So far as the penalties are concerned, we do appreciate that the learned Commissioner has considered waiver but the reasoning for the waiver is not acceptable to us. We make it clear that when there is a levy of tax, liveability of penalty depends on the facts and circumstances of each case. The reimbursement issue has travelled with lot of controversies till conclusions by Larger Bench. Learned Counsel says even the dispute has gone to Apex Court. Appreciating the difficulties faced by the assessee at the infancy stage which is reasonable cause, there shall be no levy of penalty under sections 76 and 78 of the Finance Act, 1994, in the present case. But we confirm penalty levied under section 77 of the said Act, since liability for payment has ensued with obligation for registration arose.
Perusal of the show-cause notice indicates that the appellant had realised service tax from his client but did not deposit. The mitigating factors of financial condition and illness could have been received consideration, had the appellant not realised service from its clients. Since service tax was realised and that was with the appellant, keeping such public money the appellant does not require any consideration for total waiver of penalty. Only looking to the cooperative attitude of the appellant, it may not be proper to penalise under section 76 and 78 of the Finance Act, 1994. Simultaneously, to remove hardship, it would be proper to direct the appellant to deposit 25% of the demand towards penalty under section 78 of the Finance Act 1994 within 30 days of receipt of this order. If there is no deposit, this order shall stand vacated and Revenue shall be free to realise its entire dues in accordance with law.
Counsel submits that service of the courier was used for dispatch of the samples to abroad. When courier service is connected with export and relevancy thereof was not doubted, the appellant cannot be denied relief of credit relating to tax paid for appropriate consequence under different law. Ld. Commissioner (Appeals) without looking into strength of evidence filed, recorded that the appellant failed to correlate the invoices by the courier services with the export of goods.
Appellants are engaged in business of manufacturing Ready Mix Concrete (RMC). While supplying the goods they delivered it at the desired location on site by pumping of the RMC to the spot where it was required. Revenue has made out a case that this activity is covered under ‘Commercial & Industrial Construction Services’ and imposed service tax on the entire consideration received for RMC after allowing the abatement of 67% under Notification No.l/06-ST.
The submission of the learned Counsel for the appellants is that the credit is mostly in respect of capital goods only and there is only a small portion of credit attributable to input services. He submits that the portion of Rule 6(3)(c) will apply only in respect of credit taken in respect of inputs and input services and not capital goods. When such credit alone is considered, the utilization is well within the prescribed limit in the said Rule and therefore, demand is not maintainable.
The appellants were sending their manager/ employees to hotels run by the subsidiary/ associate companies on deputation. They were recovering costs on actual basis and were not retaining any amount out of the payment made by the hotels run by the subsidiary/ associate companies. The contention of the Department is that the appellants were engaged in manpower supply service as they were supplying their manpower to hotels run by associate companies on a cost recovery basis.
As per provisions in Taxation of Services (Provided from Outside India and Received in India), Rules 2006 the question whether the service in question is imported is decided with reference to location of the recipient of service for service specified under section 65(105)(r) but is decided with reference to place of performance for service specified at section 65(105)(y). That is to say if the impugned service is classified as Management Consultancy, service tax is payable in the instant case but if it was classifiable as service of Market Research Agency then tax was not payable for the reason that the service is performed entirely outside India.
The decisions of the Tribunal in the case of CCE v. Future Polyesters Ltd. [Final Order No. 782 of 2011, dated 8-7-2011] is clearly to the effect that most of the impugned activities would not fall under the definition of Management Consultancy service. Though compliance with laws is part of the responsibilities of management such responsibility per se cannot bring it into the ambit of the words ‘in connection with the management of any organization’ used in section 65 (105)(r) and section 65(65) to tax such services
It is no longer, res integra that in a contract for providing service of the type involved in this case the service component and value of materials can be separated. Notification 12/2003-ST also recognises this principle. The only dispute that remains is whether value of materials sold “can be segregated based just on the value on which VAT is paid.
We find that show cause notice stands issued on 7-2-2007 for the period 1-7-2003 to 31-8-2004, thus invoking the longer period of limitation. Tribunal in the case of Brij Motors (P.) Ltd. v. CCE [Final Order No. ST/601/2011, dated 22-11-2011] as [2012 (25) STR 489 (Tri – Delhi)] has taken note of the fact that the were decisions of the Tribunal holding in favour of the assessees and as such has held the demand to be barred by limitation.
