SHRIRAM HOLOGRAPHICS Vs. CCE

JUDGEMENT

(1.) IN the impugned order, learned Commissioner demanded service tax of over Rs. 1.10 crores from the appellants for the period 1 -4 -2004 to 9 -9 -2004 in respect of certain services rendered by them to their clients, which were held to be 'Business Auxiliary Services'. Learned Commissioner also imposed equal amount of penalty on the party. Moving the present application for waiver of predeposit and stay of recovery in respect of the amounts of tax and penalties, learned Counsel submits that the appellants have a strong case on merits as well as on limitation. Learned SDR opposes this claim on the strength of the findings recorded in the impugned order.

(2.) AFTER considering the submissions, we find that the above demand of tax is in respect of services rendered by the appellants to three other companies, hereinafter referred to as 'the companies', under agreements entered into between the appellants and the companies, during the above period. After a perusal of these agreements, we note that the companies were into the business of giving loans for commercial vehicles and accepting deposits/debentures and the appellants were to provide miscellaneous services in connection with such business. It appears from the agreements that the appellants were to make necessary miscellaneous service arrangements to enable the companies to organize agents/investors meet, collect money for the investments on behalf of the companies, process the applications, liaison with the companies for issue of deposit/debenture certificate, etc. The show -cause notice classified these services as "promotion or marketing of service provided by the clients" and "any customer care service provided on behalf of the client" and the Commissioner held the services rendered by the appellants, to be "incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services". It is the case of the appellants that they did not provide any services of the above kind to the companies. The services rendered by them were in the nature of "banking and non -financial services", for which they had got themselves registered with the department as early as in 2001. It is submitted that the definition of 'Business Auxiliary Services' was expanded with effect from 10 -9 -2004 and thereafter the registration certificate was amended for inclusion of 'business auxiliary service' also. According to learned counsel, prior to 10 -9 -2004, the appellants were not rendering any 'business auxiliary service' to the companies. Learned Counsel has also claimed a strong case on the ground of time bar. The show -cause notice in this case was issued on 2 -5 -2006 under Section 73 of the Finance Act, 1994 for demanding service tax for the period 1 -4 -2004 to 9 -9 -2004. The normal period of limitation under Section 73 is one year. The extended period of limitation could be invoked only in a case where suppression of material facts was found against the party. According to the appellants, they did not suppress any material fact inasmuch as they were filing their returns from time to time during the period of dispute and the relevant facts were being verified by the authorities. This claim is also contested by learned SDR, who submits that the relevant agreements were never supplied to the department by the appellants at any point of time. In his rejoinder, learned Counsel has relied on the Tribunal's decision in Dolphine Detective Agency v. CCE, Belgaum 2006 (4) S.T.R. 25 (Tri. -Bang.), wherein it was held, in a service tax case, that, where all relevant facts were in the knowledge of the authorities, there was no suppression by the party and hence the extended period of limitation provided under Section 73 was not to be invoked against them. A few stay orders passed by the Bangalore Bench have also been referred to by the counsel.

(3.) AFTER giving careful consideration to the submissions, we have not found a strong case for the appellants as claimed by the counsel. A reading of the relevant agreements would show that the appellants were inter alia helping the companies organize meetings of investors. A service of this nature, prima facie, partakes the character of "promotion or marketing of services provided by the client". Hence, apparently, the appellants cannot straightaway escape liability to pay the tax demanded by the Commissioner. The appellants were filing returns in respect of services for which they were registered during the material period. They did not file returns in respect of "Business Auxiliary Services", nor did they care to supply copies of the relevant agreements to the department. Today, they claim not to have rendered any 'business auxiliary services' to the companies on the strength of the terms and conditions of the agreements. They ought to have furnished these agreements to the department atleast at the time when, upon receipt of the returns, the assessing authorities were into verification of the records. This did not happen. Apparently, the conduct of the appellants can be termed "suppression" of the kind envisaged under Section 73 of the Finance Act, 1994.