Vatsal Resources Pvt Ltd. Vs C.C.E. & S.T.-Surat-I (CESTAT Ahmedabad)
Held that revenue alleged that the assessee has collected service tax payment. However, revenue failed to support the allegation with any corroborative evidence. Demand of service tax unsustainable
Facts-
The appellant are engaged in providing of various services. Acting on the intelligence that M/s Forward Resources Pvt. Ltd. and other firms operated by and related to the directors of the said company were indulging in evasion of Service tax, search was conducted and during the search number of documents related to income tax TDS statements, copies of Balance Sheet /audit reports, bank statement were seized and statement of Jagdishchandra Somani, Director of M/s Forward Resources Pvt. Ltd. was recorded. Statement of Manoj V. Rajak, Director of Appellant was also recorded. The Investigation revealed that appellant was engaged in providing different services to different clients as detailed in TDS statement and had received the service charges. During the investigation, the Appellant deposited Rs. 50,00,000/- towards their Service tax liability.
Investigation also revealed that Appellant have provided taxable service under Business Auxiliary Service, Advertising Agency Service, Market Research Agency Service, Management or Business Consultancy Service and for that they have charged and collected service tax, but failed to deposit the service tax to the government exchequer. Accordingly, show cause notice dated 29-09-2017 was issued proposing the Service tax demand along with interest and penalty. The Additional Commissioner confirmed the demand of service tax along with interest and penalty. The Commissioner (Appeals) upheld the order passed by the Additional Commissioner and dismissed the appeal. Being aggrieved, the appellant preferred the present appeal.
Conclusion-
We are of the view that demand of service tax is not sustainable on the basis of TDS/ 26AS Statement.
We also find that when the Service tax is demanded on alleged services, it is the responsibility of the department to show that the appellant had rendered these services to customers with positive evidences. In the present case department failed to do so.
Further on the basis of documents/ records received from customers of Appellant, revenue alleged that they have collected the service tax payment. However, on the basis of records of other persons it cannot be concluded that Appellant have collected the service tax from their customers. In the present matter revenue in support of their contentions nowhere produced any corroborative evidence in the form of Bank Details or any documents recovered from the business premises of the Appellant by which it can be concluded that Appellant have collected the Service tax. In the present matter department clearly failed to prove the case that Appellant have collected the service tax from their customers.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeal is directed against the impugned Order-In-Appeal No. CCESA-SRT (APPEALS) PS-542/2018-19 dated 09.11.2019 passed by the Commissioner (Appeals) CGST &Central Excise, Surat.
2. The brief facts of the case are that the appellant are engaged in providing of various services. Acting on the intelligence that M/s Forward Resources Pvt. Ltd. and other firms operated by and related to the directors of the said company were indulging in evasion of Service tax, search was conducted and during the search number of documents related to income tax TDS statements, copies of Balance Sheet /audit reports, bank statement were seized and statement of Shri Jagdishchandra Somani Director of M/s Forward Resources Pvt. Ltd. was recorded. Statement of Shri Manoj V. Rajak, Director of Appellant was also recorded. The Investigation revealed that appellant was engaged in providing different services to different clients as detailed in TDS statement and had received the service charges. During the investigation, the Appellant deposited Rs. 50,00,000/- towards their Service tax liability. Investigation also revealed that Appellant have provided taxable service under ‘Business Auxiliary Service‘ , ―Advertising Agency Service‘, ‘Market Research Agency Service‘, ‘Management or Business Consultancy Service‘ and for that they have charged and collected service tax, but failed to deposit the service tax to the government exchequer. Accordingly, show cause notice dated 29-09-2017 was issued proposing the Service tax demand along with interest and penalty. The Additional Commissioner, Surat vide Order-In-Original No. 47/ADJ/ADC-CSM/OA/2017-18 dated12.04.2018confirmed the demand of service tax along with interest and penalty. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who by impugned order -in-appeal dated 09-112018 upheld the order passed by the Additional Commissioner and dismissed the appeal. Aggrieved by the impugned order-in-appeal present Appeal has been filed.
3. Shri Jigar Shah, Learned Counsel along with Shri Ambarish Pandey, Advocate appearing on behalf of the appellant submits that the impugned proceedings are without Jurisdiction, unconstitutional and erroneous, as the department completely failed to comply with the constitutional scheme so applicable after the enactment of the Central Goods and Service tax Act, 2017. In the present case, the legislature has omitted the provisions of Chapter -V of the Finance Act, 1994. Thus, Section 6 of the General Clauses Act, 1897 shall not be applicable in view of the Judgment of Hon‘ble Supreme Court in case of Rayala Corporation Vs. Directorate of Enforcement, 1969 (2) SCC 412, supra. Therefore, no proceedings can be initiated, and no liability can be fastened by the Government in respect of any alleged violation or non-compliance of the provisions contained in Chapter -V of the Finance Act, 1994 as omitted vide Section 173 of CGST Act. The initiation of the proceedings vide the present show cause notice and the confirmation of demands by the impugned order is without jurisdiction, unconstitutional and erroneous and hence, deserves to be quashed and set aside.
3.1 He submits that Appellant had already made a payment of Service tax to tune of Rs. 50,00,000/-. The said amount was paid by the Appellant in the nature of deposit and to avoid the harassment by the officials of the Department. In the show cause notice the department has wrongly considered several activities as taxable at the end of the Appellants, while the said services are non- taxable or taxable at the end of the recipient under reverse charge mechanism.
3.2 He further submits that the services provided by the Appellants to their clients namely M/s CMIPL are chargeable to service tax under the reverse charge mechanism. The Applicable Service tax liability is to be discharged by the clients of the Appellant and therefore, no service tax liability can be fastened against the Appellant. The nature of services provided by the Appellant to M/s CMIPL was pertaining to goods transport agency. For providing the aforesaid GTA Service, the Appellant hired the vehicles from M/s Vaibhav Roadways, Mumbai.
3.3 The Service provided by them to their client M/s IndusInd Bank Ltd. pertained to arranging of various advertising sites such as hoarding, banners and posters across the India, which was under the negative list at the relevant time. The show cause notice wrongly proposes the recovery of the service tax on the above transaction from the Appellant and the impugned order wrongly confirmed the recovery thereof from the Appellant.
3.4 He submits that the impugned order failed to consider that the show cause notice invoked wrong provision of the Finance Act, 1994 to demand Service tax. The demand of Service tax should have been proposed under Section 73A of the Finance Act, 1994 and not under Section 73. Therefore, there can be no demand of Service tax as the impugned order is passed without jurisdiction and hence liable to be quashed and set aside. He placed reliance on the following decisions
