Shresth Leasing & Finance Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Held that demand of services tax on the basis of TDS /26AS statements/ 3CD Statements are not sustainable.
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 was 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 wherein he stated that Suneet Kabra was the Director of the Appellant and he along with Suneet Kabra operated different firms including that of the appellant. Statement of Suneet Kabra was also recorded wherein he interalia stated that Appellant had received commission charges from different customers.
On the basis of the investigation conducted and scrutiny of the records ofthe Appellant, it appeared that Appellant were engaged in providing services as ―Commission agentsto M/s Windsor Machines Ltd., and Management or Business Consultancy to various customers in India. Appellant neither filed ST-3 returns nor paid any amount of service tax. Accordingly, show cause notice on 20.10.2016 was issued proposing the Service tax demand along with interest, penalty. The Additional Commissionerconfirmed the demand of service tax of Rs. 1,05,34,774/- under proviso to Section 73(1) of the Finance Act, 1994 and ordered for appropriation of Rs. 20,00,000/- paid by Appellant during the investigation. Further demand of Interest under Section 75 of the Finance Act, 1994 and Penalty of Rs. 20,000/- under Section 77, Penalty of Rs. 1,05,34,774/- under Section 78 of the Finance Act, 1994 also confirmed.
Commissioner (Appeals) upheld the order passed by the Additional Commissioner. Being aggrieved, the appellant preferred present appeal.
Conclusion-
We are of the view that the demand of services tax on the basis of TDS /26AS statements/ 3CD Statements are not sustainable.
The appellant provided the various types of services to various entities and department has classified all as commission agent services under the category of ‘business auxiliary service‘ and ‘management consultancy service‘ legally not correct.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeal is directed against the impugned Order-In-Appeal No. CCESA-SRT(APPEALS)PS-465/2018-19 dated 18.10.2018 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 was 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 wherein he stated that Shri Suneet Kabra was the Director of the Appellant and he along with Shri Suneet Kabra operated different firms including that of the appellant. Statement of Suneet Kabra was also recorded wherein he interalia stated that Appellant had received commission charges from different customers. On the basis of the investigation conducted and scrutiny of the records of the Appellant, it appeared that Appellant were engaged in providing services as ―Commission agents” to M/s Windsor Machines Ltd., and ‘Management or Business Consultancy” to various customers in India. Appellant neither filed ST-3 returns nor paid any amount of service tax. Accordingly, show cause notice on 20.10.2016 was issued proposing the Service tax demand along with interest, penalty. The Additional Commissioner, Surat vide Order-In-Original No.20/ADJ/ADC-KSM/OA/2017-18 dated 30.01.2018confirmed the demand of service tax of Rs. 1,05,34,774/- under proviso to Section 73(1) of the Finance Act, 1994 and ordered for appropriation of Rs. 20,00,000/-paid by Appellant during the investigation. Further demand of Interest under Section 75 of the Finance Act, 1994 and Penalty of Rs. 20,000/- under Section 77, Penalty of Rs. 1,05,34,774/- under Section 78 of the Finance Act, 1994 also confirmed. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who by impugned order -in-appeal dated 18-10-2018 upheld the order passed by the Additional Commissioner and dismissed the appeal. Aggrieved by the impugned order-in-appealpresent Appeal has been filed.
3. Shri Jigar Shah, Learned Counsel along with Shri Ambarish Pandey appearing on behalf of the appellant submits that in the impugned order Ld. Appellate Authority has upheld the OIO in its entirety observing that the Appellant were engaged in providing ‘financial consultancy service‘ under ‘business auxiliary service and management or business consultancy services‘. Appellant received commission charges to the tune of Rs. 10,56,34,930/- from various customers but did not pay any service tax on the same, which comes to Rs. 1,05,34,774/-. However, they provided diverse services to various entities and department has classified them all as commission agent under the category of ‘Business Auxiliary Service‘ and ‘Management Consultancy Service‘.
3.1 He Submits that Appellant rendered services of wholesale and retail financing to M/s ECL, which is involved in the providing treasury and investment management services. M/s ECL is a subsidiary of M/s Edelweiss Asset Management Ltd., which in turn is a subsidiary of M/s Edelweiss Capital Ltd. M/s ECL is engaged in treasury and investment management activities. M/s Edelweiss Capital Ltd. is the asset management Company acting as an investment manager to M/s Edelweiss Mutual Fund, which has various fund options listed on FSM such as Edelweiss Arbitrage Fund -Bonus, Edelweiss Arbitrage Fund -Growth, Edelweiss Arbitrage Fund- Dividend etc. As per the Rule 2(1) (d) (iv) of the Service tax Rules , 1994 the liability to pay Service tax on auxiliary service of distribution of Mutual Fund by a mutual fund distributor was on the service recipient, thus, the Asset Management Company in the present case is liable. However, the service tax was payable by the recipient of Services till 30.06.2012, thus, the demand of Service tax on the Appellant for the period prior to July 2012 legally not correct and the impugned order wrongly upholds the same. For the period post July 2012, the service provided by a mutual fund agent to mutual fund or asset management company or by distributor to a mutual fund or asset management company were exempted vide Notification No. 25/2012- ST dtd. 20.06.2012. The same is also clarified in CBEC Education Guide. He placed reliance on the case of Vijay Sharma & Co. Vs. CCE Chandigarh, 2010(20)STR 309 (Tri. -LB).
3.2 He further submits that service provided to M/s Windsor Machines Pvt. Ltd. of transporting machinery from premises of Windsor to M/s Manike Moulds Pvt. Ltd. and appellant performed commissioning and installation Jobs at the site of M/s Manike Moulds Pvt. Ltd. are not taxable as it amounted to intermediate process in manufacture of excisable goods. Appellant had provided services to M/s Welspon Corp Ltd., Welspon Syntex, Welspon Global Brands Ltd. and M/s Alkem Laboratories Ltd. towards providing advice and negotiation in respect of packing credit in foreign currency. Packing credit is a credit facility provided by the Bank to an exporter. Thus, the services provided by the Appellant were ancillary to export in nature and hence, was not liable to Service tax. Appellant provided the maintenance services to M/s KEC International Ltd. for power distribution channel allocation in order to obtain resources utilization. The services provided by the Appellant are related to the principal supply of ‗electricity‘ and are thus, not liable to service tax. He placed reliance on the following decisions:
