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File NO.APPL·COMMOST/623/2019·GST· APL·CHD

CENTRAL GOODS & SERVICES TAX

COMMISSIONERA TE. CHANDIGARH.

CHANDIGARH. PH. 0172-2720240.

C No.App-COMMOST/623/2019-GST-APPL-CHD b Dated: Appeal No. 23/A/ST/CHD/19-20 ~~~ 0

ORDER-IN-APPEAL

Order-in-Appeal No. : CHD-EXCUS-OOI-APP- ri-~19-20 Dated: ~s-I" \ , , Appellant Ganga Ram, VPO Barmana, Distt. Bilaspur (H.P.)-

174013

Order-in-Original 03/STC/AC/Mandi/2019 dated 20.02.2019 No.& date

Adjudicating Authority Assistant Commissioner, Central Goods and Services Tax Division, Mandi

Amount of service tax Rs.13,73,S03/-

Amount of Penalty Rs.13,73,S03/- under Section 78 of the Finance Act, 1994.

Period of dispute 2007-08 to 2010-11

Ganga Ram, VPO Barmana, Distt. Bilaspur (H.P.)- 174013 (hereinafter referred to as the 'appellant') has filed the appeal against Order-in-Original No.

/!; ~' -'03/STC/AC/Mandil2019 dated 20.02.2019 (here-in-after referred to as the ~)f? 'impugned order') passed by the Assistant Commissioner, Central Goods and ~~, (S~ryices Tax Division, Mandi (hereinafter referred to as the 'adjudicating '<r(;'?'()"'~ ~uthority'). I take up the appeal for decision. * • ChJndi~al ••. //

~#

1.1 Briefly stated, that appellant having service tax registration No. ADNPR5485JSTOO 1 issued under section 69 of the Finance Act, 1994 (here-in­ after referred to as the Act) were engaged in providing taxable services falling under category of 'commercial or industrial construction service' as defined under section 6S(2Sb) of the Act.

File NO.APPL·COMMOST/623/2019·GST· APL·CHD

, •

1.2 During the course of audit of Mis Gaggal Cement Works, ACC Unit-I and Unit-II (herein after referred to as ACC) by audit party of A.G. Shimla it was observed that the appellant during the period from 2007-08, being a service provider under the category of 'commercial or industrial construction service' had raised invoices to ACe as service charges amounting to Rs. 66,17,738/- on which service tax amounting to Rs.8, 17,953/- was payable. However, the appellant had paid service tax amounting to RsA,27,292/- only. The figures for subsequent period were also called for from AeC and it was observed that during the period from 2007-08 to 2010-11 the appellant had claimed service charges amounting to Rs.2,26,76,448/- from ACe on which service tax amounting to Rs.25,96,616/- was payable but the appellant had paid service tax amounting to Rs.12,23, 113/- only resulting into short payment of Rs.13,73,503/­ inclusive of cesses.

1.3 It was alleged that the appellant had wilfully suppressed the facts and material information from the knowledge of department with intent to evade payment of service tax; that the said amount of service tax of Rs.13,73,503/­ including cesses was recoverable from them by invoking the extended period of limitation under Section 73(1) of the Act alongwith interest leviable under section 75 of the Act; and that appellant is also liable to penal action under Section 78 of the Act.

1.4 Accordingly, show cause notice dated 24.02.2012 was issued to the appellant for recovery of service tax of Rs.13,73,503/- under Section 73(1) of the Act alongwith interest under Section 75 of the Act. The said show cause notice was adjudicated by the adjudicating authority vide the impugned order wherein demand of service tax of Rs.13,73,503/- was confirmed alongwith

/~~te~est and penalty of Rs.13,73,503/- was also imposed on the appellant under i~; Section 78 of the Act.

0:2 Being aggrieved by the findings of the adjudicating authority, the (" appellant/has filed the instant appeal on the grounds as mentioned in the appeal

Cr , whic .interalia are summarized as under:­ ~

2.1 That the proceedings on the basis of audit report are liable to be set aside.

2.2 The appellant had provided the services only to ACe. Most of the services provided to ACC were with materials. Therefore, in respect of the service provided with materials, the appellant had claimed abatement @ 67% under Notification No. 1I2006-ST dated 01.03.2006. Further, where only service was provided, the appellant had paid the service tax on the entire amount charged for such service. However, where there was only supply of materials, the appellant did not pay any service tax as the same was not payable.

File No.APPL-COMMOST/623/2019-GST- APL-CHD

2.3 The demand has been calculated on the gross amount that also included reimbursable expenses of Gratuity, PF, Insurance, bonus, etc. Such reimbursable expenses were not includable in the taxable value during the period of demand. Reliance is placed on the decision of the Hon'ble High Court of Delhi in Intercontinental Consultants and Technocrats Pvt. Ltd V s Union of India another reported as 2012-TIOL-966-HC-DEL-ST.

2.4 The demand is hit by the bar of limitation. The appellant had filed ST -3 returns on time. Therefore, the extended period is not sustainable. Accordingly, penalty is also not imposable on them.

3. Personal hearing in the case was held on 06.11.2019. Shri Om Prakash, Advocate attended the hearing and reiterated the submissions made in the appeal. He also filed additional submissions during personal hearing.

4. I have carefully gone through the facts of the case, impugned order, appeal filed by the appellant as well as submissions made at the time of personal hearing. It was alleged that appellant during the period from 2007-08 to 2010-11 had claimed service charges amounting to Rs.2,26,76,448/- from ACC on which service tax amounting to Rs.2S,96,616/- was payable; that appellant during the relevant period had deposited/paid service tax of Rs.12,23, 113/- only; that appellant during the relevant period had misdeclared their taxable value in their ST-3 returns; and that appellant had short paid service tax amounting to Rs.13,73,S03/-( inclusive of cesses) during the relevant period. Accordingly, appellant was issued demand show cause notice of Rs.13,73,S03/-, which was adjudicated by the adjudicating authority vide the impugned order wherein the said demand was confirmed alongwith interest.

4.1 The appellant on the other hand contended that there was no short payment of service tax on their part; that they had provided the services only to ACC; that most of the services provided to ACC were with materials on which they had claimed abatement @ 67% under Notification No. 1I2006-ST dated 01.03.2006; and that they had not paid any service tax on the supply of

- materials as the same was not payable. I find that the above contentions were € «also raised before the adjudicating authority, who had sought documentary (f ;.'! C evidence from them in support of their claim. But inspite of being given ample O).<~ opportunity, the appellant did not produce the requisite documents as is clearly \\S~r~}'«.IJ':leviderit from para 8.3 of the impugned order, the relevant portion of which is ~~ "'. \

-q. Ch,n reproduced as under:- ~

"During personal hearing held on 14.11. 2018 the Noticee was requested to submit documents i.e. invoices, ledger, balance sheet, ITR account in respect of his claim for abatement in respect of materials supplied alongwith service which he had agreed to supply within two weeks. The Noticee vide his written reply dated 02.07.2013 had made similar submissions and had reiterated the same during

File No.APPL-COMMOST/623/2019-GST - APL-CHD

personal hearing held by Joint Commissioner, Central Excise Commissionerate, Chandigarh-I on 02.07,2013. The Noticee had also submitted details of amount charged and service tax paid during 2007-08 to 2010-11 and copies of some selected invoices. Written submission of the Noticee were forwarded to the jurisdictional Range Officer i.e. Superintendent of erstwhile Central Excise Range, Bilaspur vide letter for verification. In this regard it observed that vide letter CNo. CE- 20/SCN/verijication/BLPRJ111/2010/1036 dated 06.12.2013, CNo.202 dated 18.03.2015 and CNo.567 dated 12.02.2016 the Noticee was requested by the Range Office to submit relevant documents for confirmation of correctness of the particulars such as taxable value/abated value, service tax paid as shown in the charts submitted vis-a-vis service tax returns alongwith challans and copy of the sales tax returns. But the Noticee did not submit documents called for by the Range Officer. Again during personal hearing held on 14.11.2018 the Noticee was requested to submit documents i.e. invoices, ledger, balance sheets, ITRs in respect of his claim of materia Is supplied alongwith services to which the Noticee had agreed to submit within two weeks. However, I observe that no such documents have been submitted by the Noticee. "

In the instant appeal also, the appellant neither submitted any documentary evidence such as balance sheets, ledger, ITRs, sales taxN AT returns in rio sale/supply of materials, agreement/contract entered into with the service recipient (ACC) [of the relevant period in support of their contention that most of the services provided to ACC by them were with materials] nor admitted having paid sale tax or VAT on the sale/supply of materials to ACe. Even the sample invoices (submitted by the appellant) do not mention the payment of VAT/sales Tax on the sale/supply of the materials. As such, the benefit of abatement cannot be extended to the appellant especially in the absence any documentary evidence of material supplied/sold by them.

4.2 The appellant further contended that demand has been calculated on the gross amount which also included reimbursable expenses of Gratuity, PF Insurance, bonus, etc; and that such reimbursable expenses were not includable in the taxable value during the period of demand. I find that the appellant has not submitted any documentary evidence such as agreement/contract entered into with the service recipient (ACC), balance sheets, ledger, bills/invoices of reimbursable expenses, etc. In the absence of any documentary evidence, I find no merit in the said contention of the appellant and as such they are liable to pay the service tax on the gross amount received by them from the service recipient (ACC) in terms of Section 67 of the Act as correctly held by the adjudicating authority.

4.3 The appellant further contended that demand confirmed by the adjudicating authority is barred by limitation as extended period is not invokable in their case and that since there is no suppression on their part, therefore penalty under Section 78 of the Act is also not imposable on them. I find that the appellant has deliberately suppressed the material fact of receipt of

File NO.APPL-COMMOST/623/2019-GST- APL-CHD

gross amount received by them from the service recipient (ACC) and the fact of short-payment of service tax on the amount received by them came to the notice of the deptt., only during the course of audit of the service recipient i.e. ACe. Had the audit not been conducted and pointed out the discrepancy, it would have remained undetected and they would have continued the evasion of service tax. As such, the contraventions of provisions of law stand clearly proved against the appellant for which they are liable for penalty under Section 78 of the Act. For the aforesaid wilfull suppression with intent to evade the payment of service tax, I further hold that extended period under Section 73 of the Act, has rightly been invoked in their case.

4.4 As such, I do not find any infirmity in the impugned order and the appeals filed by the appellant are liable to be rejected.

Order

5. In view of the above, the appeal filed by the appellant is rejected and the impugned order is upheld. The appeal is disposed of, accordingly.

Digitally signed by SUMAN BALA Date:Mon Nov 25 1 :03:40 1ST 201 9

R.eason:APpro;r~ Surrrtth ii a) c:r

COMMISSIONER(APP ALS)

REGD.A.D. Ganga Ram, VPO Barmana, Distt. Bilaspur (H.P.)- 174013 Copy to :- l. The Chief Commissioner (CZ), Central Goods & Service Tax,

Chandigarh. The Commissioner, Central Goods & Service Tax Commissionerate, Shimla The Asstt. Commissioner, Central Goods & Service Tax ~Vision-Ma di'l Guard file. ~ -.--:- '1 fu' ~..y:> ,

Po :SI<'I) qi""';~ .:J:r ~ '1 '\ t~ "\' ~}~,':' SuperintendenttA eals) ~I I

2.

3. 4.