This appeal was against the Order-in- Original No: 02-COMMR/MEERUT/2015 dated 19.01.2015 passed by the Commissioner, Customs, Central Excise & Service Tax, and Meerut . (Hereinafter referred to as the ‘assessing authority’). The Assessing Authority levied the service tax of amount Rs.74,98,893/- under Section 73(1) of the Act along with penalty of Rs Rs.74,98,893/- and Rs.10000/- u/s 77 and interest under Section 75 of the Act.
Appellant was issued a show cause Notice No. IV-CE(9)CP/M-1/60/2013/43 DATED 10-10-2014 asking explain
– Why Service tax amounting to Rs. 74,98,893/- payable on Amount Received against Taxable service rendered during the period April-2009 to March 2013 should not be demanded.
– Why the Interest at an appropriate rate should not be charged & demanded for the aforesaid period under the provisions of the finance Act 1944.
– Why the Penalty u/s 77, 78 of the finance act 1994 for failure to pay service tax Rs. 10000 & 74,98,893/- should not be demanded.
The appellant claimed the order is erroneous that while framing an order based on the figures of the Profit & Loss account of the Company. The Assessing authority has ignored the vital question while deciding the case such as
(a) All the Service Tax paid by the assessee to the department though the regular mechanism.
(b) Through declaration of the tax under VCS scheme of 2013 & dispose off the liability in full.
(c) The company got the refund of Service Tax( For a period of April 11 to December 11) through legitimate routes by way of refund order Dated 15.02.2013 by the Asstt. Commissioner of Income Tax originated against the SCN datedV918) Ref/DMRT/ST/AL Faheem/72/11-12/2928-2930 dated 17.08.2012.
(d) That the Service Tax has been paid to the securities agencies providing Human Resource to the company.
(e) The commission was paid to Indian Resident however the department has treated them foreign resident not having a permanent address in India.
The following service taxes were levied on the assessee, which were accepted by the CESTAT (Allahabad) levied as on presumptive basis. Hence found the same non sustainable.
1.1 Services of Goods Transport Agency (GTA) of goods transport
1.2 Reverse Charge Mechanism for Security Services
1.3 Commission paid to the Foreign national
CESTAT ( Allahabad) in its FINAL ORDER NO 72560/2018 held that.
2. Brief facts of the case are that the appellants were engaged in the business of export of “Boneless Buffalo Frozen Meat” and they were registered with Service Tax Department. From the Balance Sheet for the year 2009-10 to 2012-13 it appeared to Revenue that on the freight charges shown in the balance sheet appellant should have paid service tax under Goods Transport Agency Service under Reverse Charge Mechanism to the tune of Rs.67,01,359/-. Further on the scrutiny of the balance sheet Revenue came to know that during the year 2012-13 from July, 2012 to March, 2013 appellant has paid security charges of Rs.22,97,634/-. Therefore, it appeared to Revenue that appellant should have paid service tax on 75% of the said amount to the tune of Rs.2,12,990.68/-. Further on scrutiny of balance sheet Revenue came to know that appellant paid commission on export. The total commission paid for the financial years 2011-12 and 2012-13 was Rs.53,34,331/-. It appeared to Revenue that appellant should have paid service tax of Rs.5,84,542.30/- on the same since it appeared to Revenue that commission was paid to foreign agent. Therefore, a show cause notice to demand service tax amounting to Rs.74,98,893/- was issued on 10.01.2014. The appellant contested the show cause notice on various grounds.
3. The Original Authority confirmed the demand and imposed equal penalty. Aggrieved by the said order appellant is before this Tribunal.
4. Heard the learned C.A. for the appellant. He has submitted that the show cause notice was issued without scrutiny of the taxable value on which service tax was due from the appellant. He submitted that had Revenue scrutinized the entire transaction that was reflected in balance sheet, Revenue would have come to know that the freight charges reflected in balance sheet included various elements such as freight paid for inward transports of goods, freight paid on outward transport of goods. Further Revenue would have come to know bifurcation of freight paid on the outward transportation such as freight paid from factory to container depot and from container depot to port. He has submitted that without examining any transaction, the entire transaction was treated as eligible assessable value for charge of service tax on reverse charge mechanism. Revenue also did not take into consideration the amount of refund that Revenue has allowed to the appellant under the provision of Notification No. 17/2009-ST dated 07.07.2009. Therefore, the entire demand is on the basis of presumption and the same is not sustainable. He has further submitted that it was submitted before the Original Authority that the expenditure shown in the balance sheet towards sales commission was pertaining to commission paid to person situated in taxable territory of India but in spite of that Original Authority presumed that since it was commission on export it was paid to a foreign entity. Since show cause notice and the findings both are presumptive, the demand is not sustainable. In respect of demand to the tune of Rs.2,12,990.68/- on 75% value of security charges paid for the period from July, 2012 to March, 2013 he has submitted that the service tax liability was discharged by service provider on the entire amount. He has further submitted that reverse charge mechanism in respect of security charges paid was applicable w.e.f. 17.03.2012 and as the appellant was paying service tax to the service provider on entire value, the service tax once again cannot be demanded from the appellant since the same will be amounting to double taxation. He has relied on the final order passed by this Tribunal in the case of Umasons Auto Compo Pvt. Ltd. vs. Commissioner of Central Excise, Aurangabad reported at 2016 (46) S.T.R. 405 (Tri. Mumbai).
5. Heard the learned AR who has supported the impugned order.
6. Having consider the rival contentions and on perusal of record we find that the demand of around Rs.67 lakhs of service tax was raised by Revenue on the basis of presumption that entire expenditure on account of freight recorded in the balance sheet for the period covered by show cause notice was taxable. We also note that various components of the said freight pointed out by appellant were covered by other Notification i.e. 17/2009 and on which appellant were paid refund by Revenue. Therefore, we hold that the entire demand of around Rs.67 lakhs is presumptive and the same cannot sustain. We also find that in respect of demand of around Rs.2 lakhs on security services, since the service tax is paid by the service provider as has been held by this Tribunal in the case of Umasons Auto Compo Pvt. Ltd. (supra), the said service tax cannot be once again demanded. We further note that it was presumed by Revenue that commission was paid to the foreign commission agent for export. It is clear from the record that Revenue did not scrutinise any record and did not take into consideration the persons to whom commission was paid and raised the demand under presumption that the commission was paid to foreign entity and also presumed that such entity did not have any Office in India. We, therefore, find that the demand of service tax of around Rs.5 lakhs on account of commission is presumptive. We, therefore, do not find the impugned order to be sustainable. We, therefore, set aside the impugned order and allow the appeal.