Case Law Details
CESTAT, NEW DELHI BENCH
Sercon India (P.)Ltd.
versus
Commissioner of Service Tax, Delhi
Stay order No. 56155 of 2013
Service Tax Stay No. 3467 of 2012
APPEAL NO. ST/2744 OF 2012
Date of Pronouncement – 05.02.2013
ORDER
D.N. Panda, Judicial Member – Both sides have been heard extensively. The precise question in this appeal is whether the assessable value splited into two parts and one such part is called reimbursement of expenses shall form part of assessable value of the taxable service in question.
2. Appellant’s plea is that the expenses which are not at all in the nature of gross receipt of the consideration for the services provides shall not form part of the assessable value. But revenue’s grievance in that invoice value were deliberately splited to escape taxation in the guise of expenditure although those are inextricably linked with the value of services provided and should form part of the assessable value. Separate invoices were raised to get reimbursable value.
3. The appellant relied on para 7 of the show cause notice as well as the provisions of Service Tax relating to determination of the assessable value of the and submits that none of the provisions before and after amendment of law relating to valuation brings the case of assessee to the net of the service tax. Reference was invited to para 2.5 of the adjudication order followed by a certificate from the Chartered Accountant appearing at page 44 of the appeal record to show reimbursement aspect. Receipts were towards reimbursement of expenses. It was further submission of appellant that at page 58 of the appeal folder col. 2 of the table thereunder gives the description of the reimbursement of the expenses. But the figure depicted by Adjudicating Authority is not correct figure which was subjected to the reconciliation as per the Chartered Accountant’s certificate.
4. Relying on the judgement of the Hon’ble High Court of Delhi in the case of Intercontinental Consultants & Technocrats (P.) Ltd. v. Union of India [2012] 38 STT 75, it was submitted by Appellant that the reimbursement of expenses being beyond the scope of taxation, there shall be no liability of the appellant at all.
5. It was further submitted by the appellant that the proceedings having been related to the period October, 2002 to March, 2007 and the show cause notice issued on 23.4.2008 that has made the proceedings time barred. So also the appellant is in financial difficulties as is apparent from page 54 in para -H of the appeal folder.
6. It was submitted on behalf of the Revenue that the gross consideration for providing the taxable services in whatsoever manner received is liable to tax.
7. We have examined the contention of both the sides. When para-5 of the show cause notice is looked into that leaves ample doubt against the appellant as to its modus operandi and prima facie compels to hold against the appellant. No agreement was made available to us to consider in favour of the appellant. We have gone through anxiety of the revenue and also looked into para 2.5 of the adjudication order. The expenses incurred were directly allocable to generate the service provided and no way can be held to be avoidable to call the same reimbursable for incremental value addition to the service. It appears that revenue lifted corporate veil to go inside the transactions for ascertaining the truth behind the operation. In the entire adjudication process, the Authority noticed evasive practice at different parts of the adjudication order. We do appreciate that rule should not be a tyrant but should be a servant of law. But the facts and circumstances of the case suggests that the appellant has adopted a novel way of splitting the consideration with nomenclature of reimbursement of expenses. Deliberate splitting is not possible to be ruled out when splitting is not intended by law. Once splitting is attributable to a motive, the appellant cannot get any shelter under the purview of law.
8. We considered the financial hardships as has been pleaded today. Taking overall facts and circumstances into account, as against service tax demand of Rs.3.62 crores approximately followed by penalty under Section 76 and interest as well as penalty of Rs.4 crores under Section 78 of Finance Act, 1994 appellant is directed to make deposit of Rs.1,00,00,000/- (Rupees One Crore) in three instalments . Rs.40 lakhs shall be deposited by 28.2.2013, Rs.30 Lakhs shall be deposited by 20.3.2013 and Rs.30 lakhs shall be deposited by 10.4.2013 and within a week of the deposit of each of of the said instalments , the appellant shall furnish copy of challans to the ld. adjudicating authority as a mark of compliance to this order. Failure to make deposit of any of the instalments shall render this order vacated and revenue shall be at liberty to realise its entire dues in accordance with law.
9. Upon deposit of the instalments aforesaid, there shall be compliance reported on 15.4.2013.
Case of Intercontinental Consultants & Technocrats (P.) Ltd. v. Union of India [2012] 38 STT 75 has opened a new chapter in Service tax which should be addressed by the authorities at the earliest.