Service tax not collected , tax liability by cum tax consideration

By | May 22, 2016

Held

As regards the submission that computation of liability to the extent the consideration is received by the applicants to be taken as inclusive of tax is correct. The Bench has not recorded any findings on this point, It is settled law by the judgement of the Apex Court that duty or tax liability is to be worked out from the amounts/consideration received holding the same as cum-tax consideration. To that extent we hold that the applications for ROM need to be allowed.

CESTAT, MUMBAI BENCH

Lalit Dongre

v.

Commissioner of Central Excise & Customs, Nashik

M.V. RAVINDRAN, JUDICIAL MEMBER
AND C.J. MATHEW, TECHNICAL MEMBER

ORDER NOS. M/86758-86762/2016/STB
APPLICATION NOS. ST/ROM/95219 TO 95221, 95223 & 95224/2015
APPEAL NOS. 85409 TO 85413 OF 2014

MARCH  14, 2016

Vinay Jain, C.A. for the Appellant. A.G. Goswami, Addl. Commr. (AR) for the Respondent.

ORDER

M.V. Ravindran, Judicial Member – All these applications for Rectification of Mistakes are filed against the final order No. A/2392-2396/15/STB dated 07.08.2015.

2. Learned Counsel appearing on behalf of the applicants – submit that there are errors apparent on the face of the records as follows:—

(a) On limitation, it was extensively argued that extended period cannot be invoked. The Bench has not recorded any findings and has also not considered the submissions that an investigation in these cases started since 2008 and show-cause notice was issued almost after four years. It is his submission that the applicants had bonafide belief that they are not liable to pay service tax. He submits that the order of the Bench has not recorded any independent views on these points and more specifically, in respect of the ratio of the Tribunal in the case of Charanjeet Singh Kanuja v. CST [Final Order Nos. 51818-51855/2015, dated 9-6-2015] which was cited wherein the facts are identical to the facts in these cases.
(b) That the service if any is in the nature of brand promotion which was not covered under the definition of Business Auxiliary Services.
(c) The applicants being small service providers are entitled for threshold exemption as per Notification 8/2008-ST.
(d) No service tax can be imposed on the direct purchase of products made by the applicants from RMP.
(e) Computation of liability is incorrect to the extent of consideration received by the applicant should be taken as inclusive of taxes.

3. Learned D.R. would submit that all these points were raised by the appellants before the first appellate authority and the findings recorded by the first appellate authority at paragraph 6.8, 6.9 and 6.10 are self explanatory and hence there is no error apparent on the face of the record.

4. We have considered the submissions made by both sides and perused the records.

5. The order of the Tribunal dated 07.08.2015 has considered the extensive submissions made by both sides before delivering the judgement. In the said judgement, the Bench has followed the law as laid down by the Principal Bench on identical set of facts in the case of Surendra Singh Rathore/Smt. Chanda Bohra v. CCE[Final Order Nos. 57072-57073, 2013, dated 27-7-2013] and Mahaveer Saharan v. CCE & ST [Final Order No. 57681/2013, dated 19-9-2013] and reproduced the relevant paragraphs in the said order. We find that there is no error apparent on the face of the records in the case of arguments of invocation of extended period. It can be seen that the ratio of the Tribunal in the case of Surendra Singh Rathore/Smt. Chanda Bohra (supra) in paragraph No. 7 directly applies in the case in hand wherein identical set of facts was there and invocation of extended period was also upheld. We do not find any difference in the facts of that case and in the facts in these cases. As regards the case law relied upon by the learned Counsel in the case of Charanjeet Singh Khanuja(supra) we find that in that case, the facts were very much different inasmuch as that the lower authorities were themselves confused and held contradictory views. This is apparent from the findings of the Bench in paragraph No. 16 of that case which is as under:—

“We also take notice of the fact that in respect of appeals filed by the Revenue, the Commissioner(Appeals) after analyzing the activities of the assessee had taken the view that the same is not covered by the definition of Business Auxiliary Service under Section 65(105) (zzb) read with Section 65(19) of the Finance Act, 1994. When on the issue involved in this group of cases, there were two views in the Department itself, it cannot be said that on the question as to whether the activity of the assesses was taxable under Section 65(105)(zzb) read with Section 65 (19) of the Finance Act, 1994, there was no scops for doubt.”

It can be seen from the above that there was no findings recorded by the adjudicating authority or the first appellate authority; on the contrary, in the cases in hand both the lower authorities have recorded that the appellants had not produced the records from 2008. Appellants had not informed the department as to the activities undertaken by them during the period in question. In view of this, we find that there is no error apparent on the face of the record on the point of limitation.

5.1 As regards the threshold exemption we find that the first appellate authority has recorded that he is unable to extend the benefit of Notification 8/08-ST dated 01.03.2008 as the appellant had not produced any documents as to their turnover in the previous year. Before us also, nothing is produced to come to a concrete conclusion. In our view, principally the appellant should get the benefit of exemption under Notification No. 8/08-ST if they are able to produce an evidence that their turnover service rendered from the previous year falls within the period of exemption. To that extent, we hold that the appellants have made out a case in the ROM application.

5.2 As regards the service tax imposed on direct purchase of products made by the applicants from RMP, we find no error apparent on the face of the records as in an identical set of facts in the case of Surendra Singh Rathore/Smt Chanda Bohra (supra) the Tribunal held against the appellants. The said ratio squarely covers the issue and we hold there is no error apparent on the face of the record on this point.

5.3 As regards the submission that computation of liability to the extent the consideration is received by the applicants to be taken as inclusive of tax is correct. The Bench has not recorded any findings on this point, It is settled law by the judgement of the Apex Court that duty or tax liability is to be worked out from the amounts/consideration received holding the same as cum-tax consideration. To that extent we hold that the applications for ROM need to be allowed.

5.4 In sum, the tax liability is upheld alongwith interest but the same needs to be worked out as indicated in paragraphs 5.1 and 5.3 herein above.

6. The applications for Rectification of Mistake are disposed of as indicated hereinabove.

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