M/S. Ngk Infrastructure Ltd vs C.C.E.&S.T., Ghaziabad
- CitationAppeal No.ST/59069/2013-CU[DB]
Ratio decidendi
The rule this decision rests on
The extended period of limitation under the proviso to Section 73 of the Finance Act, 1994 is invocable upon establishing suppression, collusion, or wilful mis-statement with intent to evade service tax; the date on which the Revenue discovered or became aware of the evasion is not a relevant factor in that determination. Non-inclusion of the amount received for a taxable service in the ST-3 returns, coupled with the assessee's failure to furnish the relevant details during enquiry despite a specific request, constitutes suppression of facts; the mere non-payment of service tax, standing alone, does not amount to suppression, and the burden of establishing suppression rests on the Revenue. A service falls within the exclusion for agriculture in the definition of site formation and clearance, excavation, earthmoving and demolition services only where the service is itself rendered in relation to agriculture; the fact that the land on which work is done is agricultural land does not by itself bring the service within the exclusion where the work is undertaken for a housing project. Where the assessee's own bill describes the service and the payment is reflected in the Revenue's records against the work order, the assessee cannot disown receipt of the work order on the ground that no acknowledgment of receipt bears its signature; documentary evidence of the transaction is sufficient to establish the service and its consideration. A plea of bona fide belief in non-taxability cannot be sustained where the definition of the taxable service is clear and there is no ambiguity as to whether the service falls within it; such a belief must be one a reasonable person could hold in the circumstances. A notice that does not specify the particular clause of the statutory definition under which the service is taxed is not fatal where the definition is clear and the assessee has adequately understood and answered the case against it. Two show cause notices covering the same period are not impermissible where they relate to different transactions or services; the rule against duplicate assessment applies only where the transactions are the same.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes
ApplicationNo.ST/STAY/59746/2013-CU[DB]
ApplicationNo.ST/MISC/54719/2014-CU[DB]
Appeal No.ST/59069/2013-CU[DB]
[Arising out of Order-in-Original No.01/COMMR./ST/GZB/2013-14, dated 15.05.2013 passed by the C.C.E&S.T., Ghaziabad]
M/s. NGK Infrastructure Ltd. Appellants
Vs.
C.C.E.&S.T., Ghaziabad Respondents
Appearance
Shri J.K. Mittal, Advocate
Shri Kamal Gupta, CA - for the appellants
Shri Amresh Jain, DR - for the respondents
CORAM: Honble Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
Final Order No.52092/2015, dated 30.06.2015
Per Mr. R.K. Singh:
Appeal has been filed against Order-in-Original No.01/COMMR./ST/GZB/2013-14, dated 15.05.2013 in terms of which service tax demand of Rs.66,35,778/- was confirmed along with interest in respect of amount of Rs.6,08,49,653/- received vide cheque No.1956, dated 17.06.2006 (Rs.3,06,88,653/-) and Cheque No.1963, dated 21.06.2006 (Rs.3,01,61,000/-) for rendering Site Formation, Clearance, Excavation, earth moving and demolishing service to M/s. Sahara India Commercial Corporation Ltd. (SICCL) (established to develop residential and commercial complexes in different cities of India as stated by Shri Mudit Saxena, authorised representative of SICCL). Penalties under sections 77 and 78 of the Finance Act, 1994 were also imposed.
2. The facts of the case are that SICCL issued a Work Order No.SICCL/SCH/AMRITSAR/WO/04 dated 17.06.2006 to the appellant for levelling of soil including filling of gorges/nallah, removing of shrubs, grass and rubbish, etc. at Sahara City Homes, Amritsar. Payments for the said work order were made vide cheque No.1956, dated 17.06.2006 and cheque No.1963, dated 21.06.2006 as mentioned earlier, totalling to Rs.6,08,49,653/-. The appellant also issued a bill No. Sahara/06-07/01 dated 18.08.2006 for an amount of Rs.6,08,49,000/- and in the particulars column of the bill it is stated being charges for agriculture land levelling, soil filling thereon and of gorges/nallah, removing of shrubs, grass and rubbish, etc. at vill. Manawala, Amritsar (Area covered 24.00 Acres (approx)). It was seen that the appellant had not paid any service tax on the said service and had not shown this amount in its ST-3 returns. During investigation, it did not even submit details sought in spite of summons issued and the details about the said work order dated 17.06.2006 were obtained from SICCL. The adjudicating authority held the said service liable to service tax under Site formation service [defined under Section 65 (97a)] of the Act and imposed penalties as above clearly holding that there was suppression of facts to evade service tax and thereby the extended period was invocable.
3. The appellant essentially contended that (i) the demand is time barred as there was no wilful mis-statement or suppression of facts, (ii) the Show Cause Notice was not valid as it was not specified under which specific clause of Section 65 (97a) of the Act the impugned service was covered, (iii) the service rendered was agricultural land levelling, which is excluded from the purview of Section 65 (105) (zzza) read with Section 65 (97a) of the Act, (iv) Revenue has relied upon purported work order dated 17.06.2006, whose authenticity is disputed as there is no evidence that the said work order was received by the appellant. Reliance on the statement of Shri Mudit Saxena, authorised representative of SICCL in this regard is mis-placed. (v) Enquiry in this case began in the year 2008. The appellant was also audited by jurisdictional commissionerate, which made enquiries and issued summons in the year 2009 and it (the appellant) had given copies of the balance sheet for the period 2005-06 to 2009-10 to the jurisdictional commissionerate. Thus, there was no wilful mis-statement/suppression of facts on its part.
The Show Cause Notice was issued after more than one year of the commencement of the enquiry and on that count also demand is time barred. It cited several judgements of High Courts as well as CESTAT to contend that the demand raised in the show cause notice issued after one year of supplying information/date of visit of the officers to the premises of the assessee was time barred. (vi) The demand was time barred also because there was another Show Cause Notice issued by the commissionerate covering the same period and it cited the judgement of the Supreme Court in the case of Duncans Industries Ltd. Vs. CCE, New Delhi [2006 (201) ELT 517 (SC)] and the judgement Kolkata High Court in the case of Avery India Ltd. Vs. Union of India [2011 (268) ELT 64 (Cal)] to advance the proposition that there could not be two assessments for the same period and so two Show Cause Notices could not have been issued in relation to the same period. It also cited a catena of judgements including the judgements of the Supreme Court in the cases of Uniworth Textiles Ltd. Vs. CCE, Raipur [2013 (288) ELT 161 (SC)] and CCE, Aurangabad Vs. Bajaj Auto Ltd. [2010 (260) ELT 17 (SC)] to contend that mere non-payment is not suppression of facts and that the onus to prove that there was wilful mis-statement or suppression of facts on the part of the appellant is on Revenue which it (i.e., the Revenue) has failed to discharge.
It also referred to the judgement of the Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. [2002 ITR (256) (Delhi)] to contend that mere change of opinion of an Assessing Officer is not a ground for re-assessment. (vii)The work done by the appellant related to activities of agricultural land levelling, which was excluded from the taxable service under Section 65 (105) (zzza) read with Section 65 (97a) of the Act. (viii) It was under a bona fide belief that the service tax was not leviable. (ix) It is incorrect to say that Shri Jitender Kumar, officer of the appellant did not deny the work order dated 17.06.2006; he merely stated that he was unable to tell anything regarding the said work order.
4. Ld. Departmental Representative, on the other hand, argued that (i) it is incorrect on the part of the appellant to deny the existence of work order dated 17.06.2006 as it is in response to the said work order that the appellant issued its bill dated 18.08.2006 in which the particulars of work mentioned fully corresponded to the description of work mentioned in the work order dated 17.06.2006. Further in the table (RUD No.4), which has not been denied by the appellant, the payments by cheques dated 17.06.2006 and 21.06.2006 totalling of Rs.6,08,49,653/- are reflected against work order No.4 dated 17.06.2006. (ii) Ld. counsel for the appellant never claimed that the work was relating to agriculture; he stated that work was relating to agricultural land development; it is only subsequently that it claimed the exemption under Notification No.17/2005-ST, dated 07.05.2005. (iii) Not including the impugned amount in the ST-3 returns clearly amounts to suppression of facts. Even the details regarding the work order were not provided by the appellant (and the same were obtained from M/s. SICCL) which also shows suppression of facts.
5. We have considered the contentions of both sides. At the very outset, it needs to be stated that the payment was made by cheques dated 17.06.2006 and 21.06.2006 for the services rendered as per the work order dated 17.06.2006 and the bill in respect thereof was issued by the appellant on 18.08.2006. Thus, there is no doubt that the Show Cause Notice dated 05.05.2011 was issued within a period of five years, which is the extended period available for issuing the same in case of wilful mis-statement/suppression of facts on the part of the appellant with intent to evade payment of service tax. One of the contentions regarding time bar raised by the appellant is that the enquiry began sometime in the year 2008 and therefore the Show Cause Notice was required to be issued within a period of one year of the commencement of the enquiry and various High Court and CESTAT judgements were cited in that regard. Perusal of Section 73 ibid makes it clear that the only requirement for Revenue to be able to invoke extended period of five years is to establish suppression, collusion or wilful mis-statement with intent to evade service tax and the date on which Revenue discovered or became aware is not a variable in this equation. As regards the judgements on this issue cited by the appellant, suffice to say that each of these judgements were given in the context of the facts and circumstances of each case. The need to individually take up those cases and distinguish to show their inapplicability to the present case is however obviated by the judgement of the Supreme Court which in the case of Tejas Network India Ltd. Vs. Commissioner [2015 (316) ELT A157 (SC)], in effect, held that extended period is invokable when clandestine removal for evasion of duty is established and date on which Revenue became aware of it is not relevant.
6. As regards the contention that suppression of facts has not been clearly brought out by the adjudicating authority, we find that the impugned order clearly notes that the said amount was not reflected in the ST-3 return which itself is sufficient to establish suppression of facts on the part of the appellant to evade service tax. Further, the details about the said payment received were never submitted by the appellant during the enquiry. Indeed, the said details were, (had to be), obtained from the service recipient (SICCL). It is on record that Investigating Officer asked the appellant vide letter dated 02.02.2010 to submit the facts and figures, copies of work order, bank statement, etc., but the same were never supplied by the appellant and it was only then that the Investigating Officer called for the information/ details from the service recipient, SICCL. It further establishes suppression on the appellants part. We have taken note of catena of judgements cited by the appellant in support of the proposition that mere non-payment of service tax does not amount to wilful mis-statement/suppression of facts and that the onus that there was mis-statement or suppression on the part of the appellant is on Revenue. We entirely agree with the said proposition on that count. However, as has been brought out above, in the present case, there has been a deliberate act of suppression of facts on the part of the appellant. The definition of site formation and clearance, Excavation and Demolition service is defined in Section 65 (97a) ibid as under:-
Site Formation and clearance, Excavation and Earthmoving and Demolition includes,
(i) Drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or
(ii) Soil stabilization; or
(iii) Horizontal drilling for the passage of cables or drain pipes; or
(iv) Land reclamation work; or
(v) Contaminated top soil stripping work; or
(vi) Demolition and wrecking of building, structure or road, but does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies;
Mere perusal of the above definition vis-a-vis the description of work (service) done by the appellant does not leave any scope to even entertain a reasonable doubt, leave alone reasonable belief, that the service rendered may not be covered under the said definition. Mere non-mention of the particular clause of the definition in the Show Cause Notice when the definition is so graphically clear could in no way jeopardise the appellants ability to defend itself and the defence submitted by the appellant is ample evidence thereof and therefore the same (i.e., such non-mention) is inconsequential. The only exclusions in the said definition in Section 65 (97a) ibid are such services provided in relation to agriculture, irrigation, watershed development and drilling digging, repairing, renovating or restoring of water sources or water bodies. The appellant has tried to state that it did the work on the agricultural land as confirmed by the Patwari. In this regard it is suffice to say that even if it is presumed that the land on which work was done was agricultural land, the service rendered by the appellant was not in relation to agriculture.
The service rendered to SICCL was in relation to a housing project in Amritsar. The appellant has only tried to obfuscate the issue by saying that the work was on agricultural land. As per Oxford dictionary, word agriculture means science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool and other products. It is evident that the service rendered by the appellant was in relation to none of these activities. In other words, the service rendered was not in relation to agriculture as claimed by the appellant. Even the appellant has not contended that the service rendered was in relation to agriculture. Thus, there was no scope for any confusion even with regard to the said exclusion. It needs to be mentioned that the bona fide belief is not a hallucinatory opinion of an uninformed person. As regards the contention that the appellant had a bona fide belief regarding the non-taxability of the said amount, it has to be said that mere utterance of the words bona fide belief does not make it a belief, leave alone bona fide belief.
Bona fide belief is a belief entertained by a reasonable person in an appropriate environment. As brought out earlier, there was no ambiguity or doubt about coverage of the service rendered by the appellant under the scope of Sit Formation and Clearance, Excavation and Earthmoving and Demolition service. In these circumstances, we hold that the extended period as well as Section 78 of the Finance Act, 1994 are invokable in the present case.
7. The appellant has strenuously argued that on the work order dated 17.06.2006, there are no signatures of receipt of work order by it. We have perused the work order, which is reproduced below:-
SCHEDULE OF JOB
SAHARA CITY HOMES, AMRITSAR
Ref: SICCL/SCH/AMRITSAR/WO/04 Dated 17/06/2006
Work: Levelling of soil including filling of gorges / nallah, removing of shrubs, grass and rubbish, etc. at Sahara
Name of the party : M/s. NKG Infrastructure Ltd., New Delhi.
Sl.
No. Description Unit Qty.
Rate (Rs.) Amount (Rs.)
1.
Levelling of soil including filling of gorges / nallah, etc. by hiring tractor and trolley including driver wages, fuel, etc. Hrs.
315518 175.00 55215650.00
2. Removing shrubs, grass and rubbish from the area complete in all respects Sqm 97128.00 58.00 5633424.00
TOTAL
60849074.00
Say Rs.
6,08,49,000.00
Rupees Six Crore Eight Lak Forty Nine Thousand Only
Prepared
Sd/-xxx
(P.M. Pandey)
Dy. Manager
Sd/-xxx Sd/-xxx Sd/-xxx
(Majeed Siddiqui) (S.B. Pandey) (Sanjay Singh)
Manager ` Manager Asst. Sr. Manager
The appellant is claiming that there is no evidence that the work order was ever received by it. Even if that was the case, the fact remains that the appellant issued a Bill No. Sahara/06-07/01 dated 18.08.2006 (RUD-3) for the amount mentioned in Work Order dated 17.06.2006 and for the same work as mentioned in that work order. Also, RUD No.4 which has never been denied by the appellant, shows payment of Rs.6,08,49,653/- (vide cheque No.1956, dated 17.06.2006 and cheque No.1963, dated 21.06.2006 for Rs.3,06,88,653/- and Rs.3,01,61,000/- respectively) against work order No.4 dated 17.06.2006. The RUD-4 is reproduced below:-
(Amount in Rs.)
Annexure-II S.no.
Name of Party Address W.O.
No. W.O.
Date W.O.
Amount Ch.
No. Ch.
Date Develop
Ment amount paid Bill
Date Bill Amount
1
M/s. NKG Infrastructure Ltd.
803, Manjusha 57, Nehru Place, New Delhi
4
17.06.06
60849000.00
1956 1963
17.06.06
21.06.06
Total
30688653
30161000
60,849,653.00
18.08.06
60849000.00
60,849,000.00
2.
M/s. SMF Engineering India Ltd.
202, A-8, Priyadarshini Vihar, Delhi
3
28.04.06
122037000.00
1832
24233
24235
1929
28.04.06
09.05.06
10.05.06
03.06.06
Total
36296000
30000000
31377307
25626693
123,300,000.00
01.06.06
15.05.06
10.05.06
362296000.00
61377307.00
25626690.00
123,300,000.00 Grand Total 182,886,000.00
184,149,653.00
184,149,000.00
In these circumstances, we find it highly disingenuous on the part of the appellant to claim that it never received the work order dated 17.06.2006. In any case, the appellant issued Bill No.Sahara/06-07/01, dated 18.08.2006 (which is reproduced below) which clearly establishes that the service of agricultural land levelling soil filling thereon and of gorges / nallah, removing of shrubs, grass and rubbish, etc. at village Manawala, Amritsar (area covered 24 acres approx.) was rendered to SICCL.
Date: Aug 18, 2006 Bill No.: Sahara/06-07/01
To Sahara India Commercial Corpo. Ltd.
Sahara India Bhawan, Kapoorthala,
LUCKNOW
BILL
PARTICULARS AMOUNT (Rs.) Being charges for agriculture land levelling, soil filling thereon and of gorges/nallah, Removing of shrubs, grass and rubbish etc. at Vill. Manawala, Amritsar. (Area covered 24.00 Acres (approx) 60849000.00 (Rs. Six Crore Eight Lacs Forty Nine Thousand Only.) 60849000.00
For NKG INFRASTRUCTURE LIMITED
Sd/-xxx
(Authorised Signatory)
Thus the said bill coupled with the payment details given in RUD-4 reproduced above clearly shows that the impugned service was rendered by the appellant and the payment therefor was received.
8. The appellant had stated that it was eligible for exemption under Notification No.17/2005-ST, dated 07.06.2005 that is applicable to the site formation and clearance, excavation and earthmoving and demolishing and such other similar activities referred to in sub-clause (97a) and (zzza) of clause 105 of Section 65 of the Act, provided by any person in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports or other ports. No elaborate discussion is needed to state that the service rendered by the appellant was not in the course of construction of roads, airport, railways, transport terminal, bridges, tunnels, dams, ports or other ports and therefore, the said Notification (No.17/2005-ST) is clearly not attracted in this case.
9. As regards the contention of the appellant that for the same period another Show Cause Notice was issued by Revenue and therefore the Show Cause Notice in respect of which the impugned order was issued could not have been issued as has been held in the case of Avery India Ltd. and Duncans Industries Ltd. (supra), we find that the other Show Cause Notice related to different set of facts and did not cover the transaction covered in the present Show Cause Notice. In that Show Cause Notice, the demand was raised for rendering of service of road repair and the present transaction/service was not the subject matter of that Show Cause Notice at all. Thus, the judgments of the Supreme Court in the cases of Avery India Ltd. and Duncans Industries Ltd. (supra) do not find any applicability as those judgements would be applicable in case of unity of transactions. It is also not a case of re-assessment as a result of mere change of opinion of assessing officer. It is a case of detection of evasion involving suppression of facts and therefore Supreme Court judgement in the case of CIT Vs. Kelvinator of India (supra) is not relevant/applicable here.
10. In the light of the foregoing, we do not find any infirmity in the impugned order warranting appellate intervention. Therefore, the appeal is rejected.
(Pronounced in the Open Court on 30.06.2015)
(Justice G. Raghuram)
President
(R.K. Singh)
Member (Technical)
SSK
-2-
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free