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Adverting to the present case, it is clearly evident that ‘reasons recorded’ were not provided to the assessee despite categorical directions by the ITAT and even when the so-called “reasons recorded” have been supplied after a gap of almost 11 years, it is amply clear from the face of it that the ‘reasons’ were not recorded prior to the issuance of notice under Section 148.
Entire demand on the freight element is based on Rule 2(1)(d)(v) of the Service Tax Rules, 1994. Sub-clause (v) was inserted in Rule 2(1)(d) only on 3.12.2004 and the same cast Service Tax liability on the person paying the freight. Prima facie, the appellant did not pay the freight and therefore there is no tax liability on their part.
Expenses incurred to provide taxable services shall be part of assessable value if such expenses are inseparable and are integrally connected with the performance of the taxable services. Such expenses shall necessarily form part of the assessable value. Therefore, the assessee was not entitled to any relief on account of expenses not disputed, for inclusion while determining assessable value.
The appellant is said to have entered into a lease agreement with the company-in-liquidation on 22-1-2000, for demised building of 8,400 sq.ft. along with adjacent vacant land (about 5.33 acres) for a lease rent of Rs. 5,000 per month for a period of 11 months, which expired on 21-12-2000. Again, the company-in-liquidation is said to have entered into a fresh lease agreement for a period of 30 years in respect of the said building of 8,400 sq.ft. and the adjacent vacant land at Rs. 5,000 per month with 20 per cent increase in rent on every five years, commencing from 22-12-2005 and so on. The terms of lease deed are heavily loaded in favour of the lessee. It is difficult to understand as to how such large extent of property with a spacious building has been rented out for a meagre sum of Rs. 5,000 per month with marginal increase once in 5 years.
The assessee had reflected the service tax liability on account of service provided by him during the period April, 2007 to September, 2007 in the ST-3 returns filed with the department. The reason for delay in making payment had been sufficiently explained by the assessee in his reply, stating that due to sudden crash in the stock market, the main broker of whom he was the sub-broker, defaulted in making the payment. This had resulted in non-payment of service tax liability in time. The reason is bona fide in non-payment of service tax in time.
Prima facie coaching material has intimate connection with the commercial coaching provided by the assessee and the contents of the study material are relevant to the coaching to make the later fruitful and meaningful so that the enrolled candidates are benefited out of commercial coaching. There was no evidence to effect that these coaching materials are sold as text books by book sellers and no way useful to the enrolled students. So also there is no evidence to suggest that these coaching materials by any means enjoy exemption under law and not taxable.
Since the appellant prays that it has a case for consideration under Section 80 of the Finance Act, 1994 it is desirable to bring to record about the date on which liability arose, date of return ought to have been filed, date on which admitted tax liability should have been discharged and the date of discharge of duty liability. If these particulars neatly come out to record, that shall enable the authority to properly consider the plea of the appellant as whether it is entitled to the benefit of Section 80 of Finance Act, 1994.
When the defendant has alleged non-receipt of the said letter dated July 31, 2006 and urges the same for not taking steps, the reasons stated by the appellant do not appear to be false or frivolous. It must be remembered that in every case of delay, there is some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea. As held by the Supreme Court in N. Balakrishnan v. M. Krishnamurthy[1998] 7 SCC 123 if the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suito
Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim.
Calcutta High Court decision in Exide Industries case (supra). The Calcutta High Court held that leave encashment is neither a statutory liability nor a contingent liability and it is a provision to be made for the entitlement of an employee achieved in a particular financial year. Testing clause (f) with the objects sought to be achieved by the introduction of Section 43 B, it was held that the same could not have any nexus with the object sought to be achieved by the original enactment. Section 43 B, it was held, was originally inserted to plug evasion of statutory liabilities and the introduction of clause (f) was found to be inconsistent with the said object.
