M/S. Creative Travel Pvt. Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 67/S.Tax/2012 dated 06.03.2012 passed by Commissioner (Appeals) Customs & Central Excise, Delhi II]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

Hon'ble Mr. R K Singh, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the 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?

M/s. Creative Travel Pvt. Ltd Appellants

Vs.

Commissioner of Central Excise Respondent

& ST, New Delhi

Appearance:

Shri J K Mittal with Shri Rajveer Singh, Advocates for the Appellants

Shri Amreesh Jain, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. R K Singh, Member (Technical)

Date of Hearing : 14.8.2015

Date of decision : 6.10.2015

FINAL ORDER NO. A/ 53076/2015-ST

Per Ashok Jindal :

The appellant is in appeal against the impugned order wherein the show cause notice dated 12.10.2010 was held to be maintainable.

2. The facts of the case are that the appellant is registered with sales tax department for air travel agent service, tour operators service and business auxiliary service. Initially, the show cause notice issued to the appellant for the period 2004-2005 to 2008-2009 on 8.4.2010 under the category of tour operator service and Business auxiliary service. The said show cause notice is not the subject matter in this matter. But on the basis of said show cause notice, this show cause notice is issued. Before issuance of show cause notice, the appellant was asked to provide details/ documents/ information for the period April, 2009 to March 2010 through various letters dated 3.6.2010, 4.7.2010, 28.7.2010, 3.9.2010 and lastly on 1.10.2010. But the appellant did not provide any details to the department. Therefore, it was alleged in the show cause notice that the appellant has failed to furnish the requisite information and also not furnished the returns under section 70 of the Act. Therefore, provisions of section 72 of the Act were attracted on the basis of best judgment assessment and the show cause notice was issued accordingly. The appellant challenged the issuance of show cause notice before the Honble High Court of Delhi and Honble High Court vide order dated 4.1.2011 directed the adjudicating authority to decide the matter with regard to jurisdiction tacit basis taking into consideration the stand and stances putforth by the appellant, whether the show cause notice was issued correctly or not. The adjudicating authority held that show cause notice is maintainable and the same has been confirmed by the learned Commissioner (Appeals). Aggrieved from the said order, the appellant is before us.

2. Shri J K Mittal, learned Counsel for the appellants appeared and submitted that in para 5 of the show cause notice it is alleged that the appellant failed to furnish the return under section 70 of the Act and again it is alleged in para 12 (iii) of the show cause notice that appellant failed to furnish return under section 70 of the Act and in para 9 of the show cause notice, it is further alleged that determination of assessable liability under second provision of 72(a) appeared to be justifiable. Whereas in para 13 of the show cause notice, it is alleged that the provision of section 73(1) of the Act can be invoked and in para14 of the show cause notice, it is proposed that why best judgment could not be made under section 72 of the Act and why services tax should not be recovered under section 73 of the Act, which indicates that the show cause notice was issued on the parameters that appellant has not filed service tax return, the proceedings under section 72 and 73 were simultaneously initiated. He further submits that the show cause notice itself admitted that the appellant has replied the letters issued by the department and have not supplied the information. Whereas the letters clearly states that they have not been issued section 72 of the Act but were issued under section 14 of the Central Excise Act by specifically stating that it will attract penal provisions under section 77 of the Act and nowhere it is stated in any one of said letter that the same are issued under section 72 of the Act. Moreover, it was noted that in all the letters, it was stated to furnish the following month wise details/ documents/information, but nothing was stated what are those information/ details/ documents, Whereas the adjudicating authority has admitted that appellant has requested to the department to depute audit team to prepare desire details. Whereas there is no such allegation in the show cause notice that which record is required to be maintained under Rule 5 of the Service Tax Rules, 1994 have not been prepared by the appellant. Despite the appellant request, the department did not depute any team to verify the records as required under Rule 5A of the Service Tax Rules, 1994.

3. He further submits that the show cause notice is issued on the basis that appellant has failed to furnish the return which is found to be false. As admitted by the adjudicating authority that the returns for relevant period were filed on time. However, the adjudicating authority travelled beyond the allegation made in the show cause notice by alleging that the relevant information required in ST 3 return has been left blank by the appellant referring as per annexure attached. However, there is no such allegation in the show cause notice. However, the returns filed by the appellant were in order. It is settled law that the adjudicating authority cannot travel beyond the allegation made in the show cause notice. He submits that the appellant has periodically filed the service tax returns and the department has not alleged that required information in the return has not be given. Infact, the department has accepted the return filed by the appellant in the manner in which it has been filed for such several years. The learned Commissioner (Appeals) has confirmed the finding of the adjudicating authority by observing that various column of form ST 3 return are blank by referring to annexure and thereafter given a contrary finding that appellant has failed to furnish the return under section 70 of the Act to invoke extended period of limitation.

Learned Commissioner (Appeals) further observed that ST 3 return filed by the appellant are incomplete whereas there is no such allegation in the show cause notice. The learned Commissioner (Appeals) has gone beyond the issue raised before him in the lis. Therefore, he has wrongly held that the show cause notice is maintainable. As both the authorities below have travelled beyond the scope of show cause notice which is not permissible in law as held by Honble Apex Court in the case of CC Mumbai vs. Toyo Engineering India Ltd. [2006 (201) ELT 513 (SC)]. He further submits that the provisions of Section 72 can be invoked in either of two situations (a) When the assessee fails to furnish the information under section 70 of the Act; and (b) Having made the return, fails to assess the tax in accordance with the law or Act or Rule made thereunder. In the present case, the allegation were made in the show cause notice that the appellant failed to furnish the return and also specifically stated that provision of clause (a) of section 72 of the Act is invoked. The provision of section 72(a) is applicable when return is not furnished whereas it is a clear finding of the adjudicating authority that the appellant has filed return in time.

Therefore, the show cause notice is not maintainable when the allegation of the department is failed. But, the adjudicating authority travelled beyond the allegation made in the show cause notice recording that party has failed to fulfill condition (b) inasmuch as the ST 3 were filed by them are incomplete. This was not the allegation in the show cause notice or in the letters issued by the Department. The appellant has challenged such finding before the learned Commissioner (Appeals) on the ground that adjudicating authority travelled beyond the allegation made in the show cause notice but the learned Commissioner (Appeals) wrongly stated that there is a specific reference to section 72 (a) and 72(b) in para 9 of the show cause notice, whereas para 9 of the show cause notice clearly states that provisions of section 72 (a) of the Act are invoked. In the show cause notice, there is no allegation of violation of section 72(b) of the Act. Therefore, the impugned order is to be set aside.

4. He further submits that it was held by the authorities below that the department has not received such information /figures from the appellant which resulted in invocation of provisions of section 72 of the Act, but the letters issued by the department on various dates for sending information/ details were not issued under section 72 of the Act at all but same were issued under Section 14 of the Central Excise Act for invocating of penal provisions under section 77 of the Act. And these letters does not specify any specific information to be furnished or the information furnished by the appellant in the return are incomplete in any respect. The law does not permit for invocation of section 72 of the Act for non-furnishing of information but in the show cause notice, section 72 was invoked either for non-furnishing of return or furnishing of incomplete report whereas the assessee has failed to assess tax in accordance with the law. Therefore, the adjudicating authority has drawn the wrong conclusion contrary to law and even if there would have been such allegation will not sustain in the show cause notice for invocation of section 72 of the Act for the said reason.

5. He further submits that in the show cause notice, provisions of section 72 and 73 are invoked simultaneously whereas in the show cause notice, it is alleged that provisions of section 73(1) of the Act can be invoked and in the adjudication order, it has been specifically noted that the plea taken that provision of section 72 and 73 cannot be invoked simultaneously, which make the show cause notice bad in law. Such a plea was taken in brief submission filed before the adjudicating authority, but the same has not been dealt by both the authorities below. He submits that best judgment assessment under section 72 is a independent of the order passed under section 73 of the Act, therefore, simultaneously issuing the show cause notice for initiating proceedings under section 72 and 73 are bad in law and not maintainable. He further submits that in the show cause notice, the value of taxable service as well as service tax payable thereon has already been determined by specifying and stating therein whereas as per the provision of section72 of the Act, best judgment is made to arrive at the value of taxable service and determine sum payable by the assessee/Parties on such year-wise assessment, the value of service tax payable has already been determined in the show cause notice, then the show cause notice asking the appellant why section 72 should not be invoked is not maintainable.

He further submits that this plea was taken by the appellant before the learned Commissioner (Appeals) on the ground that appellant has filed the return in time, therefore section 72(a) is not applicable and the allegation made for non-filing of return is proved false. He further submits that as there is no allegation in the show cause notice to invoke clause (b) of section 72 for failing to assess the tax in accordance with the law after filing the return therefore, the show cause notice is bad in the eyes of law and liable to be quashed. He also submits that show cause notice is apparently prepared by the AC whereas it has been signed and issued by the Joint Commissioner and the said infirmity was pointed out by them has not been dealt with by the both the authorities below. He further submits that there are difference in tax determined in figures mentioned numerically and in words which was pointed out but ignored by the adjudicating authority holding it as a typographical error without giving any reasons. In these terms, he prayed that impugned order is to be set aside.

6. On the other hand, learned AR supported the impugned order and submits that the show cause notice was issued in continuation of show cause notice dated 8.4.2010 and the charges and violations mentioned in the show cause notice dated 8.4.2010 shall apply to the impugned show cause notice. He further submits that the show cause notice dated 8.4.2010 was relied upon for issuance of the impugned show cause notice. He further submits that as the appellant has failed to specify the information under various sections of Finance Act, 1994, therefore, show cause notice is maintainable.

7. He also submits that show cause notice is clearly brings out the violation of section 66A, 67, 68, 69, 70 and 72 of Finance Act, 1994 and is in continuation of earlier show cause notice dated 8.4.2010, therefore, show cause notice is maintainable. In these terms, appeal is to be dismissed.

8. Heard the parties. Considered the submissions.

9. In this matter, the issue before us is that whether the show cause notice issued to the appellant is in accordance with the law and same is maintainable or not.

10. As the show cause notice is the issue before us, therefore, it would be in the interest of justice to incorporate the show cause notice herein as under:

11. Now on perusal of the show cause notice, we find that in para 5 of the show cause notice, the case of the Revenue proceeded on the fact that appellant has failed to furnish the return under section 70 of the Finance Act, 1994. The non-submission of information by the appellant has resulted into hampering of determination of service tax liability. Therefore, provisions of section 72 of the Act were attracted, as the appellant has failed to produce records/ information as required by the proper officer. Further, in para 9 of the show cause notice, the provision of section 72(a) of the Act were sought to be invoked for determination of the assessment of service tax liability of the appellant which was found to be justified. Thereafter, in the show cause notice, the quantification table of service tax liability has been incorporated on the basis of previous years turnover of the appellant for enhancement of 25% of turn over of the previous year was sought to be assessed. On perusal of the show cause notice, nowhere it is mentioned that whatever information, the appellant has supplied are not sufficient and what are the deficiencies in these informations.

12. To invoke provisions are of section 72 of the Act, it is proper to incorporate the provisions of section 72 of the Act.

13. For better appreciation, the same are reproduced as under :

Section 72 of the Act ibid read as Best judgment assessment means if any person, liable to pay Service Tax.

(a) fails to furnish the return under Section 70;

(b) Having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder,

The Central Excise Officer, may require the person to produce such accounts documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. 

14. As per the abovesaid provisions, the provisions are attracted in a case the assessee has failed to furnish the return under section 70 of the Act and if he has made the return fails to assess the tax in accordance with the provisions of this chapter or Rules made thereunder.

15. Therefore, section 72 ibid has two limbs:

A. Fails to furnish the return

or

B. If return has been filed in that case, he fails to assess the tax in accordance with law.

In this case, the allegation against the appellant is that they have not filed their ST 3 return under section 70 of the Act. If that is so, then the provision of section 72(a) are attracted. But it is a fact on record that the appellant has filed their return regularly under section 70 of the Act. Therefore, the foundation of the show cause notice that the appellant has not filed their return is incorrect. If the case of the Revenue is that appellant has not filed the return, the provision of section 72 are attracted. The said allegation against the appellant stand disapproved as the appellant has filed their return regularly.

16. Now, we analyse the clause (b) of section 72. If the appellant has filed the return, and fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder in the show cause notice, there is no allegation against the appellant that they have filed the return and failed to assess the tax in accordance with the provisions of law.

17. Therefore, we hold that provision of section 72(b) are not attracted in the show cause notice and the show cause notice has been issued without appreciating the facts that the appellant have been filing the return regularly. The show cause notice has travelled on the premise that appellant has not filed return under section 70 of the Act which is incorrect.

18. In the paragraph 4 of the show cause notice, it is mentioned that appellant were asked to provide details /documents/ information for issuance of the show cause notice, through various letters. We have also seen list of the letters and a copy of such letter is incorporated herein as under:

19. On examination of those letters, we find that in para 2 of the same, it is alleged that the appellant has not filed proper reply inspite of letters issued to them. Hence, he was requested to furnish following information/ details/ documents for the period April, 2009 to March, 2009. But, what as the documents /information and details as required is not been mentioned in these letters. For that, appellant has specifically asked the department to tell what information they require, but despite the appellants request, it was not informed what information /details /documents were required for by the department to issue the show cause notice. In the absence of any document, nature of details which was sought to be asked from the appellant specifically, in that case, the show cause notice is only on the basis of assumption and presumption.

20. As discussed above and on analyzing the same, we hold that the show cause notice is deficient, therefore, the same is not maintainable.

21. With these observations, we set aside the impugned order and allow the appeal with consequential relief, if any.

(Pronounced in the open court on 06.10.2015 )

( Ashok Jindal ) Member(Judicial)

( R K Singh )

Member(Technical)

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