Ajay Marketing Co vs C.C..E., Panchkula

Arising out of the Order-in-Review No.06/Commr./Pkl/Rev./09 dated 25.2.2009 passed by the Commissioner of Central Excise, Panchkula.

For approval and signature:

Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Technical Member

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Ajay Marketing Co.  Appellant

Vs.

C.C..E., Panchkula . Respondent

Appearance:

None for the appellant

Present Shri Ranjan Khanna , A.R. for the respondent

Coram: Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Technical Member

Final Order No. 52871/2015

Per R.K. Singh:

Appeal has been filed against Order-in-Revision dated 25.2.2009 in terms of which the following order was passed:

ORDER

(i) The Order-in-Original No.04/AC/ST/YNR/2007 dated 28.2.2007 passed (dropping the proceedings of show cause notice) by the Assistant Commissioner, Central Excise Division, Yamuna Nagar is annulled under Section 84 of the Finance Act, 1994;

(ii) I invoke the extended period as envisaged under the proviso (1) to Section 73 of the Finance Act, 1994 as the fact of rendering the services under Business Auxiliary Services was deliberately suppressed from the department with intention to evade service tax;

(ii) Accordingly, I hold that unpaid service tax amount on account of service tax liability and education cess thereon on Business Auxiliary Services under Section 73 of the Finance Act, 1994 is payable along with interest thereon in terms of Section 75 of the Finance Act, 1994 vide show cause notice No.IV(16)ST/SCN/956/BAS/HQ /PKL/ 2005/2317 dated 8.6.2005;

(iv) I hold that penalty under erstwhile Section 75A, Section 76 & Section 78 of the Act ibid upon M/s Ajay Marketing Co., Yamuna Nagar for contravention of provisions of Section 70, 68, 69 of the Act ibid is imposable which in total will be equal to service tax not paid.

2. The facts of the case are as under:

The appellant was issued a show cause notice dated 8.6.2005 alleging that it was providing services on behalf of a mobile company as Direct Selling Agent/Direct marketing Agent for promoting, marketing or sale of goods but did not pay service tax on the commission received on initial activation, target achievement bonus, customer loyalty bonus, feet on street and also commission on the payment of collection etc. The show cause notice required the appellant to show cause as to why:-

i) the unpaid service tax amount on these services should not be demanded and recovered from them under the provisions contained in Section 73 of the Finance Act, 1994 (for service tax) along with interest on the delayed payment as applicable in terms of Section 75 ibid;

ii) penalty should not be imposed upon them under Section 75 A (erstwhile Rule), 76, 77 & 78 of the Finance Act, 1994 (for Service Tax).

3. The primary adjudicating authority after going through the Agreement between the appellant and the telephone company M/s Reliance Infocomm Ltd. observed as under:

I have carefully gone through the facts and records of the case and the written submissions made by the party, along with the copy of agreement and the sale purchase documents, as mentioned in their written submission dated 29.6.2006. On through the agreement between the noticee and M/s Reliance Infocomm Ltd., I observe that as per the agreement, the noticee has been appointed as distributor of M/s Reliance India Ltd. for the purpose of selling the prepaid recharge coupons. The various clauses of the agreement point out that the role of the noticee as the distributor of the M/s Reliance India Ltd. is to sell the products of the company. I have also gone through the copies of invoice/bill of sale/purchase, provided by the noticee and I observe that there in fact sale and purchase of recharge coupons is involved .There is no material/evidence for providing taxable services available on record as mentioned in the show cause notice. No amount of service charges & service tax has been quantified in the show cause notice. Hence , no service is being provided by the noticee and the allegations as made in the show cause notice are not established against the noticee. Accordingly, the proceedings initiated against the noticee vide show cause notice C.No.IV(16)/SCN/956 /BAS/HQRS/PKL/2005/2317 dt. 8.6.2005, are liable to be dropped and I pass the following order.

Order

I drop the proceedings initiated against the noticee, vide show cause notice No. IV(16)ST/SCN/956/BAS/HQ /PKL/ 2005/2317 dated 8.6.2005;

The Revisionary Authority vide the impugned order differed with the primary adjudicating authority and held that in terms of the conditions laid down between the appellant and the telecom company the

appellant was providing Business Auxiliary Service and accordingly passed the impugned order reproduced earlier.

4. When the case was taken up for hearing today, none appeared on behalf of the appellant. The intimation for hearing was sent by registered post which has been received back with the postal remark refused to take. Accordingly we proceed to decide the appeal itself on merits.

5. In its grounds of appeal the appellant has essentially stated that the primary adjudicating authority has held that there was no services rendered as it was a case of sale and purchase of goods. Therefore, the impugned order is not sustainable.

6. We have considered the facts of the case. We notice that in the show cause , neither any period has been specified nor any amount of demand quantified. The show cause notice does not refer to any agreement between the appellant and the telephone company so as to identify the exact nature of service rendered. It also does not name the taxable services allegedly rendered by the appellant. These deficiencies in a show cause notice are fatal and such a show cause notice is per se unsustainable as it disables the assessee to defend itself, thereby being violative of the principles of natural justice. Further from whatever can be made out from the show cause notice, the issue is fully covered in favour of the appellant vide CESTAT/High Court orders in the cases of R.B. Agencies vs. C.C.E., Calicut  2008 (11) STR 124 (Tri-Bang.) and Martend Foods and Dehydrates  2013 (30) STR 634 (Tri-Del.) and Commissioner vs. Daya Shankar Kailash Chand  2014 (34) STR J 99 (Allahabad).

7. In view of the foregoing we allow the appeal and set aside the impugned order.

(Justice G. Raghuram)

President

(R.K. Singh)

Technical Member

scd/

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