Hon'ble Shashi Kant,J.
(Delivered by Hon'ble Rajes Kumar, J.) This is an Appeal under Section 83 of the Finance Act, 1999, read with Section 35-G of the Central Excise Act, arising from the order of the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal'), dated 25th August, 2008, raising following substantial questions of law:
(1) Whether the Principal Tour Operator having paid service tax on the gross amount received from the foreigner tourists for providing Package tour charging service tax on such service would amount to taxing the same service tax and the Tribunal was justified in not deciding the said question of law which was specifically raised by the appellant and noted in the argument by the Tribunal?
(2) Whether in view of the decision of Hon'ble Supreme Court reported in 2006 Vol (8) SCC page-33 the Tribunal was justified in not deciding the argument on merits which were specifically raised by the appellant, as mentioned in grounds no. 2 and 3 and recorded in paragraph 2 of the Tribunal order?
(3) Whether Service tax is leviable on payments received by the appellant by way of reimbursement of expenses on actual basis?
(4) Whether raising a demand of service tax on amounts received by the appellant from Principal Tour Operator (PTO) as reimbursement of actual expenses, amounts to taxing the same service twice inasmuch as PTO has already paid service tax on gross amount received by PTO on account of package tour, which includes amount of actual reimbursement?
(5) Whether with regard to non taxability of reimbursement on actual basis having been decided by co-ordinate Benches of the Tribunal, the Tribunal was justified in taking a different view inspite of the decision of Malabar Management Services (P) Limited Vs. Commissioner of Service Tax, Chennai (2008) 12 VST (CESTAT-Chennai) having been specifically mentioned therein?
(6) Whether the notice dated 19.10.2007, issued for the period 01.04.2002 to 31.3.2007 was clearly barred by limitation since extended period of limitation of five years is not applicable?
(7) Whether even assuming without admitting that the extended period of five years is applicable, show cause notice having been admittedly issue on 19.10.2007, raising demand from 01-4-2002 to 31-3-2007, the notice was clearly barred by limitation in respect of period prior to five years being computed from 19-1--2007?
(8) Whether the definition of Tour operators having been amended with effect from 10-09-2004, the same shall be applicable prospectively and no service tax shall be legally levied on the basis of amended definition for the period prior to 10-9-2004?
(9) Whether the Circular cannot create tax liability and the Tribunal was not justified in relying upon the Circular dated 23-8-2007 issued after the disputed period?
(10) Whether in view of decision in the case reported in 2007 (9) SCC 617 when there is conflicting decision of the Tribunal the extended period shall not be applicable and the Tribunal was not justified in over-looking the said decision, specifically in view of the decision of C0-ordinate Benches of the Tribunal about the tax ability of reimbursement expenses?
(11) Whether failure of the appellant to avail CENVAT Credit as per Rule 3 of CENVAT Credit Rules in respect of service tax paid by Principal Tour Operators (PTO), would justify raising demand of service tax under section 73(1) and Section-68 of Finance Act, and the Tribunal was not justified in confirming imposition of penalty under Section 78 of the Finance Act?
Briefly stated, the facts giving rise to the present appeal are as follows:
The appellant is a Tour Operator, entered into a contract with various Principal Tour Operators (hereinafter in short referred to as 'PTO'), mostly based in Delhi and Mumbai. It appears that the PTOs provide services of package tours to the foreign tourists and other tourists, who visit various cities and various tourist places in India. It is alleged that the package tour provided by the PTOs, includes transport services, alongwith supplementary services, like, Air and Railway Tickets, fooding and lodging, porterage services, monuments visit services, guide services, food services and general assistance services etc. It is the contention of the appellant that the PTOs are under the obligation to pay the service tax for rendering such services and the service tax has been paid on such services. However, no evidence has been adduced by the appellant at any stage that on which turnover and how much services tax has been paid by the PTOs.
It is the case of the appellant that it was only engaged in the business of providing Transport services to be provided by the tourist vehicle, without any supplementary services, like, Air and Railway Tickets, fooding and lodging, monuments visit services, guide services, porter's services, food services and general assistance service etc. and raised bills from the PTOs only for transport services. The claim of the appellant is that certain amount incurred on behalf of the PTOS for engaging the guides, porters or supplying the foods reimbursement is made on actual basis by the PTOs against the debit note being raised by the appellant. Copies of the contract between the appellant and PTOs have not been filed.
The contention of the appellant is that as per the contract, while providing package tour to the foreign tourists by the PTOs, apart from the transport service, various other supplementary services, namely, Air and Railway Tickets, porter, fooding and lodging, monuments visit services, guide services, porter's services, food services and general assistance services etc. were being provided for which a consolidated amount was being paid by the foreign tourists to the PTOs on which service tax is being paid by the PTOs. However, it is relevant to mention here that in support of claim, no evidence has been adduced by the appellant at any stage.
It is the contention of the appellant that there was a relationship between the PTOs and the appellant as a Principal and an agent. It appears that the appellant was registered under the Service Tax Act vide Registration No. ST/Cent/Kanpur/AGra/TOU/01/2005.
It also appears that the appellant has filed the return in ST-3 for the relevant period in dispute, disclosing the amount received for the tours and transportation services and treated such services as a taxable service and also paid tax thereon. It appears that the appellant has claimed the exemption to the extent of 60% under the Notification No. 39/97-ST, which was available to the tour operator on a package tour.
A search was conducted by the Central Excise authorities at the premises of the appellant on 6th February, 2007 wherein various documents have been seized. On the basis of various documents, seized at the time of the search, an opinion has been formed that the appellant was not paying the service tax on the gross amount charged from the customers in lieu of the services rendered by tour operator, which amounts to wilful suppression of facts by the appellant with the intent to evade service tax and, accordingly, a show cause notice dated 19th October, 2007 has been issued by the Central Excise Commissioner, Kanpur for the period 01.04.2002 to 31.3.2007. On the basis of the facts stated in the show cause notice, the appellant has been asked to show cause why:
(i) An amount (Gross) of Rs.24,85,36,696/- (Rupees Twenty Four Crores Eighty Five Lakhs Thirty Six Thousand Six Hundred Ninety Six only) charged and received from their customers during the period from 1.4.2002 to 31.3.2007 in lieu of providing the taxable service of "Tour Operator" their Agra, Gwalior, Jhansi, Khajuraho and Varanasi branches should not be treated as the differential value of taxable services provided by them and accordingly why Service Tax at appropriate rates amounting to Rs.11570655/- (Rupees One Crore Fifteen Lakhs Seventy Thousand Six Hundred Fifty Five only) [Rs.11447261/- of Service Tax + Rs.123394/- of Educational Cess] should not be demanded and recovered from them under the provisions of Section 73(1) of the Act read with Section 68 of the Act ibid and Rule 6 of the Service Tax Rules, 1994. Since the party has already deposited Rs.1500000/- against their service tax liability as discussed above, why the same should not be confirmed and appropriated against them.
(ii) Penalty should not be imposed upon them under Section 78 of the Act ibid for suppression of facts and the value of taxable service and for contravention of various provisions of the Act and the Rules made thereunder with intent to evade payment of Service Tax.
(iii) Penalty should not be imposed upon them under Section 76 of the Act ibid for failure to pay Service Tax in accordance with the provisions of Section 68 of the Act and Rule 6 of the Service Tax Rules, 1994.
(iv) Interest at the appropriate rate for the relevant period till the payment of the Service Tax should not be demanded and recovered from them under the provisions of Section 75 of the Act.
The appellant filed a detailed reply to the show cause notice, which is Annexure-4.
The Commissioner of Central Excise, vide order dated 13th February, 2008 confirmed the demand of Rs. 1,15,70,655/= (Rupees One Crore, Fourteen Lakh, Forty Seven Thousand and Two Hundred Sixty One towards service tax plus Rupees One Lakh 23 Thousand and Three Hundred Ninety four towards Education Cess), appropriated the amount already deposited by the appellant to the tune of Rs.15 Lakhs, imposed the penalty of Rs.1,15,70, 655/=, under Section 78; imposed the penalty of Rs. 100/= per day upto 17.4.2006, with effect from 1st day after the due date of payment of service tax and with effect from 18.4.2006, Rs.200/= per day or 2% of the outstanding service tax per month, whichever is higher, till the date of actual payment of outstanding service tax, under Section 76 of the Act for their failure to pay the service tax, in accordance with the provisions of Section 68 of the Act and Rule 6 of the Service Tax Rules, 1994.
Against the order of the Commissioner of Central Excise, the appellant filed the appeal before the Tribunal. The Tribunal by the impugned order allowed the appeal in part. The Tribunal has held that the appellant is liable for the service tax on the entire gross amount of Rs.24,85,36,696/=, excluding the amount of Rs.60,26,174/= received towards temporary advance to tour escorts and the amount of Rs.42,24,160/= on account of inter branch billings income. The Tribunal upheld the levy of service tax on the gross turn over of Rs.23,82,86,362/=. The Tribunal has also confirmed the levy of penalty, under Sections 76 and 78 of the Act on the ground that the appellant was liable for service tax on the supplementary service for arranging Air and Railway Tickets, fooding and lodging, porterage, monuments visit services, guide services, porter's services, food services and general assistance services etc., which falls within the purview of tour operator service and is liable to service tax during the year in dispute and the extended limitation period, under Section 73(1) of the Finance Act, 1994 has been correctly invoked as the appellants are guilty of wilful suppression of the relevant information and for this reason they are also liable for penalty under Sections 76 and 78 of the Finance Act, 1994. However, the matter has been remanded back for recalculation of the service tax and the penalty, in view of the fact that the Tribunal has held that a sum of Rs.60,26,124/= and Rs.42, 24, 160/=, aggregating to Rs.1,02,50,334/= would not be liable for service tax. The order of the Tribunal is impugned in the present petition.
It also appears that the appellant subsequently filed a recalling application on 30th October, 2008 on the ground that some of the pleas, which have been taken in the appeal and the arguments raised in respect thereof during the course of the hearing have not been adjudicated. The said application is Annexure-8 to the memorandum of appeal. It is being informed by Sri Bharat Ji Agrawal, learned Senior Counsel, appearing on behalf of the appellant, that the said recalling application has been rejected by the Tribunal. The order of the Tribunal is Annexure-
We have heard Sri Bharat Ji Agrawal, learned Senior Advocate, counsel for the appellant and Sri Ashok Singh, learned Senior Standing Counsel, Union of India, appearing on behalf of the respondents.
Learned Senior Counsel, appearing on behalf of the appellant, made following submissions:
(i) The appellant acted as an agent of the Principal Tour Operator (PTO). The PTO entered into a contract with the foreign tourist for the tour package, which included transportation services and other supplementary services, namely, Air and Railway Tickets, fooding and lodging, porterage, monuments visit services, guide services, porter's services, food services and general assistance services etc. The PTO engaged the appellant to provide transport service and paid the amount against the bill raised by the appellant. On the further instruction of the PTO, the other alleged supplementary services, namely, Air and Railway Tickets, fooding and lodging, porterage, monuments visit services, guide services, porter's services, food services and general assistance services etc. have been provided on their behalf for which against the debit note, the amount incurred has been reimbursed. The submission is that on the entire amount received from the foreign tourists for the tour package, PTO was liable for service tax and service tax has been paid. Once the service tax has been paid by the PTO on the entire amount, the appellant would not have been subjected to service tax again on the said amount. This plea has been raised in the memorandum of appeal as well as during the course of the hearing of the appeal before the Tribunal, which has been incorporated in the order also, but no finding has been recorded in this regard and, therefore, the order is vitiated and the matter requires reconsideration by the Tribunal.
(ii) The further submission of learned counsel for the appellant is that the appellant was registered under the Service Tax Act and furnished ST-3 return, disclosing the amount received towards transportation charges and treated the same as the taxable amount and paid the service tax thereon, after availing exemption, to the extent of 60%, as provided under Notification No. 39/97-ST. However, the appellant could not disclose the amount received towards the supplementary services from the PTO in the return on the ground that it was under the bonafide belief that such services have been rendered on behalf of the PTO and the PTO would be liable for the service tax. Mere non-declaration of a particular turnover does not amount to wilful suppression and mis-statement and, therefore, the provisions of Section 73(1) could not have been invoked and the extended period of limitation of five years is not applicable. At the most, the demand can be raised for the period of one year from the date of issuance of the show cause notice.
(iii) He next submitted that prior to 10th September, 2004, in the definition of 'tour operator' provided in clause (115) of Section 65, the supplementary services, namely, 'planning', 'scheduling', 'organising' or 'arranging tours', which may include the arrangement for accommodation, 'site seeing' or other similar services, 'by any mode of transport', was not included. These services have been added by the Finance (No.2) Act, 2004, vide Circular dated 10th September, 2004, therefore the amount received towards the supplementary services, prior to 10th September, 2004, cannot be included in the gross turnover and cannot be subjected to service tax.
(iv) He also submitted that the Circular dated 23rd August, 2007 is not applicable to the disputed period as it has been issued subsequent to the relevant period and is applicable prospectively. Further, the Circular cannot create the tax liability and the Commissioner, Central Excise as well as the Tribunal cannot place reliance on the Circular dated 23rd August, 2007.
(v) The further submission of the appellant is that the position of the relevant period, at least, prior to 10th September, 2004, was not clear. It is not clear that the payment received for supplementary services would be included in the gross turn over or not and, therefore, on the facts and circumstances, it leads to the inference that there was no bonafide failure on the part of the appellant in not disclosing of turnover, relating to the supplementary service in the return. Thus, the present case does not fall within the purview of wilful suppression or mis-statement and the extended period of limitation, as provided, under Section 173 does not apply. Reliance is being placed on various decisions of different Tribunals, which are as follows:
1.Sanghmitra Services Agency v.s Commissioner of C.Ex., Chennai, reported in 2007(8) STR 233 (Tri.-Chennai).
2.Malabar Management Services v. CST , reported in (2008) 12 VST 133 (CESTAT-Chennai),
3.B.S. Refrigeration Ltd. v. Commr. Of Service Tax, Banglore, reported in 2006 (4) STR 103 (Tri.-Bang),
4.Scott Wilson Kirkpatrick (I) Pvt. Ltd. v. Commr. Of S.T. Bangalore, reported in 2007 (5) STR 118 (Tri.-Bang.)
(vi) With regard to the imposition of penalty, learned counsel for the appellant submitted that since no case of wilful suppression and mis-statement is being made out, the penalty imposed under Section 78 is not leviable. On the facts and circumstances, the penalty, under Section 76 is also not leviable. He submitted that in view of Section 80, it is to be examined that whether, there was "reasonable cause". The present case is a case where there was a 'reasonable cause' and, therefore, no penalty is leviable under Sections 76 and 78. To buttress the submission, reliance is being placed on the decision of the Apex Court in the case of Uniworth Textiles Limited v. Commissioner of Central Excise, Raipur, (2013) 9 SCC 753, (Paragraph-24).
Sri Ashok Singh, learned Senior Counsel, Union of India, appearing on behalf of the respondents, submitted that so far as the question nos. 1 and 2 are concerned, in respect thereof the appellant has filed a Recalling Application before the Tribunal, which has been rejected by a reasoned order. The order of the Tribunal, rejecting the Recalling Application has not been challenged by the appellant, therefore, it is not open to the appellant to raise such dispute and these questions cannot be said to be substantial questions of law. He further submitted that the appellant failed to establish that on the entire gross turn-over of the package tour, which has been received by the PTOs from their customers, which also includes the payment made by the PTOs to the appellant, service tax has been paid by them. There is nothing on record to establish that on the amount paid by the PTOs, the service tax on the amount of transportation charges has been paid by the PTOs inasmuch as the appellant itself admitted the liability of service tax on the amount of transportation charges and paid the service tax. The submission is that the appellant failed to prove that on the amount paid by the PTOs to the appellant towards supplementary services, service tax has been paid. No evidence has been adduced in this regard.
It is the submission of learned Senior Standing Counsel that the appellant has treated the entire tour contract as a tour package and, accordingly, claimed the benefit of abatement/exemption, under the Notification No. 39/97-ST to the extent of 60% of the total receipt. This clearly shows that the appellant was fully aware that in a package tour, supplementary services are also included, but failed to disclose the receipt towards supplementary services. He submitted that in the statement of Sri Rakesh Srivastava, the Authorised Representative of the appellant, in reply to question no.3, he categorically admitted that:
mRrj&03%& tSlk ds eSus fiNys mRrj esa crk;k gSA fd gekjh QeZ }kjk iznku dh tkus okyh VªkaLiksVZs'ku dh lfoZl ij gh lfoZl VSDl pktZ fd;k tkrk gSA VªkLiksVZ lfoZl gh gekjh eq[; O;olk; ,oa lfoZl gSA vU; lIyhesUVªh lfoZlst tSls fd xkbM] iksVZst] eksuwesUV bUVsaªl] fel- bR;kfn dks gekjh QeZ FkMZ ikVhZ ls eqgS;k djkdj vius xsLV dks iznku djrh gSA rFkk bldk Hkqxrku Hkh okLrfod vk/kkj ij gh izkIr djrh gSA gekjh QeZ us vxj lsok;sa iznku djus ds ,ot esa flQZ MsfcV uksV vFkok fjEclZes.V gsM okyh bUokW;l gh tkjh dh gSA rks vo'; gh ml xsLV dks ;k rks VªkaliksVZ lfoZl iznku gh ugha dh xbZ gksxh ;k fQj vxj VªkaLiksVZ lfoZl iznku dh xbZ gS rks mldh oSY;w ij lsokdj dk Hkqxrku fizaliy Vwj vkWijsVj us igys dh dj fn;k gksxkA gekjs Vwj vkWijsVj ds VªsM esa vR;kf/kd izfrLi/kZrk ds pyrs gesa bl rjg dh lIyhesaVªh vFkok oSY;w ,sMsM lfoZl Hkh iznku djuh iM+rh gSA ftlesa fd gesa dksbZ vkfFkZd ykHk ugha gksrk gSA gekjh QeZ ls bryh xyrh vo'; gqbZ gSA fd ge lsok dj foHkkx dks ;g tkudkjh ugha ns ik;sa fd VªkaliksVZ dh VSDlcy lfoZlst ds vfrfjDr gekjh QeZ xkbM] iksVZst] eksuwesUV bUVsaªl] fel- bR;kfn oSY;w ,SMsM lfoZl dh iznku dj jgh gSA bl fo"k; esa eSa ;g Hkh crkuk pkgrk gwW fd vf/kdkfj;ksa }kjk gekjs izfr"Bkuksa esa fnukad 6-7-2007 dks dh xbZ ryk'kh dh dk;Zokgh ds mijkUr vius vf/kdkfj;ksa ds dgus ij bu oSY;w ,SMsM lfoZlst ij Hkh lsok dj pktZ dj mldk Hkqxrku djuk izkjEHk dj fn;k gSA bl rjg vc gekjh QeZ }kjk xzkWl ,ekmUV ij lsok dj pktZ dj mldk Hkqxrku fd;k tk jgk gSA gekjh QeZ dh izR;sd czkUp lsizsV izkWfQV ls.Vj ds :i esa dk;Z djrh gSA rFkk dbZ ckj ,d czkUp dks nwljh czkUp ds fy;s lsok;sa iznku dj bUokW;l tkjh djuh iM+rh gSA bl rjg tkjh dh xbZ b.Vj czkUp bUokW;lst ij ge vHkh Hkh dksbZ lsok dj ugha pktZ djrs gSA D;ksafd tks bUokW;l fizaliy Vwj vkWijsVj dks Hksth tkrh gSA mlesa lsokdj pktZ fd;k tkrk gSA^^ He submitted that Sri Rakesh Srivastava has admitted his mistake in not disclosing the receipt towards supplementary services. It is submitted that the 'taxable service' is defined by sub-section (105) of Section 65. It says that the 'taxable service' means any service provided or to be provided to any person by a tour operator in relation to a tour.' The tour has been defined under sub-section (115). He submitted that the definition of 'tour operator' is to be read alongwith clause (n) of sub-section (105). Clause (n) says a 'taxable service' means any service provided to any person by a tour operator in relation to a tour. Therefore, all the services in relation to a tour provided by the tour operator is included in the taxable service, which includes allied services. Therefore, even prior to 10th September, 2004, before the amendment, allied services amount to supplementary services provided by the tour operator and would be liable to service tax. According to him, the amendment is only clarificatory in nature. He submitted that Section 67 provides valuation of taxable service for charging the service tax, which provides that the value of any taxable service shall be gross amount charged by the service provider of such service, therefore, it is the gross amount charged by the service provider, which is taxable, which includes the amount received towards allied services, unless specifically excluded under the explanation. He referred page nos. 65, 66, 71, 72, 73, 74, 75 and 76 of the paper book, which relates to the show cause notice to substantiate his submissions. He submitted that the Circular has not been issued for the first time in the year 2007. The first Circular was issued on 22nd August, 1997, which has been widely circulated, which is at page 88 of the counter affidavit wherein it is stated that the rate of service tax is 5% and the value of taxable service in relation to the service provided by a tour operator to a client shall be gross amount charged by such tour operator from the client in relation to a tour and includes the charges for any accommodation, food or any other facilities provided in relation to such tour. Further, a Circular has been issued in 2001, which is referred in the order of the Tribunal itself, wherein same clarification has been reiterated. In pursuance of the said Circular, various trade notices have been issued by the respective Commissioners. Therefore, though the appellant was fully aware about said Circulars that he was liable for the service tax on the entire gross amount, which includes, the amount received towards rendering supplementary services, yet has wilfully failed to disclose such details in the return and has wilfully made suppression and mis-statement.
He submitted that so far as the penalty is concerned, since it is a clearcut case of suppression and mis-statement, therefore, penalty has rightly been levied, under Sections 76 and 78. Reliance is being placed on the decision of the Apex Court in the case of Tamilnadu Kalyan Mandapam Assn. v. Union of Inida, reported in 2006(3) STR 260 (SC).
We have considered rival submissions perused the material on record.
It would be appropriate to refer the relevant provisions of the Service Tax Act and Rules, 1984, which are necessary for adjudication of the present Appeal:
"Taxable Service" has been defined under sub-section (105) of Section 65 and the relevant is (n), which defines "Taxable Service", provided by a tour operator, as under:
(105) "taxable service" means any service provided [or to be provided],-
(a)...................................................
(b).................................................
(c).................................................
(d).................................................
(e)................................................
(f)................................................
(g)..............................................
(h)..............................................
(i)............................................
(j)............................................
(k).............................................
(l)...............................................
(m)...............................................
(n) to any person, by a tour operator in relation to a tour;
Sub-section (115) before 10.09.2004 (115) "tour operator" means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder:
Sub-section (115) after 10.09.2004, substituted by Finance ( No.2) Act, 2004.
(115) "tour operator" means any person engaged in the business of planning, scheduling, organising, or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made thereunder:
Section 67. Valuation of taxable services for charging service tax:
For the purposes of this Chapter, the value of any taxable service shall be the gross amount charged by the service provider for such service [provided or to be provided by him] Explanation [1].- For the removal of doubts, it is hereby declared that the value of taxable service, as the case may be, includes.-
(a).................................................
(b).................................................
(c).................................................
(d).................................................
(e)................................................
(f)................................................
(g)..............................................
[but does not include-
(i) initial deposit made by the subscriber at the time of application for telephone connection or pager or facsimile (FAX) or telegraph or telex or for leased circuit;
(ii) the cost of unexposed photography film, unrecorded magnetic tape or such other storage devices, if any, sold to the client during the course of providing the service;
(iii) the cost of parts or accessories, or consumable such as lubricants and coolants, if any, sold to the customer during the course of service or repair of motor cars, light motor vehicle or two wheeled motor vehicles;
(iv) the airfare collected by air travel agent in respect of service provided by him;
(v)the rail fare collected by the rail travel agent in respect of service provided by him;
(vi)the cost of parts or other material, if any, sold to the customer during the course of providing maintenance or repair service;
(vii)the cost of parts or other material, if any, sold to the customer during the course of providing erection, commissioning or installation service; and
(viii) interest on loans.
[Explanation 2.-Where the gross amount charged by a service provider is inclusive of service tax payable, the value of taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged.] [Explanation 3.-For the removal of doubts, it is hereby declared that the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.
73. Recovery of Service tax not levied or paid or short levied or short paid or erroneously refunded (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within ''one year' from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice :
Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of --
(a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted.
Explanation. -- Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of 'one year' or five years, as the case may be.
(2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid :
Provided that the Central Excise Officer may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "one year" referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.
Explanation. --(1) For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the Central Excise Officer, but for this sub-section.
(4) Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short- paid or erroneously refunded by reason of--
(a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax.
(5) The provisions of sub-section (3) shall not apply to any case where the service tax had become payable or ought to have been paid before the 14th day of May, 2003.
(6)For the purposes of this section, "relevant date" means, --
(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid --
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made there under;
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made there under, the date of adjustment of the service tax after the final assessment thereof;
(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.';
76. Penalty for failure to pay service tax Any person,liable to pay service tax in accordance with the provisions of section 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, an interest on that tax, in accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees [for every day during which such failure continues] but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay.
78. Penalty for suppressing value of taxable service.
Prior to 10.09.2004 (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of-
(a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall not less than, but which shall exceed twice, the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded.
If the [Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise] in the course of any proceedings under this Chapter is satisfied that any person has, with intent to evade payment of service tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay by way of penalty, in addition to service tax and interest, if any, payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of service tax sought to be evaded by reason of suppression or concealment of the value of taxable service or the furnishing of inaccurate value of such taxable service.
80.Penalty not to be imposed in certain cases Notwithstanding anything contained in the provisions of section 76 [section 77 or section 78], no penalty shall be imposable on the assess for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure.
Admittedly, show cause notice under Section 73 of the Act was issued on 19.10.2007 for the period 1.4.2002 to 31.3.2007. The period covered in the show cause notice is more than one year. Therefore, the question for consideration would be whether the proviso to Section 73 (1) of the Act is applicable extending the period of limitation from one year to five years. Further, the question for consideration is whether the submission of the appellant that since service tax has been paid by the Principal Tour Operator on the entire amount received by it from its customers, which includes the amount paid to the appellant, further tax can be levied and since this aspect has not been considered whether the matter requires consideration by the Tribunal. Further, whether the amount received towards supplementary services would be subject to service tax for the period prior to 10.9.2004. Further, whether levy of penalty under Sections 76 and 78 of the Act are justified, on the facts and circumstances, read with Section 80 of the Act.
So far as the submission of learned counsel for the appellant that since service tax has been paid by the Principal Tour Operator on the entire amount received from the customers, which includes amount paid to the appellant, therefore, there should not be a double levy of service tax on the same amount inasmuch as this aspect of the matter has not been considered by the Tribunal, though raised, is concerned, we do not find any substance and the same cannot be accepted for the reasons:
(1)that the appellant has filed a miscellaneous application on the ground that the issue has not been considered by the Tribunal, the same has been rejected by the Tribunal against which no appeal has been filed; and (2) the appellant is not able to adduce any evidence in the form of assessment order of the Principal Tour Operator or any other documents issued by the service tax authorities to substantiate the claim that service tax has been paid on the entire amount by the Principal Tour Operator, which includes the amount paid to the appellant. Merely on the basis of the certificates issued by the Principal Tour Operator enclosed with the memorandum of appeal, the claim of the appellant cannot be accepted inasmuch as it is doubtful whether these certificates have been filed before the authorities below.
Now coming to the question whether the proviso to Section 73 (1) of the Act is applicable or not. It is the case of the Department that the appellant has only disclosed the amount received towards transportation in ST-3 return and paid the service tax on the amount received. Supplementary services for arranging Air and Railway Tickets, fooding and lodging, porterage services, monuments visit services, guide services, food services and general assistance services etc., though appellant has received payment from the Principal Tour Operator, but had not shown in ST-3 return. On the basis of the documents seized at the time of search conducted at the premises of the appellant on 6.2.2007, it was revealed that the appellant had also received payment from the Principal Tour Operator towards supplementary services. Sri Rakesh Srivastava, Authorised Representative, in his statement has also admitted the mistake of not disclosing the information about the providing the supplementary services apart from the transport services. The firm also provided services for guide services, porter's services, monuments visit, etc. and has also admitted that after the search the appellant has started paying service tax on such supplementary services. This proves the wilful mis-statement and suppression of facts and thus, the proviso to Section 73 (1) of the Act is fully applicable to the extended period of limitation.
It is stated that the various decisions under Section 11-A of the Central Excise Act and Section 28 of the Customs Act are not applicable in the present case inasmuch as the language of Section 73(1)(a) is different to the language of Section 11-A of the Central Excise Act and Section 28 of the Customs Act.
The various decisions rendered by the Hon'ble Supreme Court are mainly based on the language, namely, wilful mis-statement and suppression of facts. It has been held that mere suppression of fact is not sufficient and there should be wilful suppression of fact, as the word "suppression" is qualified by the word "wilful". However, in proviso to Section 73(1) of the Act, the "suppression of fact" is not qualified by the word "wilful". Only 'mis-statement' is qualified by 'wilful', therefore, mere suppression of fact is sufficient for application of the proviso to Section 73(1)(a) of the Act and it would not necessarily to be wilful suppression of fact. In the present case, on the facts and circumstances, it has been clearly established that it is a case of suppression of fact, which too has been admitted by the authorised representative of the appellant in his statement, referred hereinabove. Thus, the decision of the Apex Court in the case of Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Raipur, reported in 2013 STPL 69 SC is not applicable. However, as referred above, in the present case, on the facts it has been established that there was a clear case of wilful mis-statement of fact.
We do not find substance in the argument of learned counsel for the appellant that prior to 10.9.2004, supplementary services were not included in the definition of Tour Operator and, thus, prior to 10.9.2004, there was no suppression of fact, in not giving the information about rendering the supplementary services and about the amount received towards such supplementary services from the Principal Tour Operator, therefore, notice as well as the demand for the prior to 10.9.2004 are liable to be set aside. This argument of learned counsel for the appellant is not acceptable. Clause (n) of Sub-section (105) of Section 65 provides that taxable service means any service provided or to be provided to any person by a tour operator in relation to a tour. Sub-section (115) defines 'tour operator' which means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act or Rules made thereunder. Both clause (n) and sub-section (115) are to be read together. Clause (n) clearly provides service to any person by a tour operator in relation to a tour. The definition is wide and include all the services rendered by the service provider to any person relating to tour. The charging section is Section 65(105) (n). Sub-section (115) only defines tour operator and can not narrow down the scope of services provided in relation to a tour.
The Apex Court in the case of Doypack Systems Pvt. Ltd., v. Union of India and others, reported in 1988(36) ELT 201 (SC), while dealing with similar situation has observed thus:
"The expressions 'pertaining to', 'in relation to' and 'arising out of used in the deeming provision, are used in the expansive sense. The expression 'arising out of has been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur Undertaking. The words 'Pertaining to' and 'in relation to' have the same wide meaning and have been used interchangeably for among other reasons which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word 'pertain' is synonymous with the word 'relate'. The term 'relate' is also defined as meaning to bring into association or connecting with. The expression 'in relation to (so also 'pertaining to), is a very broad expression which presupposes another subject matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context."
The phrase 'in relation to' the tour means "in the aid of tour also. Therefore, if any service is rendered in relation to or in the aid of tour is liable to be taxed. The taxable service is therefore not only means mere providing of car, taxies, contract carriages on a temporary basis but it would also include other facilities supplied in relation to tour as a whole.
In the case of Renusagar Power Company Ltd. v. General Electric Company & another, reported in [1985] 1 S.C.R. 432, the Apex Court observed as follows:
"Expression such as "arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the exist-ence, validity and effect (scope) of the arbitration agreement."
In the case of Mansukhlal Dhanraj Jain and others vs. Eknath Vithal Ogale Etc, reported in 1995 (2) SCC-665, the Apex Court held has follows:
"The expression "in relation to" (so also "pertaining to"), is a very board expression which presupposes another subject matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Azeez, following and approving Nitai Charan Bagchi v. Suresh Chandra Paul, Shyam Lal v. M. Shyamlal and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertaking but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the terms 'relate" is also defined as meaning to bring into association or connection with. It has been clearly mentioned that "relating to" has been held to be equivalent to or synonymous with as to "concerning with" and "pertaining to". The expression "pertaining to" is an expression of expansion and not of contraction."
To clarify the aforesaid position, a Circular No. F.B.43/10/97-TRU, dated 22-8-1997 has been issued which clarifies that the value of taxable service in relation to the service provided by a tour operator to a client, shall be the gross amount charged by such operator from the client for services in relation to a tour and includes the charges for any accommodation, food or any other facilities provided in relation to such tour. The aforesaid clarification has been reiterated by the Board in the years 2001 and 2007. Therefore, it is not, that for the first time the circular has been issued in the year 2007 clarifying the position. The position regarding the taxable services provided to any person in relation to a tour has already been explained in the year 1997 and in 2001 itself. Therefore, the appellant ought to have given the information about the supplementary services being provided in ST-3 return or otherwise. In any view of the matter, such information without any doubt ought to have been given after 10.9.2004 when the definition of Tour Operator has been amended, but the appellant wilfully failed to disclose such information.
We are further of the view that enlarging the definition of Tour Operator under Sub-section (115) of Section 65 by the Finance (No.2) Act, 2004, including other supplementary services in the business is only clarificatory. Therefore, in view of the above, it cannot be accepted that the appellant under the bonafide belief could not give the information about the supplementary services to the Department.
We further find that the appellant has availed the benefit of abatement/exemption under the Notification No. 39/97-ST to the extent of 60% of the total amount charged treating the entire services provided as a package tour, including the facilities such as Air and Railway Tickets, porterage, fooding and lodging, monuments visit services, guide services, and general assistance services etc. This clearly shows that the appellant was fully aware that it is a package tour in which supplementary services are also included, but failed to disclose the receipts towards supplementary services.
Now coming to the question whether the amounts received towards supplementary services claimed to have been received by way of reimbursement, on actual basis, are liable to service tax. Section 65 (105)(n) defines 'taxable service' means any service provided to any person by a tour operator in relation to a tour. Thus, it includes any and all services provided by the Tour Operator in relation to a tour, namely, porterage services, monuments visit services, guide services, food services and general assistance services etc. for which the amount has been paid. The words 'in relation to a tour' is a wide and includes all sort of services, which relate to tour. It may also includes supplementary services, apart from the transport services, provided by the Tour Operator. The Tour Operator is defined under Sub-section (115) of Section 65. Sub-section (115) defines 'tour operator' engaged in the business of operating tour in a tourist vehicle, read with "in relation to a tour" means carrying on the business of operating tour which includes transportation services and other allied supplementary services connecting with the tour. There is nothing in the definition which excludes supplementary services which are connected to the tours. Circular dated 22.8.1997 issued by the Board, referred hereinabove, also made the clarification in a similar manner. The amendment in the definition of the Tour Operator with effect from 10.9.2004 by the Finance (No. 2) Act, 2004 enlarging the definition is only clarificatory and does not mean that such services were not included in the business of operating tour prior to 10.9.2004. Therefore, we are of the view that supplementary services or allied services in relation to tour were included in the taxable services provided by the Tour Operator prior to 10.9.2004 and subsequent to 10.9.2004.
Section 67 provides valuation of taxable service for charging the service tax. It provides that value of any taxable service shall be gross amount charged by the service provider of such service. It includes certain value of taxable service and excludes certain amount. The amount received towards supplementary services does not fall within the purview of exclusion clauses. Therefore, being a part of the gross amount, they are to be treated as the value of taxable service.
In view of the above, we are of the view that the amount paid to the appellant towards supplementary services, apart from the payments received towards transport services are liable to be included in the gross amount and are the value of taxable service which are liable to service tax.
Various decisions, referred by the learned counsel for the appellant, referred to hereinabove, are not applicable to the present case. These are the decisions of the Tribunals, which are not related to service rendered by the Tour Operator in relation to a tour and, therefore, they are clearly distinguishable.
Now coming to the penalty under Sections 76 and 78 of the Act, we are of the view that neither the Commissioner of Central Excise nor the Tribunal has addressed the levy of penalty with reference to the provisions of Section 80 of the Act which provides that notwithstanding anything contained in the provisions of section76, section 77 or section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure. The question of penalty under Sections 76 and 78 of the Act with reference to Section 80 of the Act came up for consideration before the Division Bench of this Court in Central Excise Appeal No. 67 of 2014, M/S Daurala Organics Vs. Commissioner of Central Excise, decided on 1.4.2014. The Division Bench of this Court has held as follows:
"Section 80 of the Finance Act, 1994 contains a non-obstante provision which begins with the words 'notwithstanding anything contained in the provisions of section 76, section 77 or section 78'. Under section 80, the burden is cast upon the assessee of proving that there was reasonable cause for the failure referred to in sections 76, 77 or 78, in which event no penalty would be imposable for the failure. The important point to note is that while enacting section 80, Parliament introduced an overriding non-obstante provision which operates even in relation to the provisions of section 78. Consequently, the provision envisages that notwithstanding what is contained in section 78, it is open to an assessee to prove that there was a reasonable cause for the failure attributed in section 78.
The view which has found acceptance by the Tribunal in the present case is that once the extended period of limitation under section 73(1) has been applied, there can be no reasonable cause within the meaning of section 80. Now, the circumstances which have been set out in the proviso to section 73 (1) are indeed similar to those which are set out in section 78 for the imposition of a penalty. Notwithstanding this, the Parliament did allow to the assessee an opportunity to establish that there was a reasonable cause for the failure and this provision in section 80, as noted above, overrides section 78 as well by virtue of the non-obstante clause. The non-obstante provision of section 80 must obviously be given a meaning. If the view of the revenue, which was accepted by the Tribunal, were to be affirmed, that would render the non-obstante provision of section 80 otiose. For, it would then have to be held that once a penalty has become imposable under section 78, it would be inconsistent to allow the assessee to establish that there was a reasonable cause for the failure. The words which have been used in the Statute in the present case in section 80 cannot be regarded as being redundant or otiose.
Consequently, in our view the Tribunal was in error in coming to the conclusion that there would be no occasion to establish a reasonable cause within the meaning of section 78, once, the extended period of limitation had been validly invoked under the proviso to section 73(1). If the analogy which has been used by the Tribunal is extended, it would have to be held that section 80 would have no application whatsoever to a case which falls within the purview of section 78 since as we have noted, the language of section 78 is similar to the language which is used in the proviso to section 73(1). Accepting such an interpretation would involve re-writing the provisions of section 80 by excluding the provisions of section 78 from the non-obstante clause which is contained in section 80. This would be, in our view, impermissible. In interpreting a fiscal enactment, the duty of the Court is to adopt a plain and a literal construction of the words which have been used by by the legislature."
In view of the above, we are of the view that the issue relating to penalty requires fresh consideration by the Commissioner of Central Excise in view of the law laid down by this Court.
In the result, the appeal is allowed in part. The order of the Tribunal, so far as it relates to levy of service tax is concerned, is upheld and so far as the penalty is concerned, it is hereby set aside and the matter is relegated to the Commissioner of Central Excise to re-compute the quantum of service tax as per the direction of the Tribunal and re-adjudicate the issue with regard to penalty. The questions raised in the present appeal are answered accordingly.
Order Date :- 3rdJuly, 2014 bgs/OP