Brief facts of the case
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42. In above context, I also find that vide instruction F.No. 275/7/2010-CX-8A, dated 30.6.2010 the Board (CBEC) had clarified that service tax on a taxable service received in India, when provided by a non-resident/person located outside India, would be applicable on reverse charge basis w.e.f 1.1.2005 and the ratio of judgment in M/s Indian National Shipowners Association case would not apply to such cases. However, it has now been clarified by the Board vide instruction F.No. 276/8/2009-CX8A dated 26.9.2011 that the appeals filed by the department before the Hon’ble Supreme Court, for defending the levy of service tax on such services w.e.f. 1.1.2005, have been dismissed recently subsequent to the issuance of above said instruction dated 30.6.2010. In view of the same the service tax liability on any taxable service provided by a non resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.4.2006, i.e. the date of enactment of section 66A of the Finance Act, 1994. The Board has accepted this position and rescinded the above referred instruction dated 30.6.2010.43. Thus I find that the applicability of service tax on the any taxable service provided by a non resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.4.2006 only, in this case the taxable services being the “Business Exhibition Services”, “Business Auxiliary Services” and “Advertising Agency Services”. In the instant case, it is clear and accepted by the said service provider that the payments made for exhibition services, sales promotion and advertisement expenses were made to the foreign parties in the years 2007-08 onwards. Further, I find that the said service provider has also failed to get themselves registered under the categories of “Business Auxiliary Services” , “Business Exhibition Services” and “Advertisement Agency Services” respectively, for the activities carried out them from the financial years 2007 onwards. Nevertheless, I find that there is no dispute that all the payments , made in foreign currency, was done after 18.04.2006, and therefore, I confirm the demand of service tax on the above services, totally amounting to Rs. 40,03,131/-. 44. Now coming to defense submissions of the assessee, I find that as regards taxability of the service , they have put forth the contention that period covered in aforesaid case law of M/s Indian National Shipowner’s Association ( supra) is prior to 2007-08 and therefore not applicable and is time barred. I do not find any merit on the above defence of the said service provider. I find that the said service provider had suppressed the facts and had not filed the ST 3 returns, and had it not been for the audit, the acts of the said service provider would have gone unnoticed. Thus stating that the case law of M/s Indian National Shipowners Association (supra) would not apply to them is absurd and not understandable. I find that the exhibitions/sales promotion/advertisements, conducted abroad, has helped in enhancing the business here in India , and is similar to the facts of the case of M/s Indian National Shipowners Association (supra) and taxability of such services, is provided in Rule 3 of the Taxation of Services (Provided from Outside India) Rules, 2006 which were made by the Central Government for carrying into effect the provisions of Section 66A of the Act. 45. Further, I find that the said service provider has also contended that Department has invoked the extended period of 5 (Five) years under the provisions of Sub Section 1 of Section 73 of the Finance Act, 1994 is not sustainable in law on the ground that they are not a Service Provider but are a Manufacturer of Excisable Goods for which under Rule 9 of the Central Excise Rules, 2002 they have obtained Central Excise Registration No. AACC B6654 JXM 001 as well as under the provisions of the Finance Act, 1944 they have obtained Service Tax Registration No. AACC B6654 JST 001 under Section 69, of the Finance Act, 1994 . I find that this is a vague submission. Being a manufacturer of excisable goods does not exempt them to pay service tax. Also they themselves have submitted that they have got themselves registered with the Service Tax Department, and the fact that the issues in the instant case was disputed from 2002 onwards, they should be well aware of the consequences. Feigning ignorance and suppressing the facts point clearly to their intention to evade payment of service tax, and therefore the invocation of extended period under Section 73(1) of the Finance Act, 1994, in this case is proper and legal. 46. Thus , I find that that the said service receiver has contravened the provision of Section 68. Of the Finance act, 1994 read with rule 6 of the Service Tax rules 1994, in as much as they have failed to make the payment of service tax amounting to Rs 40,03,130/- as explained in for going paras for the period 2007 -2011 (Upto Nov) and failed to credit the same to the Government within the stipulated time limit. Section 69 of the Finance act 1994 read with rule 4 of the Service Tax rules, 1994 in as much as they have failed to get them self-registered with service tax department within the stipulated time. Section 70.of the finance act 1994 read with rule 7 of the Service Tax rules 1994 in as much as they have failed to file prescribed quarterly /half yearly ST-3 return within the stipulated time limit and have failed to take registration within the stipulated time at the relevant time. 47. Further as the said service provider has short paid service tax he is liable for penalty under Section 76 of the Act. As regards imposition of penalty under Section 76 of the finance Act, 1994 I observe that in this case the demand of service tax is for the period from 2007 to 2008 wherein the penalty under Section 76 can be imposed upon them as the service provider has not paid service tax within the stipulated time period as prescribed under Section 68 of the Finance Act 1994 read with Rule 6 of the Service Tax Rules. 48. The assessee is also liable to pay interest on the total short paid service tax amount at the appropriate rate under Section 75 of the Finance Act 49. The assessee is also liable to penalty under Section 77 of the Finance Act as they have failed to correctly assess the tax payable by them ; not declared the value of taxable service in their ST-3 returns and failed to take registration under the categories of “Business Auxiliary Services” , “Business Exhibition Services” and “Advertisement Agency Services”. 50. The Government has from the very beginning placed full trust on the service provider so far as the payment of service tax is concerned and accordingly measures like self-assessments etc., based on mutual trust and confidence are in place. Further, a taxable service provider is not required to maintain any statutory or separate records under the provisions of Service Tax Rules as considerable amount of trust is placed on the service provider and private records maintained by him for normal business purposes are accepted, practically for all the purpose of Service tax. All these operate on the basis of honesty of the service provider; therefore, the governing statutory provisions create an absolute liability when any provision is contravened or there is a breach of trust placed on the service provider. 51. In the instant case if the audit had not pointed out the discrepancies, short payment of service tax by the assessee would have gone unnoticed. Therefore, it clearly establishes that the assessee has tried to suppress the facts from the Department and therefore the extended period has rightly been invoked. 52. I also find that the phrase suppression implies that withholding of information is suppression of facts. P. Ramanatha Aiyar’s Concise Law Dictionary [ 1997 Edition Reprint 2003- page 822] defines the phrase lucidly and accurately as- where there is an obligation to speak, a failure to speak will constitute the “ suppression of fact” but where there is no obligation to speak, silence cannot be termed “ suppression”. It is manifestly clear from this that intention to evade payment of duty is implied in the suppression of facts. Since the said service provider is liable to self assess the liability to pay service tax, they had an obligation to obtain Service Tax Registration and to furnish the correct and complete information and the value of services which they failed to do in the present case. As such there was clear suppression on their part and the extended period is correctly invoked in this case. 53. Various Courts including Apex Court have clearly laid down that tax liability is a civil obligation and therefore intent to evade payment of duty cannot be established by peering into the minds of the tax payer but has to be established through evolution of tax behavior. With introduction of self removal procedure and self assessment, a higher responsibility has been cast on the assessee to conform to the higher standard of information disclosure, which has not been complied with by the said service provider in the instant case. 54. In this regard I rely on the following judgments of the Hon’ble Supreme Court & Tribunals:
55. As the said service provider has short paid service tax by way of suppressing the facts from the Department, the assessee is liable to penalty under Section 78 of the Finance Act, 1994. 56. I also find that in addition to the contravention, omission and commissions on the part of the said service provider as stated in foregoing paras, they had willfully suppressed the facts, nature and value of service and they had also failed to include the taxable value in their relevant ST-3 returns filed with the department. Thus the contravention, omission and commissions on the part of the assessee had rendered themselves liable for penalty under Section 78 of the Finance Act, 1994. 57. In light of the facts discussed in foregoing paras, I confirm the demand of service tax amounting to Rs 40,03,130/-(as detailed in Annexure A) for the period from April 2007 to 2008 to November 2011.on the services received and order it to be recovered under the proviso to Section 73(1) of the Finance Act, 1994 by i9nvoking extended period. Further interest on delayed payment of Service Tax as per Section 75 also required to be charged and recovered from them. All these acts of contravention of provisions of Section 68, 69 and 70 of the Finance Act, 1994 as amended read with Rule 4, 6 and 7 of Service Tax rules 1994 also render them liable for penalty under the provisions of Section 76, 77 and 78 of the Finance Act, 1994, as discussed above. 58. In view of the above discussion pass the following order: ORDER
(J S Negi) Additional Commissioner Service Tax : Ahmedabad F. No. : STC/04-102/O&A/ADC/D-II/11-12 Dated : 28.10.2013 By Regd. Post A.D./ Hand Delivery To, M/s Bajaj Herbals Pvt Ltd., 450, Ashwamegh Estate, Opp M.N. Desai Petrol Pump, Changodar, Ahmedabad 382 210 Copy to:
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