By TIOL News Service

NEW DELHI, JULY 16, 2015: A Service tax demand of Rs.66,35,778/- was confirmed against the appellant along with penalties &interest for rendering 'Site Formation, Clearance, Excavation, earth moving and demolition service' to M/s. Sahara India Commercial Corporation Ltd. (SICCL).

During investigation, appellant did not submit details sought in spite of summons issued and the details about the work order dated 17.06.2006 were obtained from SICCL.

It appears that SICCL issued a Work Order 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 dated 17.06.2006 and cheque dated 21.06.2006 totalling to Rs.6,08,49,653/-. The appellant also issued a bill 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))".

Since the appellant had not paid any service tax on the said service and had not shown this amount in its ST-3 returns a SCN was issued and the demand was confirmed.

Before the CESTAT the appellant essentially contended that -

(i) the demand is time barred as there was no wilfulmis-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.

(v) Enquiry in this case began in the year 2008; appellant was also audited by jurisdictional Commissionerate, which made enquiries and issued summons in the year 2009 and appellant had given copies of the balance sheet for the period 2005-06 to 2009-10. As there was no wilfulmis-statement/suppression of facts on its part, SCN issued after more than one year of the commencement of the enquiry is time barred.

(vi) The demand was time barred also because there was another Show Cause Notice issued by the Commissionerate covering the same period.

(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.

The AR 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 (RUDNo.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) 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.

The CESTAT observed -

Limitation:

+ 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 wilfulmis-statement/suppression of facts on the part of the appellant with intent to evade payment of service tax.

+ 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 appellant's part.

Classification:

+ Mere perusal of the definition [of "Site Formation and clearance, Excavation and Earthmoving and Demolition"] vis-à-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 appellant's 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.

Bonafide belief:

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 Site 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.

Non-receipt of Work Order:

+ 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, RUDNo.4 which has never been denied by the appellant, shows payment of Rs.6,08,49,653/- (vide chequeNo.1956. dated 17.06.2006 and chequeNo.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.

+ 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.

+ 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.

Claim of Exemption:

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.

Same period another SCN issued:

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. It is also not a case of re-assessment as a result of mere change of opinion of assessing officer. It is case of detection of evasion involving suppression of facts and therefore case laws cited are not relevant/applicable.

The appeal is rejected.

In passing: Also see 2015-TIOL-1339-CESTAT-DEL - Shubham Electricals.

(See 2015-TIOL-1439-CESTAT-DEL)