Reynolds Petro Chem Ltd. Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Held that the Adjudicating Authority had failed to follow the requirement of Section 9D of the Act regarding examination in chief of witness, therefore demand of service tax on the basis of statements of persons cannot be sustainable.
Facts-
The Investigation revealed that appellant was engaged in trading as well as providing commission services. They had received the commission/brokerage amount. Investigation also revealed that Appellant have availed the cenvat credit without having any corroborative evidence. Accordingly, show cause notice dated 14-5-2018 was issued proposing the Service tax demand alongwith interest, penalty and disallowance of Cenvat Credit.
The Additional Commissioner, Surat confirmed the demand of service tax and disallowed the Cenvat Credit. Being aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who upheld the order passed by the Additional Commissioner and dismissed the appeal. Aggrieved by the impugned order-in-appeal present Appeals has been filed.
Conclusion-
Held that the department for confirmation of service tax demand relied on the statement of the Director of the Appellant, We observed that, it is settled law that though the admission is extremely important piece of evidence but it cannot be said to be conclusive and it is open to the person who has made the admission to show that this is incorrect. We also note that there are numerous decisions of the Tribunal laying down the principle that such admission of persons, cannot be considered to be conclusive evidence to establish the case against the assessee. Burden of proof is on the Revenue and same is required to be discharged effectively.
Held that even if it is assumed that appellant have provided the business auxiliary service the impugned show cause notice has not specified under which clause of the definition of Business Auxiliary Service the activity of the Appellant falls. For determining the taxability of services, it very important to specify the activity of the assessee. In the absence of the specification of the exact sub-heading under which the service falls, taxability of service cannot be decided.
Held that as regard the cenvat demand we find that the charges against the Appellant are that they have not produced the input service documents on which they have taken cenvat Credit. We find that contrary to this fact, the appellant has recorded the receipt of the input services in their cenvat account and along with affidavit produced the cenvat credit account, copies of input service invoiceson the basis of which Cenvat credit has been availed by them. Therefore, we do not find any reason to deny the Cenvat Credit.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeal is directed against the impugned Order-In-Appeal No. CCESA-SRT (APPEALS) PS-532/2018-19 dated 01.11.2018 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. Statement of Suneet Kabra was also recorded. The Investigation revealed that appellant was engaged in trading as well as providing commission services. They had received the commission/brokerage amount. Investigation also revealed that Appellant have availed the cenvat credit without having any corroborative evidence. Accordingly, show cause notice dated 14-5-2018 was issued proposing the Service tax demand alongwith interest, penalty and disallowance of Cenvat Credit. The Additional Commissioner, Surat vide Order-In-Original No. 45/ADJ/ADC-KSM/OA/2017-18 dated 27.03.2018confirmed the demand of service tax and disallowed the Cenvat Credit. Being aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who by impugned order-in-appeal dated 01-11-2018 upheld the order passed by the Additional Commissioner and dismissed the appeal. Aggrieved by the impugned order-in-appeal present Appeals 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, 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 noncompliance 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 made payment of Service tax of Rs. 86,18,689/- before initiation of investigation proceedings. The Appellant provided GTA service to M/s Alkem Laboratories Ltd. The Services provided by the Appellant to M/s Alkem Laboratories Ltd. are liable to Service tax in the hands of service recipient under reverse charge mechanism. In the beginning of contract the appellant did not have clarity on chargeability of Service tax and the appellant made payment of Service tax of Rs. 26,35,007/- under protest. Hence, the Appellant made payment of Rs. 59,83,682/- against the taxable services provided by them to Sarna Chemicals Pvt. Ltd., Chemieorganic Chemicals Pvt. Ltd., Farmson Pharmaceutical Guj Pvt. Ltd., Supreet Chemicals Pvt. Ltd. & Alkem Laboratories Ltd. during the financial year 2011-12 to 2014-15. The Appellant also paid an amount of Rs. 1,15,00,000/- towards service tax under protest under pressure of revenue authorities. The correct liability, as per the Appellant is Rs. 59,83,681/- and the Appellant have already paid an amount of Rs. 2,01,18,689/- Thus, the Appellant are entitled for refund of the remaining amount of Rs. 1,41,35,008/-
3.2 He further submits that the services provided by the Appellants to several of their clients including M/s Lupin Ltd., M/s Alkem Laboratories Ltd. and M/s Anuh Pharma Ltd., Calyx Chemicals & Pharmaceuticals Ltd., Farmson Pharmaceutical Gujrat Pvt. Ltd., Supreet Chemicals Pvt. Ltd. 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.
3.3 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 :
