Zullu Security (India) Pvt. Ltd vs C.C.C.Ex. & S.Tax, Lucknow

Arising out of the order in appeal No.56/ST/LKO/2010 dated 12.3.2010 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Lucknow.

For approval and signature:

Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, 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?

Zullu Security (India) Pvt. Ltd. . Appellants

Vs.

C.C.C.Ex. & S.Tax, Lucknow .. Respondent

Appearance:

Present Shri Ex Major Virendra Sharma, Representative for the appellants

Present Shri B.B. Sharma, A.R. for the respondent/Revenue

Coram: Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

Final Order No. 52159/2015

Per Justice G. Raghuram:

Show cause notice dated 18.1.2006 was served on the appellant alleging rendition of security service defined in Section 65(94) of the Finance Act, 1994, during 2001-02 and 2002-03 and receipt of consideration of Rs.38,47,589.60 for rendition of such service. Notice also alleged that the appellant neither obtained registration, filed returns nor remitted service tax on the consideration received for providing the taxable service.

2. By a response dated 12.3.2007, the appellant claimed not to have received the entire amount billed by it for rendition of the service; stated to have remitted the service tax of Rs.7,578/- on 20.10.2005 for the liability pertaining to the year 2001-02; and Rs.4,191/-vide TR-6 challan dated 20.10.2005 towards taxes pertaining to the year 2002-03. The appellant also claimed to have recovered service tax on phone bill amounting to Rs.1,978/- for the year 2001-02 and further that some consideration was received for certain construction work provided by it. The appellant however failed to furnish any transactional documents, such as agreements etc to support its claim of having provided construction service also nor any other evidence in support of its claim to have received only a part of the considerations during the relevant. The assessee also failed to support its claim of having received only a part of the billed amount.

3. In the circumstances, the Deputy Commissioner , Central Excise and Service Tax, Lucknow vide adjudication order dated 18.5.2009 confirmed service tax demand of Rs.1,92,373/-, apart from interest and penalties as specified therein.

4. The appellant thereupon an preferred appeal. The Ld. Commissioner (Appeals), Central Excise, Customs and Service Tax, Lucknow, vide the impugned order dated 12.3.2010 found no reason to interfere with the primary adjudication order and dismissed assessees appeal. Hence the assesee before us in this appeal.

5. The notice of hearing of this appeal scheduled today was dispatched to the appellant and is Counsel Shri G.S. Arora on 15.6.2015. Today when the matter is taken up there was however no representation on behalf of the appellants. Hence we proceeded to dispose of the on merits.

6. After a substantial portion of the order was dictated in the open Court, the Managing Director of the appellant, Retd. Major Virendra Sharma appeared and sought adjournment on the ground that appellants counsel is still on vacation and is unable to appear. This request for adjournment being unreasonable we have declined adjournment.

7. In the memorandum of appeal, the appellant urges several grounds. It is inter alia pleaded that the appellant failed to obtain registration, file returns in time and remit service tax on the consideration received for rendition of the taxable service, on account of ignorance of law and legal provisions. Therefore, there was no justification for invoking the extended period of limitation and initiating proceedings beyond the normal period of limitation , is the plea. Appellant also pleads that even assuming that it is liable to remit service tax, cum-tax benefit should be extended since the appellant did not realise service tax component from the recipient of the service. It is further pleaded that during the financial year 2001-02, appellant received Rs.3,81,691/-for carrying out construction activities which is not assessable to service tax under security service. The appellant also pleaded that this transaction (construction activity) was reflected in its financial statements and that a construction agreement in support of this fact is attached with the present appeal.

8. The appellant additinally pleads that service tax is leviable on the actual amount of consideration received, not on the consideration billed when it not received from the recipient; that since appellant was under a bona fide belief as to its immunity from the liability to tax, the benefit under Section 80 should have been extended and no penalty imposed.

9. Having carefully considered the facts and circumstances of the case, the primary and the impugned appellate order and the grounds of appeal, we find no case for interference with the classification of the service as security service. The appellant did not dispute rendition of security service before either of the lower authorities. The appellant failed to produce any material, either before the primary or the lower appellate authority in support of its plea of having received a lesser amount as consideration than what was billed. No material was also produced before the authorities below in support of its claim that Rs.3,81,691/- was for rendition of construction service and not security service. A mere plea without probative evidence in support of such plea would not suffice.

10 As regards the plea for cum-tax benefit, we are inclined to accept this plea. The appellant shall be entitled to cum-tax benefit. The authorities below have confirmed imposition of penalties under Section 76 and 78 as well. In view of several decisions it is clear that there is a discretion available, even prior to amendment of Section 78 for not imposing penalties under Sections 76 & 78 simultaneously. We therefore set aside imposition of penalty under Section 76 and confirm penalty under Section 78. Section 78 also requires that the assessee should be informed of the facility of remitting service tax and interest along with 25% of penalty within 30 days towards compliance of liability. We extend this benefit.

11. Accordingly, the matter is remanded to the primary authority for re-computation of the appellants liability to service tax after cum-tax benefit. The primary authority shall intimate the extent of liability of the appellant after granting cum-tax benefit and inform the appellant in such order that it may remit the re-determined quantum of tax, interest and penalty of 25% under Section 78, within 30 days from such communication, towards compliance with its liability.

12. The appeal is partly allowed, as indicated above. There shall however be no orders as to costs.

(Justice G. Raghuram)

President

(H.K. Thakur)

Technical Member

scd/

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