Case Law Details
Poojan Decor PVT Limited Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
CESTAT Ahmedabad held that as investigating officers failed to comply with conditions of section 36B of the Central Excise Act with respect to obtaining certificate prior to relying upon the computer printout. Hence, demand set aside as based on unauthenticated data.
Facts- M/s Poojan Décor Pvt. Limited and M/s. Green Leaves Management India LLP are registered with service tax department and engaged in providing event management/Mandap keeper service for various function like marriage, corporate events and other social events.
Based on the intelligence developed by DGGI it indicated that Appellants were evading payment of service tax by resorting to suppression of taxable value of the services provided by them to their clients. The intelligence further indicated that they were suppressing the actual taxable value by collecting certain portion of such taxable value, of services so provided, in cash which was not accounted in their books of accounts and was also not considered at the time of computing service tax leviable on the same.
Based on intelligence search was conducted at the business premises of the appellants and certain pen drives and other electronic data were discovered and retrieved. Statements of key persons of the Appellants were recorded and they conformed the above modus Operandi.
Accordingly, the show cause notices proceedings initiated by the Department which culminated in the impugned adjudication orders, wherein the Ld. Commissioner had confirmed the proposed service tax demand along with interest and also imposed penalties on the appellants. Feeling aggrieved with the impugned orders, the appellants have preferred these appeals before the Tribunal.
Conclusion- We also agree with the contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as the time of obtaining printouts there from, a certificate should have been obtained as per the provision of Section 36B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellants was obtained by the department, the credibility of the computer printout gets vitiated.
Held that in the present matter the investigating officers failed to comply with the conditions of Section 36B of the Act in respect to relying upon this computer printout. In view of the above we hold that service tax demand based on such unauthenticated data is not sustainable and hence are set aside.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
These appeals are directed against Order-In-Original No. AHM-EXCUS-001-COM-001-22-23 dated 01.04.2021 and AHM-EXCUS-002-COMMR-40-2021-22 dated 20.12.2021. As these are arising out of common investigation, these are being disposed by a common order.
2. Brief facts of the case are that M/s Poojan Décor Pvt. Limited and M/s. Green Leaves Management India LLP are registered with service tax department and engaged in providing event management/Mandap keeper service for various function like marriage, corporate events and other social events. Based on the intelligence developed by DGGI, Ahmedabad Zonal Unit it indicated that Appellants were evading payment of service tax by resorting to suppression of taxable value of the services provided by them to their clients. The intelligence further indicated that they were suppressing the actual taxable value by collecting certain portion of such taxable value, of services so provided, in cash which was not accounted in their books of accounts and was also not considered at the time of computing service tax leviable on the same. Based on intelligence search was conducted at the business premises of the appellants and certain pen drives and other electronic data were discovered and retrieved. During the search it was found that appellants were raising invoices for the service provided to their clients, for a certain parts of actual taxable value and consideration received was being accounted in their regular Tally account. It was also found that part of taxable value of such services being recovered by appellant in cash from their clients and this cash amount was not being entered into their regular books of accounts but was entered in a separate .xls sheets. All such .xls files were stored either in pen-drives of key persons or on Google Drives of such key persons. The printout of said .xls file was taken and seized under Panchnama dated 19/20.08.2019 along with the pen-drives and other electronic data wherein such .xls files were stored. Statements of key persons of the Appellants were recorded and they conformed the above modus Operandi. Accordingly, the show cause notices proceedings initiated by the Department which culminated in the impugned adjudication orders, wherein the Ld. Commissioner had confirmed the proposed service tax demand along with interest and also imposed penalties on the appellants. Feeling aggrieved with the impugned orders, the appellants have preferred these appeals before the Tribunal.
3. Shri Paresh Dave with Shri Parth H. Bhatt and Shri Khyati Chugh Learned Advocates appearing for the appellants submits that the entire amount allegedly received in cash is derived by totaling up the figures appearing in excel sheet printouts of pen drive and google drive. But there is no evidence of the appellants having actually received any such cash from the clients. More than one hundred names and address of the clients appeared in the printouts, but evidence of only three clients is on records and two out of theses have stated that no cash was ultimately paid to the appellants.
4. He also submits that the mandatory procedure under Section 36B of the Central Excise Act as made applicable for service tax law by virtue of Section 83 of the Finance Act, 1994 has not been followed and the mandatory conditions of section 36B of the Act for admissibility of ‘computer printout’ are not satisfied in this case. The entire case of under-valuation is based on excel computer printouts. None of the procedure of Section 36B is complied with by the revenue and none of the conditions of this provision is satisfied by the revenue before relying on computer printout for demanding service tax. For non-compliance of the mandatory procedure and nonobservance of the statutory condition of Section 36B, excel sheets of computer printout is inadmissible as evidence and consequently the entire case of the revenue fails.
5. He further submits that sub section (4) of Section 36B lays down a condition about a certificate to be signed by person occupying a responsible official position in relation to the operation at the relevant device; but there is no such certificate on record of this case. A computer printouts is secondary evidence, and therefore such printout can be admitted as evidence only if the mandatory conditions of Section 36B of the Act are complied. He placed reliance on the following judgments : –
(i) J.P. Iscon Pvt. Limited – 2022 (63) GSTL 64 (Tri. Ahmd)
(ii) Orissa High Court Judgment in Commissioner of Central Excise & Customs, Bhubaneshwar vs. M/s Shivam Steel Corporation – Tax Appeal Nos. 13 to 17/2016 decided on 14.12.2022.
(ii) Arjun Panditrao Khotkar vs. Kailas K. Gorantyal – (2020) 7 Supreme Court Cases 1
(iv) Anvar P.V. vs. P.K. Basheer & Others (2014) 10 Supreme Court cases 1
6. He also submits that Learned Commissioner has confirmed the service tax demand on the basis that two Accounts Manager of the appellants and Partner/ Director of the Appellants have stated before the investigating officers when their statements were recorded that the computer printout were for receiving cash from the clients, and thus receiving cash for the taxable services was admitted by these persons. The Learned Commissioner also relied upon statement of one client who has stated before the investigating officer that certain cash payment was made by him. But these statements are not admissible as evidence because the mandatory procedure laid down under Section 9D of the Central Excise Act (as made applicable in relation to service tax by virtue of Section 83 of the Finance Act, 1994) is not complied with by the Adjudicating authority. The statements recorded by the investigating officers are therefore of no evidentiary value, and no service tax demand is sustainable on the basis of such inadmissible evidences. He placed reliance on the following decisions.
(i) Patidhar Products Vs. Commissioner, Bhavnagar – Final Order No. A/11216-11224/2022 dated 18.10.2022
(ii) Forward Resources Pvt. Ltd. Vs. Commissioner, Surat –I – 2023(69)GSTL 76.
(iii) Reynolds Petrochem Ltd. Vs. Commissioner, Surat – 2023 (68)GSTL 292.
(iv) Shree Hari Steel Industries & Others Vs. Commissioner, Bhavnagar -2022(8) Tax Management India 1251
(v) P. Iscon Pvt. Limited – 2022 (63) GSTL 64
(vi) G-Tech Industries Vs. Union of India – 2016 (339) ELT 209 (P&H)
7. He argued that in the present case, admittedly none of the persons whose statements were recorded during the investigation were examined as a witness and there is nothing on record to show that the adjudicating authority formed the opinion that, having regard to the circumstance of the case, these statements should be admitted in evidence in the interest of justice. The adjudicating authority has not made any attempt to comply with the conditions and requirements of Section 9D of the Central Excise Act before admitting the statements as evidence. Therefore, all the statements which are not proved nor admitted as evidence in terms of Section 9D of the Act, are inadmissible and unreliable against the appellant. When these statements are discarded, there is no case against the appellant about recovering cash from the clients, and the demand of Service tax therefore falls.
8. He also submits that there is no evidence of the clients corroborating that the appellant had collected cash from them, as a part of the value of taxable services. Name and details of more than one hundred clients appear in computer printout, but only one of them were contacted by the investigating officers. But a case of receiving cash from more than 100 persons cannot be justifiably made out only on the basis of statement of only one client; that also he has denied the amount mentioned in Excel Sheet; it is settled legal position that cogent and reliable evidence of a substantial quantum of alleged evasion, and sufficient number of customers/ clients, must be adduced by the Revenue. He placed reliance on the following decisions:-
(i) Grace Castings Limited Vs. Commissioner, Ahmedabad – 2019(369)ELT 751 (Tri. Ahmd)
(ii) Commissioner Vs. Motabhai Iron & Steel Industries -2015(316)ELT 374 (Guj.)
(iii) M. Energy Teknik & Electronics Ltd. Vs. Commissioner, Vadodara 2015 (328) ELT 443 (Tri. Ahmd.)
(iv) Mahesh Silk Mills Vs. Commissioner of Central Excise -2014 (304) ELT 703 (Tri. Ahmd.)
(v) Commissioner Vs. Mahesh Silk Mills -2015(319) ELT (A52) – Gujarat High Court.
(vi) Arya Fibers Pvt. Limited Vs. Commissioner, Ahmedabad -2014 (311) ELT 529 (Tri. Ahmd)
9. He further submits that a case of clandestine activities has to be established by the revenue by leading cogent, reliable and independent evidence. Such case cannot be made out only on statements recorded by the investigating officers. The customers /buyers who are alleged to have paid cash must be located, statements of such persons must be recorded for proving cash payment by them, the amount of cash transactions should also be established as actually received by the assessee, and such evidences has to be brought on record. In absence of such evidence, a case of clandestine activities is not acceptable.
10. He also submits that the figures and details of excel sheets were actually the details of estimates given to the clients. The Appellants have explained in the adjudication that first estimate were prepared (which were mentioned in the excel sheets) and then rates were negotiated, and finalized. The invoice was prepared under instruction of Shri PinkalDandwala for the final rate/ amount, and such invoices was recorded in the books of accounts. In majority of cases, the difference in amount in excel sheets and in the invoice was because the finalized rates were less, but no reduction was allowed after the invoice was raised by the appellant. Admittedly, no cash has been found by the investigating officers from the office or any other premises of the appellants. If cash was actually being collected from the clients, then some cash would have been lying with the appellant. The only person who is claimed to have admitted some cash payment is Shri Suvrat M. Puri, but he was not the appellant’s client. His brother has negotiated the deal, and he had expired; and therefore Shri Survant Puri could not have admitted any cash payment made by his brother.
11. Shri P.K. Rameshwaram, learned Additional Commissioner (AR) appearing for the department reiterates the findings in the impugned orders. Post hearing, Shri Rameshwaram submitted a detailed written submission dated 24.07.2023 which is based on the findings of the impugned order, has been taken on record and the same was also carefully considered.
12. He also argued that the decisions relied upon by the appellants in the present matter are not applicable. He placed reliance on the following decisions:-
(i) Ispat Industries Ltd. Vs. CC, Mumbai – 2006(202)ELT 561 (SC)
(ii) Vinod Solanki Vs. Union of India – 2009(233)ELT 157(SC)
(iii) CCE, Chandigarh Vs. Vinay Traders – 2016(340)ELT 521(Tri. Del)
(iv) RamchandraRexinsPvt Ltd. Vs. CCE Bangalore –I – 2013(295)ELT 116 (Tri. Bang)
(v) Lawn Textiles Mills Pvt. Ltd. Vs. CCE, Salem – 2013(297)ELT 561 (Tri- Chennai)
(vi) CCE, Mumbai Vs. Kalvert Foods India Pvt. Ltd. – 2011(270) ELT 643 (SC)
(vii) Gulabchand Silk Mills P Ltd. Vs. CCE, Hyderabad -II-2005(184)ELT 263 (Tri. Bang)
(viii) CCE, Madras Vs. Systems & Components Pvt. Ltd. – 2004(165)ELT 136 (SC)
(ix) Lawn Textiles Mills Pvt. Ltd. Vs. CESTAT, Chennai – 2018(362)ELT 559 (Mad.)
(ix) CC, Kandla Vs. Essar Oil Limited.
13. We have heard the rivals and carefully considered the facts of the case and the submissions made at length by both sides. We find that the Revenue has proceeded in confirmation of the service tax demand on the basis of .xls Sheets recovered from Pen Drive seized from the appellants premises. The entire case of Revenue in the present matter is based on said .xls sheets and Statement of employee, partner and director of the Appellants. However, it is seen that apart from recording the statements of persons in the present matter no independent investigation has been carried out by the department. We observed that Department has not brought out any independent facts or evidence as who is the service receivers, whether the cash receipts shown in the xls. Files pertaining to the service component only or otherwise and no corroborative evidence produced in support of details mentioned in the said xls. files. In the present matter allegation of the revenue are that appellants collected the huge amount of cash in respect of provisions of services involved. However not a single rupee of unaccounted cash was found during the search conducted by revenue in the business premises of the appellants. We also noticed that during the investigation statements of 2 to 3 customers only recorded by the revenue. The customer Shri Hardik Takkar Specifically denied of any payment of cash to the appellant in his statement recorded on 11.10.2019. The relevant para of his statement is reproduced as below: –
Q.4: – Please peruse the panchanama dated 19/20.08.2019 drawn at the premises of M/s GLM and please also peruse the page No. 180 of the made up file listed at Sr. No. A-14 to the INS-02 attached with the said panchnama. The scanned copy of this page is reproduced below for ready reference. Please give your comments on the same.
A.4 I have pursued the said panchnamadated 19/20.08.2019 drawn at the premises of M/s GLM and as a token of having perused the same I put my dated signature on the said panchanama. I have also perused the page No. 180 of the made-up file listed at Sr. No. A-14 to the INS -02 attached with the said Panchanama. Having read the said page I put my signature on it. As I have stated in my answer to question No. 2 & 3, an event was managed by me for M/s Arihant Educare Pvt. Ltd. and for this reason the said page shows entry in my name. I further state that total payment was made by M/s Arihant Educare Pvt. Limited only and I have not made any payment to M/s Green Leaves Management Pvt. Ltd. So far as I know total payment of Rs. 9,44,566/- was made to them through normal banking channel and for which M/s GLM has provided us the copy of their ledger account maintained for M/s Arihant Educare Pvt. Ltd. and I produce the copy of the same before you as well. I further state that an amount of Rs. 16,65,217/- was pending to be paid to M/s Green Leaves Management Pvt. Ltd., however no such amount was ultimately paid to them due to some dispute regarding rains during the course of said function period. I further state that I have not made the payment of said pending amount.
From the above statement of Shri Hardik Thakkar it is clear that Total payment of Rs. 9,44,566/- was made by M/s Arihant Educare Pvt. Ltd. through normal banking channel and amount of Rs. 16,65,217/- shown as pending in the said page was never paid to them and He negotiated the entire deal with Shri Pankaj Dandwala.
We find that such denial of the customer is not considered or dealt upon by the Ld. Commissioner in his order. We also gone through the statement of Shri Suvrat M Puri and observe that this customer was not the one who entered into agreement with the appellant. Shri Suvrat’s brother Late Shri Vishrut Puri has negotiated the deal with the appellant. Further in his statement Shri Suvrat M Puri is also not sure whether any cash was paid by Shri Vishrut Puri to appellant or not. Such statement cannot be relied upon as there is no confirmation from any statement recorded that such customers have paid any cash to the appellant and the person who actually has entered into agreement with the appellant is no more alive. We also find that in the present matter two invoices of customers Shri Sunny Arora and Shri Manojkumar Agarwal that are reproduced in impugned order, however statements of such customers were not recorded by the revenue. We find that the department has not substantiated the allegation about service provided in cash as mentioned in the disputed Excel Sheets. Further more than 100 names and address of the clients appeared in the disputed Excel Sheet but department failed to further enquiries in the form of statements and other records from such persons whose names appearing in Excel Sheets.
14. We also find that the pendrive data is not substantial evidence and no evidence of extra receipt has been produced in the form of persons from whom such extra considerations was given, how it was given and how it was received by appellants, therefore, service tax demand on account of undervaluation of taxable services is not sustainable.Even if the statements of persons are considered inculpatory the same cannot be relied upon in absence of corroboration with material evidence as held in case of Tejwal Dyestuff Ind. v. Commissioner – 2007 (216) E.L.T. 310 (Tri.) and 2009 (234) E.L.T. 242 (Guj.). Even in the case of CIT v. Dhingra Metal Works – 2010-TIOL-693-HC-DEL-IT, it was held that inculpatory statement by itself is not sufficient without the matters having been further investigated. Thus the statements of director/partner and employee cannot lead to infer that the details mentioned in the disputed Excel Sheet are related to the taxable services provided by the Appellant in cash. Accordingly, we find no reasons to confirm the said service demands only on the basis of statements of person whose makers are not examination-in-chief before the adjudicating authority.
15. We also find that in the present matter appellants disputed the finding of the Ld. Commissioner on the ground that Ld. Commissioner has relied upon the statements of persons but these statements are not admissible as evidence because the mandatory procedure laid down under Section 9D of the Central Excise Act as made applicable in relation to service tax by virtue of Section 83 of the Finance Act 1994 is not complied. We find force in arguments of the appellant and observed that in the whole matter Revenue and Ld. Commissioner rely upon the statements of employee, director / partners and some customers. The provisions of Section 9D which are reproduced as under provide that :
“9D. Relevancy of statements under certain circumstances. – (1) A statement made and signed by a person before any Central Excise Officer of a gazetted rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, –
(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
(2) The provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.”
The above Section deals expressly with the circumstances in which a statement recorded before a gazetted officer of Central Excise (under Section 14 of the Act) can be treated as relevant for the purposes of proving the truth of the contents thereof. Reliance is placed on the ruling of the Hon’ble Punjab & Haryana High Court in the case of Jindal Drugs (Infra),2016 (340) E.L.T. 67 (P & H) wherein the Hon’ble High Court laid down the detailed procedure, inter alia, providing for cross-examination of the witness of the Revenue by the Adjudicating Authority and thereafter, if the Adjudicating Authority is satisfied that the statement of the witness is admissible in evidence than the Adjudicating Authority is obligated to offer such witnesses for cross-examination by the other side/assessee. Such view has also been affirmed by the Hon’ble Supreme Court in the case of Andaman Timber (Infra) – 2015 (324) E.L.T. 641 (S.C.) = 2017 (50) S.T.R. 93 (S.C.).
16. We further find that Hon’ble Punjab & Haryana High Court in the case of Sukhwant Singh – (1995) 3 SCC 367 it has been observed as under :-
8. It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides :
“138. Order of examinations. – Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) reexamined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief.
Direction for re-examination. – The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter.”
9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does not choose to examine him in chief. However, the practice of tendering witness for cross-examination in session trials had been frequently resorted to since the enactment of the Code of Criminal Procedure, 1898.
17. In view of above it is clear that in adjudication, the adjudicating authority is required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witness is offered to be cross-examined. We find that in the present matter Ld. Adjudicating Authority failed to do such exercise. We also note that Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which examination-in-chief has to precede cross-examination, and cross-examination has to precede re-examination.
18. In the present matter it is admitted facts that Statements recorded during investigation in the present matter, whose makers are not examination-in-chief before the adjudicating authority, would have to be eschewed from evidence, and it will not be permissible for Ld. Adjudicating Authority to rely on the said evidences. Therefore, we hold that none of the said statements were admissible evidence in the present case.
19. We also find that the case of the Revenue is based on the Excel Sheet printout found in the Pen Drive / Google Drive, with regard to reliance on the computerized print out appellants herein has objected the mode of reliance for which they argued that as per Section36B of the Central Excise Act, without following the prescribed procedure the said Excel Sheets document cannot be relied upon. The said Section36B is reproduced here below :
Section36B. Admissibility of micro films, facsimile copies of documents and computer printouts as documents and as evidence. – (1) Notwithstanding anything contained in any other law for the time being in force, –
(a) a micro film of a document or the reproduction of the image or images embodied in such micro film (whether enlarged or not); or
(b) a facsimile copy of a document; or
(c) a statement contained in a document and included in a printed material produced by a computer (hereinafter referred to as a “computer printout”), if the conditions mentioned in sub-section (2) and the other provisions contained in this Section are satisfied in relation to the statement and the computer in question,
shall be deemed to be also a document for the purposes of this Act and the rules made thereunder and shall be admissible in any proceedings there-under, without further proof or production of the original, as evidence of any contents of the original or of any fact stated therein of which direct evidence would be admissible.
(2) The conditions referred to in sub-section (1) in respect of a computer printout shall be the following, namely :-
(a) the computer printout containing the statement was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
(b) during the said period, there was regularly supplied to the computer in the ordinary course of the said activities, information of the kind contained in the statement or of the kind from which the information so contained is derived;
(c) throughout the material part of the said period, the computer was operating property or, if not, then any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of the contents; and
(d) the information contained in the statement reproduced or is derived from information supplied to the computer in the ordinary course of the said activities.
(3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether –
(a) by a combination of computers operating over that period; or
(b) by different computers operating in succession over that period; or
(c) by different combinations of computers operating in succession over that period; or
(d) in any other manner involving the successive operation over that period, in whatever order, of one or more computers and one or more combinations of computers, all the computers used for that purpose during that period shall be treated for the purposes of this section as constituting a single computer; and references in this section to a computer shall be construed accordingly.
(4) In any proceedings under this Act and the rules made thereunder where it is desired to give a statement in evidence by virtue of this section, a certificate doing any of the following things, that is to say, –
(a) identifying the document containing the statement and describing the manner in which it was produced;
(b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer;
(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to the best of the knowledge and belief of the person stating it.
(5) For the purposes of this section, –
(a) information shall be taken to be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment;
(b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities;
(c) a document shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment.
Explanation. – For the purposes of this section, –
(a) “computer” means any device that receives, stores and processes data, applying stipulated processes to the information and supplying results of these processes; and
(b) any reference to information being derived from other information shall be a reference to its being derived there from by calculation, comparison or any other process.
20. Ongoing through the said provisions, we find that Section 36B(2) provides the conditions in respect of computer printouts. In the present matter the computer was not shown to have been used regularly to store or process information for the purposes of any activities regularly carried on by the appellants. It was also not shown that information of the kind contained in the computer printout was regularly supplied by the appellant to the computer in the ordinary course of activities. Again, it was not shown that, during the relevant period, the computer was operating in the above manner properly. The above provision also casts a burden on that party, who wants to rely on the computer printout, to show that the information contained in the printout had been supplied to the computer in the ordinary course of business of the company. We find that none of these conditions was satisfied by the Revenue in this case. In the present case, the data was not stored in the computer but the officers had taken the printout from the USB drive by connecting to the computer. The officers had not obtained any certificate as required under Section36B of the said Act. It is also noted that none of the conditions under Section 36B(2) of the Act, 1944 was observed. In such situation, it is difficult to accept the printout as an evidence to support the allegations of the revenue. It is noted that the requirement of certificate under Section36B(4) is also to substantiate the veracity of truth in the operation of electronic media. We also agree with the contention of the appellants that at the time of sealing and de-sealing of the external data storage device as well as the time of obtaining printouts there from, a certificate should have been obtained as per the provision of Section36B of the Act. No such certificate has been brought on record without which the evidentiary value of these printout get vitiated. As no certificate from the responsible person of the Appellants was obtained by the department, the credibility of the computer printout gets vitiated. Hon’ble Apex Court in case of M/s. Anwar P.V. v. P.K. Basheer reported at 2017 (352) E.L.T. 416 has held that the computer printout can be admitted as evidence only if the same are produced in accordance with the provisions of Section 65B(2) of the Evidence Act. A certificate is also required to accompany the computer printouts as prescribed under Section 65B(4) of Evidence Act, 1972. It has been clearly laid down in Para 15 of this judgment that all the safeguards, as prescribed in Section 65B(2) & (4), of the Act, is required to be met so as to ensure the source and authenticity, pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tempering, alteration, transposition, excision etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. The provisions of Section 65B of Indian Evidence Act and Section 36B of Central Excise Act, 1944 of the Act are pari-materia. It is evident from the Panchnama, and the appeals records that the investigating officer had failed to follow the safeguard as mandated under Section36B of the Act. We have also considered the judgment of M/s. Popular Paints & Chemicals v. C.C. Ex. & Cus., Raipur, wherein Tribunal vide Final Order Nos. 52716-52718/2018, dated 6-8-2018 under similar facts and circumstances has set aside the demand based on such unauthenticated data and judgment of Ambica Organics Vs. Commissioner of C. Ex. & Cus., Surat -2016 (334) ELT 97 (Tri. Ahmd), affirmed by Hon’ble Gujarat High Court in 2016 (334) ELT A67 (Gujarat High Court).
21. In the present matter the investigating officers failed to comply with the conditions of Section36B of the Act in respect to relying upon this computer printout. In view of the above we hold that service tax demand based on such unauthenticated data is not sustainable and hence are set aside.
22. For the reasons recorded hereinabove, we set aside the impugned orders and allow these appeals with consequential relief, if any, as per law.
(Pronounced in the open court on 15.09.2023)
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