2021-TIOL-135-CESTAT-ALL

AN Kapoor Janitors Pvt Ltd Vs CCE & ST

ST - The appellant claims that it provided 'cleaning activity' services to government hospitals, educational institutes and non-commercial organizations, though a sizable portion of revenue was generated from Sanjay Gandhi Post Graduate Medical Institute, Lucknow SGPGMI - According to appellant, it provided both taxable and non-taxable services - The non-taxable services are those services, which, according to the appellant, have been exempted from payment of service tax under various Notifications issued from time to time - The first SCN for the period November 2005 to January 2008 was issued to the appellant demanding service tax on the services which the appellant claimed had been exempted from payment of service tax - The demand was confirmed by adjudicating authority, however, Commissioner (A) dismissed the same - A second SCN was thereafter issued to the appellant for the period 2006-07 to 2009-10 - The demand made in second SCN was also confirmed, though the Commissioner (A) did reduce the demand - The extended period of limitation was sought to be invoked in the first and second SCNs - When the matter came up before Tribunal, the issue regarding invocation of limitation period was raised by appellant - The Tribunal accepted this contention and held that since the Revenue had full knowledge of activities of appellant since August 13, 2007, the extended period of limitation alleging suppression of facts could not have been invoked - The demand was, therefore, set aside for this reason alone - According to appellant, the issue raised in third SCN for the period April 01, 2014 to June 20, 2017 is the same issue which was raised in first two SCNs as all the three SCNs relate to the payment of service tax on services which were exempted from payment of service tax - When the demand made in earlier two SCNs were set aside on the ground of limitation as the revenue had knowledge of activities of appellant, the demand raised in third SCN also deserves to be set aside on the ground of limitation - In regard to the audit report, the Additional Director General has even doubted whether the relevant documents were placed before the officers conducting the audit - In case the Additional Director General had any doubts, the audit report could have been called for and examined - Even otherwise, there is a detailed procedure for conducting an audit - It specifically requires physical verification of documents and the appellant was also required to give details of exempted services - There was really no occasion for Additional Director General to doubt the correctness of audit report - The Additional Director General has also observed that the appellant had collected service tax from most of the service recipients, but had mentioned in ST-3 return that they were exempted services - This finding is also not based on the basis of records as nothing has been brought on record to indicate that the appellant had actually collected service tax for the exempted services - Merely because the appellant collected an amount inclusive of taxes does not mean that service tax was included because there are many other taxes that are required to be paid - Thus, it is not possible to sustain the demand of service tax raised against the appellant as the extended period of limitation contemplated under proviso to section 73(1) of Finance Act could not have been invoked - Penalty could also not have been imposed upon the two Directors of the appellant: CESTAT

- Appeals allowed: ALLAHABAD CESTAT

Harika Resins Pvt Ltd Vs CC, CE & ST

CX - The appellant was a manufacturer of Alkyd, Phenolic and Malleic Resins and Shri Sama Rajasekhar was their Managing Director - Two SCNs were issued to the appellant which on adjudication culminated in an O-I-O which on appeal was remanded to the original authority by Tribunal by Final Order dt.24.11.2009 - The specific direction given while remanding the matter was to provide to the appellants copies of all relied upon documents and allow cross examination of various witnesses sought by appellant and pass an order after following principles of natural justice - As per Member (T); as far as relied upon documents are concerned, it is the case of revenue that all relied upon documents were already supplied along with the original SCN - As relied upon documents were not legible, fresh copies of all relied upon documents, except five, have been supplied to the appellant - The fact that M/s Kalyan Chemicals and M/s Prasad Chemicals were dummy firms has been established by revenue and it has not been countered effectively by appellant - The evidence regarding transportation of goods alleged to be clandestinely manufactured and removed and their sale to the buyers have not been established as both the transporters and the buyers have all negated their statements during cross examination before the adjudicating authority - In terms of section 9D, the statements are only admissible if persons were examined before the adjudicating authority, thus, the evidential value of original statement is in doubt - As far as alleged flow back of money is concerned, there is some evidence regarding cash deposits and counterfoils of DDs but this is not sufficient to establish a flow back of money to the appellant - The case under Central Excise Act is civil case and preponderance of probabilities is the level of evidence required and not proof beyond reasonable doubt - In case of clandestine removals there cannot be a 100% accurate point to point correlation with mathematical precision - If such accounts are maintained then it will no longer be clandestine removal - However, in this factual matrix where the evidence is based on statements and all but two of which have, during cross examination, reneged on the original statements and thus negatived their value in terms of section 9D, the revenue could not establish the case based on preponderance of probabilities and statements which are admissible in terms of section 9D that the appellant has clandestinely removed goods without paying Central Excise duties - As per Member (J) ; the statements of various persons are supported by documentary evidence - Such documentary evidence have been admitted by concerned employees of M/s HRPL and also admitted by Shri S. Rajsekhar, the Managing Director of M/s HRPL - Both clandestine purchases of raw materials, clandestine removal of finished goods, evidence of transport, flow back of sale proceeds of the clandestinely removed goods have been established - Retraction of statements by some of the persons at later stage as well as non appearance of some of the witness in the adjudication proceedings, is of hardly any consequence in view of the overwhelming documentary evidence discussed - Revenue in this matter has established the full cycle of clandestine activity, which is normally not easy to establish - In view of the difference of opinion, the questions arise for consideration by third Member; there is lack of sufficient evidence, as evidence being the statement of some of the persons given in the course of investigation is not reliable, as such persons have not stood by their earlier statement at the time of cross examination or not appeared for crossexamination, as held by Member (T) or the statements of the persons recorded at the time of investigation is based or co-relatable with documentary evidence - Such documentary evidence having not been denied, the denial of clandestinely removed goods in cross-examination is of no avail to the appellant and such evidence is reliable for the purpose of adjudication as held by Member (J) and; The case of Revenue is not proved on the principle of preponderance of probability and accordingly the appeals are fit to be allowed as held by Member (T) or in view of documentary evidence brought on record in the course of investigation and duly supported by oral evidence of several persons and also supported by some of the key persons involved in transaction, including in the course of cross-examination, the allegation of Revenue is established and accordingly the appeals are fit to be dismissed as held by Member (J): CESTAT

- Case deferred: HYDERABAD CESTAT