Quality Council of India Vs Commissioner of Central Excise (CESTAT Delhi)
CESTAT Delhi held that order passed without assigning any reasons is non-speaking order and, accordingly, the same is bad-in-law and is liable to be set aside.
Facts- During the scrutiny of half yearly ST-3 Service Tax Returns, Balance Sheet and figures provided by the appellant, it was observed that the appellant had not paid service tax on the gross receipts under the Head “Quality Conclave” and “Seminar Receipts” taxable under the category of “Convention Service” and also on the expenditure incurred on the “Sponsorship Service” under RCM as well as on the Grants/Contribution received from the Government, which were taxable under the category of ‘Event Management Service’. Accordingly, show cause notice dated 19.10.2012 was issued in respect of the said three services falling u/s. 65 (105)(zc), 65(105)(zzzn) and 65(105)(zu) of the Act.
Vide the impugned order, demand under the Head “Quality Conclave”, “Seminar Receipts” and “Event Management Service” were dropped, whereas, ‘Convention service’ and ‘Sponsorship Service’ was confirmed. Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Held that the appellant is right in submitting that the order under challenge is a non-speaking order as no reasoning is reflected. The Adjudicating Authority should have at least appreciated the services rendered by the appellant with reference to the definition of the services as given in the respective clauses. We do not find any discussion, which would show any application of mind so as to arrive at a conclusion that the services rendered fall within the definition clause. That time and again, it has been reiterated by the superior courts that while deciding the issue either way, it is incumbent that it is duly supported by reasons, which would reflect the mind of the Court.
We are of the considered opinion that the impugned order is unsustainable and deserves to be set aside. Since we have arrived at the conclusion that the impugned order is bad for want of reasons, we are remitting the matter back to the Adjudicating Authority to decide the issues on merits as well as on extended period of limitation and on interest and penalty afresh after recording reasons in support thereof.
FULL TEXT OF THE CESTAT DELHI ORDER
The present appeal has been filed challenging the Order-in-Original No.04/2015-16 dated 15.07.2015, whereby the Commissioner, Central Excise, partly confirmed the demand under the show cause notice.
2. The appellant is registered with the Service Tax Department and is providing services viz. “Management Consultancy” and “Scientific and Technical Consultancy” covered under Section 65(105)(r ) and (105) (za) of the Finance Act, 1994. During the scrutiny of half yearly ST-3 Service Tax Returns, Balance Sheet and figures provided by the appellant for the period 2007-2008 to 2010-2011, it was observed that the appellant had not paid service tax on the gross receipts under the Head “Quality Conclave” and “Seminar Receipts” taxable under the category of “Convention Service” and also on the expenditure incurred on the “Sponsorship Service” under RCM as well as on the Grants/Contribution received from the Government, which were taxable under the category of ‘Event Management Service’. Accordingly, show cause notice dated 19.10.2012 was issued in respect of the said three services falling under Section 65 (105)(zc), 65(105)(zzzn) and 65(105)(zu) of the Act.
3. The show cause notice was adjudicated by the impugned order, where the learned Commissioner held that during the period 2007-2008 and 20082009, there was no income from ‘Quality Conclave’ and ‘Seminar receipts’ and hence the demand for the said period was dropped. However, during the FY 2009-2010 to 2011-2012, income of Rs.1,65,18,639/- was received under the said heading, which was leviable to service tax. Similarly, for the service tax liability under the category of ‘Sponsorship Service’, the Adjudicating Authority held that the details submitted by the noticee were not supported by the documentary evidence and the explanation given is an after-thought so as to compress the taxable value of the services. The demand in respect of the third category of ‘Event Management Service’ was dropped on the ground that the appellant cannot be termed as ‘Event Manager’ and the activities performed by them do not fall under that category.
4. The appellant has filed this appeal challenging the demand confirmed by the Adjudicating Authority in respect of ‘Convention Services’ and ‘Sponsorship Services’ during the period, as referred above. The factual averment made by the learned counsel was that:-
4.1 The QCI is a non-profit autonomous body of Department of Industrial Policy and Promotion (“the DIPP”) under the Ministry of Commerce and Industry registered as a society under Societies Registration Act, 1860, which was jointly set up by the Government of India and the three prominent associations of the Industries i.e. Associated Chambers of Commerce and Industry of India (“ASSOCHAM”), Confederation of Indian Industry (“CII”) and Federation of Indian Chamber of Commerce & Industry (“FICCI”), registered under Section 12AA of Income Tax Act, 1961 (“the Income Tax Act”).
4.2 Keeping in view the mission; “Quality for National Well Being”, QCI is playing a pivotal role at the national level in propagating, adoption and adherence to quality standards in all important spheres of activities including education, healthcare, environment protection, governance, social sectors, infrastructure sector and such other areas of organized activities that have significant bearing in improving the quality of life and well-being of the citizens of India.
4.3 To achieve the stated objective, QCI is conducting Quality Conclave and Seminars and also advertise Quality Improvement Standards at various events conducted by the other organizations and give accreditation to Management System Certification Bodies in accordance with the International Standard ISO/IEC Guide 62 and 66 supported by International Accreditation Forum (“IAF”) and operate accreditation programme for healthcare organization. Further, QCI gets grants from the Government of India for the same.
5. The present appeal has been filed, inter alia, on the following grounds:-
“The definition of ‘Taxable Services’, applicable upto May 15, 2008 and also, as amended, w.e.f. May 15, 2008, is not applicable, to the present case, as their delegates are not their clients and also in terms of the definition of ‘Convention’ as defined under Section 65(32) of the Act, Convention means, “a formal meeting or assembly, which is not open to the general public, but in their case, the meeting or assembly is open to the general public.”
It appears that such argument was not taken by the appellant before the Adjudicating Authority, as it appears from the impugned order. In order to maintain the demand for the FY 2009-2010, 2010-2011 and 2011-2012, the Adjudicating Authority merely observed that :-
“6.4. I have carefully gone through the instant show cause notice and find that para 3 of the show cause notice reads as under:-
“It has been observed that the assessee has received amount under the head “Quality Conclave and Seminar Receipts” during the period 2007-08 to 2010-11.”
6.5. I have very carefully gone through the Balance Sheets and all the other documents available on record and find that income from “Quality Conclave Seminar Receipts” finds a mention in the Balance Sheets pertaining to the F.Y 2009-2010, 2010-2011 & 2011-12 only. For the F.Y. 2007-2008, head of income in the Balance Sheets has been shown as Honorarium, Sale of Packs and Misc. Receipts and for the F.Y. 2008-2009, the head of income has been shown as Honorarium, Sale of Quality Literature & Misc. Receipts.
6.5. I find that there is no document/evidence on record to prove that in the F.Y. 2007-2008 & 20008-2009, the notice had earned any income from Quality Conclave Seminar receipts. Income from Honorarium, Sale of Packs/Quality Literature & Misc. income cannot be presumed to be income earned from Convention services. Therefore, I am of the considered opinion that in the absence of any documentary evidence, it will be great injustice and against the principles of natural justice to demand service tax under Convention Services for the F.Y. 2007-08 & 2008-09 and service tax can be demanded only for the F.Y. 2009-2010, 2010-2011 and 2011-2012.
6.6. In the light of the above facts, taxable value for Convention Services is reworked as under:-
