paid the service tax
in advance on their own volition to the credit of central government nor
they had indicated the details of so called advance payment made and its
adjustment if any, in the subsequent return to be filed under Section 70
of the Finance Act, 1994 (proviso (ii) to Section 6(1A) of the Finance Act,
1994. Further, it has also been admitted by the said assessee that this
case did not fall under the provisions of Rule 6(1(A) and 6(4(A) of the
Service Tax Rules, 1994. Moreover, there was no ambiguity / uncertainty
regarding the calculation of taxable value as well as service tax liability
at
the
material
time
and
therefore,
the
question
of
provisional
assessment and payment of service tax did not arise. The action of the
adjustment of Service Tax was entirely a wrong interpretation the law in
their convenience with an intent to avoid service tax liability of Rs.
18,69,803/- because, on going through the relevant columns of ST-3
returns for the period in question, it was noticed that there was column
for gross amount received in advance for service to be provided, but the
said
assessee
had
not
shown
the
mobilization
advance
of
Rs.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 21 of 24
49,25,29,565/- in the ST-3 returns for the above period, which was
received by them in the month of Dec., 2008 from their client M/s Tata
Motors Ltd., Sanand, nor they had mentioned the details of payment
made towards service tax upon such mobilization advance in any of their
ST-3 returns filed by them.
The department came to know about
payment of service tax on the above said mobilization advance only after
an enquiry made by the jurisdictional Range Superintendent. I also find
that in case of any ambiguity / confusion regarding the provisions for
such
adjustment,
the
said
assessee
could
have
approached
the
jurisdictional Service Tax authorities to get clarification to ascertain the
liability. I do not find the said assessee having made any such attempt to
get clarification from the department. Not only that, they had failed to
disclose the fact before the department as they had never mentioned in
their ST-3 returns or through separate intimation to the proper officer in
this regard. Therefore, in view of this, it was very clear that the said
assessee had tried to misguide the department by mentioning that they
had adjusted the excess amount of service tax paid earlier, while it was
clear from the above discussion that the provisions of Rule 6[1(A)] and
6(4A) of the Service Tax Rules, 1994 were in fact not applicable to them.
24.
I also find that the said assessee has quoted some
judgements in support of their arguments made in the defence reply
dated 24.12.2012.
24.1
As regards the case of CCE, Vadodara-II Vs. Schott Glass
India Pvt. Ltd. 2009-TIOL-82-HC-AHM-ST, I observe that the said
judgement of the Hon’ble Gujarat High Court pertains to the issue of
‘taxable event’ for making payment, which is not the dispute in the
present case and therefore, the same is not relevant in the present case.
24.2
As regards the case of RELIANCE INDUSTRIES LTD Vs
CCE, RAJKOT reported at 2008 (10) S.T.R. 243 (Tri. - Ahmd.), I
find that the said judgement refers to liability of Service Tax in two
different situations where, Service Tax is payable by (i) Service Provider
and (ii) Service Recipient. There is no such dispute in the present case
and hence, this judgement is not at rescue of the said assessee.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
24.3
Page 22 of 24
As regards the judgements of CCE v. Matsushita T.V. &
Audio India Ltd. [2006] 3 STT 374 (New Delhi – CESTAT ) and
Lumax Samlip Industries v. CST [2007] 8 STT 82 (Chennai CESTAT) cited by the said assessee in their favour, I observe that both
these cases related to levy of Service Tax on royalty. Therefore, these
judgements have been mis-quoted by the said assessee in the present
case.
25.
I
further
observe
that
Shri
Nitesh
Desai,
Chartered
Accountant and Authorized Representative of the said assessee while
defending their case during the personal hearing on 24.12.2012, had
stated that the issue pertains to 2010-11 and that the period of first half
i. e. April to Sept, was taken up in an earlier SCN which was adjudicated
by the A.C. and the issue is pending with the Hon’ble CESTAT,
Ahmedabad. He had also submitted a copy of a Stay Order No.
S/2322/WZB/AHD/2012 dated 07.11.2012 stating that the instant SCN
was for Oct., 2010 to March, 2011 and requested to adjudicate
independently on merit. I have verified this fact and found that the
Hon’ble CESTAT, Ahmedabad had waived payment of pre-deposit subject
to a condition of a deposit of Rs. 1,00,000/- within a period of four weeks
and report compliance on 13.12.2012. The final outcome of the said
appeal is still awaited.
26.
In view of above, I hold that the said assessee had rightly
paid the Service Tax on the amount of mobilization advance received by
them in December, 2008 from their client. I also hold that the argument
of the said assessee that there was an excess payment which required
adjustment at the later stage, is therefore, not acceptable and therefore
does not merit consideration. I also hold that the adjustment of Service
Tax of Rs. 18,69,803/- made by the said assessee was not in accordance
with the provisions of the Finance Act, 1994. Therefore, the said
assessee was liable to pay Service Tax on the full value without
adjustment and therefore, the demand of Service Tax amounting to Rs.
18,69,803/- short paid by them is required to be confirmed under
Section 73(2) of the Finance Act, 1994 along with interest under Section
75 of the Finance Act, 1994.
OIO No. 45/STC-AHD/ADC(AS)/2012-13
27.
Page 23 of 24
I find that the said assessee had not discharged full service
tax liability on the amount of taxable value demanded under the Show
Cause Notice and thereby, they had contravened the provisions of
Section 67 & 68 of the Finance Act, 1994 rendering themselves liable to
penal action under Sections 76 & 77 of the Finance Act, 1994 as
discussed below.
27.1
Penalty under Section 76:
I further observe that during the relevant period, the said
service provider had defaulted in payment of service tax which has been
established as not paid, in accordance with the provisions of Section 68
of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994,
and thereby rendered themselves liable to pay mandatory penalty under
the provisions of Section 76 of the Finance Act, 1994 for default in
payment of service tax on time till the final payment. It has come to my
notice that till date, an amount of Rs. 18,69,803/- still remains un-paid
by the said service provider, hence imposition of mandatory penalty
under Section 76 is once again justified.
27.2
Penalty under Section 77:
I further find that the said service provider had failed to assess the
correct tax liability under the Section 70 of the Finance Act, 1994 as
discussed herein above and also to file their ST-3 returns correctly for
the period covered under the impugned show cause notice, hence they
are liable for penalty under Section 77 of the Finance Act, 1994.
28.
In view of the above, I pass the following order:
ORDER
(i) I
confirm
the
demand
of
Service
Tax
amounting
to
Rs.
18,69,803/- (Rupees Eighteen lakh Sixty Nine thousand
Eight hundred Three only)( inclusive of Ed. Cess + S. & H.
Edu. Cess ) short paid by M/s. Sapoorji Pallonji & Co., Ltd.,
Ahmedabad under Section 73(2) of the Finance Act, 1994;
OIO No. 45/STC-AHD/ADC(AS)/2012-13
Page 24 of 24
(ii) I order to recover interest from M/s. Sapoorji Pallonji & Co., Ltd.,
Ahmedabad under the provisions of Section 75 of the Finance
Act, 1994;
(iii)
I impose a penalty of Rs. 200/- (Two hundred rupees) for
everyday during such failure continue or rate of 2% (two
percent) of such tax, per month, whichever is higher, starting
with the first day after the due date till the actual payment of
outstanding amount of service tax, upon M/s. Sapoorji Pallonji &
Co., Ltd., Ahmedabad under Section 76 of the Finance Act,
1994. As the actual amount of penalty could be depending on
actual date of payment of service tax, however, as per Section
76 of the Finance Act, 1994, penalty will be restricted to the
above confirmed amount of service tax liability.
(iv)
I also impose a penalty of Rs. 5,000/- (Rupees Five
thousand only) upon M/s. Sapoorji Pallonji & Co., Ltd.,
Ahmedabad under Section 77(2) of the Finance Act, 1994 for
the reasons mentioned hereinabove.
The Show Cause Notice bearing no. STC-02/O&A/SCN/SP/JC/DIII/2012-13 dated 10/05/2012 is disposed off accordingly.
( Amarjeet Singh )
Additional Commissoner
Service Tax, Ahmedabad
F. NO. STC-02/O&A/SCN/SP/JC/D-III/2012-13
Dt. 05/02/2013
By Regd. Post A.D.
To
M/s. Sapoorji Pallonji & Co., Ltd.,
Iscon Centre, 210 Shivranjni Char Rasta,
Sattelite, Ahmedabad – 380 054.
Copy to:1.
The Commissioner of Service Tax, Ahmedabad. (Att. Review Cell)
2.
The Deputy Commissioner, Service Tax, Div-III, Ahmedabad.
3.
The Supdt. AR-XV, Service Tax Division III, Ahmedabad with an extra
copy of the OIO to be delivered to the said assessee and submit the
acknowledgement to this office.
Guard File.
4.