MANISH AGARWAL Vs. COMMR. OF SERVICE TAX, AHMEDABAD

JUDGEMENT

(1.) AFTER dispensing with the condition of pre -deposit of Rs. 1,02,378/ - (Rupees One Lakh, Two Thousands, Three Hundreds and Seventy Eight Only), confirmed as Service Tax against the applicant and penalty of Rs. 2,04,756/ - (Rupees Two Lakhs, Four Thousands, Seven Hundreds and Fifty Six Only) imposed upon them along with penalty @ Rs. 200/ - (Rupees Two Hundreds only) per day, we proceed to decide the appeal itself with the consent of both sides, as the issue lies in the narrow compass. The facts of the case, in brief, are that the appellants are engaged in providing taxable services under the category of Business Auxiliary Services and Renting of Immovable Property Services. During the course of review of Business Auxiliary Service by CERA audit party, it was noticed that the appellants had declared less value shown in their Profit & Loss periodical ST -3 returns as compared to the value shown in their Profit & Loss account for the year 2005 -06 resulting into a short payment of Service Tax to the tune of Rs. 1,02,378/ - (Rupees One Lakh, Two Thousands, Three Hundreds and Seventy Eight Only). Accordingly, a letter dated 15 -4 -2008 was issued to the appellants requesting them to pay up the differential amount of Service Tax along with interest. However, the appellants vide letter dated 8 -5 -2008 and 19 -5 -2008 had replied that the value of export had not been included in ST -3 returns as the said return was requiring the details of only taxable services. Since the department was not satisfied with the said reply, a Show Cause Notice was issued by the Assistant Commissioner, Service Tax, Ahmedabad. The said Show Cause Notice was adjudicated vide the impugned order wherein the adjudicating authority after considering the written as well as oral submission made by the appellants confirmed the amount of Service Tax under Section 73(1) of Finance Act, 1994 along with interest thereon under Section 75 of the Act and also imposed penalty under Section 76 and 78 of the Act.

(2.) BEING aggrieved with the order passed by Assistant Commissioner, the appellants preferred an appeal before Commissioner (Appeals). The appellants contended that the amount in question is the commission amount received by them in foreign currency from the foreign client for providing the services for sale of foreign goods in India and as per the provisions of Export of Service Rules, 2005, the services provided to foreign clients are exempted from Service Tax; that they had produced documentary evidence about services provided to foreign company and receipt of payment of foreign currency which has been stated in Para 12 of order -in -original, however, the same has not been rebutted nor any contrary evidence brought on record by the Department and that they are not required to pay any Service Tax in the subject matter; that since the export services are exempted from payment of Service Tax, the department has no authority to demand the tax on such services and in support of their contention, they have relied upon various judgments; that the tax has been worked out and demanded without giving any details of value on which tax is demanded and further the tax has been demanded on the differential value between the amount shown in the S.T. -3 Return and Profit & Loss account for the year 2005 -2006. However, there is nothing in the findings of the order that the differential amount is pertaining to the commission received for services rendered to domestic clients; that the ground of non -mentioning of foreign commission amount separately in the Profit & Loss account cannot be a valid reason to uphold the demand; that in the instant case, the Show Cause Notice dated 27 -1 -2009 demanding Service Tax the pertaining to year 2005 -2006 is apparently time barred and not sustainable in any law; that the longer period has been invoked merely on the grounds that they had not shown the foreign commission amount in the S.T. -3 however, in the proforma of S.T. -3 return prevailing during the material time, there was no such requirement to mention the value of exempted services and therefore, it was not mandatory to mention the same in the return; that in absence of any documentary evidence by way of recording statement or other evidence the invocation of longer period merely on assumptions and presumptions is not permitted by law; that the issue is about interpretation of the statute and therefore, heavy penalty imposed is not sustainable in law.

(3.) AFTER hearing both sides, we find that the Commissioner (Appeals)'s reasoning that the commission has not been separately shown in Profit & Loss account, cannot be held to be a valid reason to reject the appellant's plea of the commission having been earned from the services provided by them to a foreign client. It is seen that the appellants had produced documentary evidences showing services provided to foreign company and receiving the payment in foreign currency. The said plea of the appellant has not been rebutted by the Revenue. As such, the non -reflection of the source of commission in the Profit & Loss account, cannot be made a ground for rejecting their above plea.