,,
1. M/s. SOTC Travels Service Private Limited, the appellant has filed this appeal to assail the order dated 30.09.2015 passed by the Principal",,
Commissioner of Central Excise, New Delhi, the Principal Commissioner, by which the demand of service tax has been confirmed with interest and",,
penalty.,,
2. The appellant is engaged in rendering air travel agent and other tour related services. During the period of dispute from 01.10.2008 to 31.03.2013,",,
the appellant was rendering air travel agent services to the Embassy of the United States of America, US Embassy. The appellant claims that it was",,
the sole and exclusive service provider for the US Embassy and operated from a desk set up within the premises of the US Embassy. On such,,
services, the appellant was availing exemption from payment of service tax in terms of Notification dated 23.05.2007 till 30.06.2012 and, thereafter,",,
under Notification dated 20.06.2012. These Notifications exempted services rendered to diplomatic mission or consular posts in India from payment of,,
service tax.,,
3. In 2014, an investigation was initiated and audit of the records of the appellant was conducted in terms of rule 5A of the Service Tax Rules, 1994,",,
1994 Rules. During the audit, it was observed that the appellant was incorrectly availing exemption on services rendered to the US Embassy.",,
4. The audit resulted into issuance of a show cause notice dated 16.04.2014 proposing to deny the exemption as a result of which a demand of service,,
tax amounting to Rs.81,11,575 was made. The allegations in the show cause notice are as follows:",,
“12. Whereas, the party does not appear to be eligible for exemption under Notification No. 33/2007-ST dated 23.05.2007 and",,
Notification No. 27/2012- ST dated 20.06.2012 as they did not fulfill the conditions laid down in the notifications. The said Notifications,,
exempts taxable services so provided by any person for official use of a foreign diplomatic mission or consular post in India from whole of,,
the service tax leviable under section 66 or 66B of the Finance Act, 1994, subject to fulfilment of certain conditions. Whereas, from scrutiny",,
of the documents submitted by the said party, it appears that they failed to fulfil the following conditions in as much as:",,
(i) The exemption certificates issued by the Ministry of External Affairs in fovour of the American Embassy were not authenticated by the,,
embassy;,,
(ii) Undertakings issued by the Embassy for claiming exemption from service tax to the said party were not in original; and,,
(iii) The invoices issued under the provisions contained in rule 4A of the Service Tax Rules, 1994 by the party to the American Embassy",,
under exemption from service tax not contained the serial number and the date of the undertakings furnished by the said Embassy.,,
Therefore, it appears that the party has wrongly availed exemption from service tax in contravention of conditions contained in Notification",,
No. 33/2007- ST dated 23.05.2006 (upto 30.06.2012) and Notification No. 27/2012-ST dated 20.06.2012 (w.e.f. 01.07.2012).â€,,
5. The appellant filed a reply contesting the allegations leveled in the show cause notice. Further, by a letter dated 10.07.2015, the appellant furnished",,
copies of the undertakings issued by the US Embassy along with copies of tickets and invoices in support of its claim.,,
6. However, the Principal Commissioner passed the impugned order dated 30.09.2015 denying the exemption to the appellant and confirming the",,
demand of service tax with penalty.,,
7. The Principal Commissioner framed the following four issues for consideration:,,
(a) Whether the exemption contained in the Notification dated 23.05.2007 upto 30.06.2012 and Notification dated 20.06.2012 w.e.f.,,
01.07.2012 is available to the appellant for the services provided by it to the US Embassy despite the non-fulfillment of the conditions laid,,
down in the said Notifications and whether, the service tax can be recovered and demanded from the appellant in the event it is not entitled",,
to the exemption?,,
(b) Whether the appellant fulfilled its duty for amending the changed address in the Registration Certificate as per the provisions of Act and,,
if not so, whether penalty is leviable?",,
(c) Whether the extended time period can be invoked?,,
(d) If yes, whether the appellant is liable for payment of interest & penalty under the provisions of Act/Rules, as alleged in the show cause",,
notice?â€,,
8. In regard to the issue at (a), the Principal Commissioner found that the appellant had not mentioned the running serial no’s and the date of",,
undertakings on invoices issued by it. He also found that the appellant had not struck off the inapplicable portion on the face of the undertakings and,,
on the undertakings issued by the US Embassy there was no endorsement of the name of the party. Thus, some of the mandatory conditions laid down",,
in the Notification were not strictly followed by the appellant.,,
9. In regard to the issue at (b), the Principal Commissioner found that the appellant had not provided documentary proof regarding the fulfillment of the",,
Service Tax Rules 1994, 1994 Rules as the appellant had not got the addresses amended and kept on doing business from the Noida address without",,
having any valid registration certificate.,,
10. In regard to the issue at (c), the Principal Commissioner found that the appellant had violated the provisions of the Exemption Notifications",,
knowingly for the purpose of evading service tax and, therefore, the extended period of limitation contemplated under the proviso to section 73(1) of",,
the Finance Act was correctly invoked.,,
11. In regard to the issue at (d), the Principal Commissioner found that once the service tax liability was confirmed, interest and penal provisions had",,
to follow.,,
12. Shri B.L. Narasimhan learned counsel appearing for the appellant made the following submissions:,,
(i) The appellant is not liable to pay service tax on the services rendered to the US Embassy. In this connection it has been submitted that the appellant,,
has satisfied the conditions specified in the Exemption Notifications dated 23.05.2007 and 20.06.2017;,,
(ii) The impugned order has gone beyond the show cause notice as it has denied exemption for reasons not even stated in the show cause notice. In,,
this connection reliance has been placed on the following decisions:,,
a) Commissioner of Customs, Mumbai vs. Toyo Engineering India Limited, 2006 (201) E.L.T. 513 (S.C.);",,
b) Modi-Mundipharma Beauty Products Private Limited (Formerly Known as Modi Revlon Pvt. Ltd.) vs. Commissioner of Service Tax, Delhi-II,",,
2020 (6) TMI 353 â€"CESTAT, New Delhi; and",,
c) Commissioner of Service Tax, New Delhi vs. M/s. TV Today Network Private Limited (Vice-Versa), 2019 (8) TMI 1688 -CESTAT New Delhi;",,
and,,
(iii) The extended period of limitation could not have been invoked in the fact and circumstances of the case;,,
13. Shri Harsh Vardhan, learned Authorised Representative appearing for the Department however, supported the impugned order and contended that",,
the appellant did not satisfy the conditions contended in the Exemption Notifications. Learned Authorised Representative also submitted that an,,
Exemption Notification has to be strictly construed and in support of this submission he placed reliance upon the decision of the Supreme Court in,,
Uttam Industries vs. Commissioner of Central Excise, Haryana, 2011 (265) E.L.T. 14 (S.C.) and the decision of the Jharkhand High Court in",,
Manpreet Engineering & Const. Co. vs. Union of India, 2016 (44) S.T.R. 384 (Jhar.).",,
14. The submissions advanced by learned counsel for the appellant and the learned Authorised Representative appearing for the Department have,,
been considered.,,
15. The appellant has claimed exemption from payment of service tax on services rendered to diplomatic mission or consular posts in India on the,,
basis of the Exemption Notification dated 23.05.2007 for the period up to 30.06.2012 and for the subsequent period from 01.07.2012 on the basis of,,
the Exemption Notification dated 20.06.2012.,,
16. The Notification dated 23.05.2007 is reproduced below:,,
“In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it",,
is necessary in the public interest so to do, hereby exempts all taxable services specified in section 65 of the said Act provided by any",,
person, for the official use of a foreign diplomatic mission or consular post in India, from whole of the service tax leviable under section 66",,
of the said Act, namely:-",,
1. Procedure:- To claim the exemption the following procedure shall be fulfilled, namely:-",,
(i) the foreign diplomatic mission or consular post in India, is issued with a certificate by the Protocol Division of the Ministry of External",,
Affairs that it is entitled to exemption from service tax, as stipulated in the certificate, based on the principle of reciprocity;",,
(ii) the head of such foreign diplomatic mission or consular post, or any person of such mission or post authorized by him, shall furnish to",,
the provider of taxable service, a copy of such certificate duly authenticated by him or such authorized person, alongwith an undertaking in",,
original, signed by him or such authorized person, bearing running serial number commencing from a financial year and stating that the",,
services received are for official purpose of the said foreign diplomatic mission or consular post;,,
(iii) the head of such foreign diplomatic mission or consular post or such authorized person shall maintain an account of such undertakings,,
issued during a financial year and such account shall contain:-,,
(a) the serial number and date of issue of such undertakings;,,
(b) the name and the registration number of the provider of taxable service; and,,
(c) the description of taxable service and invoice number.,,
(iv) the invoice or bill or as the case may be, the challan issued under the provision contained in rule 4A of the Service Tax Rules, 1994",,
shall, in addition to the information required to be furnished under the said rule, contain the serial number and the date of the undertaking",,
furnished by the said head of foreign diplomatic mission or consular post; and,,
(v) the provider of taxable service shall retain the documents referred to in point number (i) above alongwith a duplicate copy of invoice,,
issued, for the purposes of verification.",,
2. In case the Protocol Division of the Ministry of External Affairs, after having issued a certificate to any foreign diplomatic mission or",,
consular post in India decides to withdraw it subsequently, it shall communicate the withdrawal of such certification to the foreign",,
diplomatic mission or consular post.,,
3. The exemption from the whole of the service tax granted to the foreign diplomatic mission or consular post in India for official purpose,,
shall not be available from the date of withdrawal of such certification given to them.â€,,
17. The Notification dated 20.06.2012, which came into force on 01.07.2012, is also reproduced below:",,
“Exemption to services provided for official use of a foreign diplomatic mission or consular post in India for personnel use of diplomatic,,
agents or career consular officers,,
In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is",,
necessary in the public interest so to do, hereby exempts taxable services provided by any person, for the official use of a foreign",,
diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career",,
consular officers posted therein from whole of the service tax leviable under section 66B of the said Act, subject to the following conditions,",,
namely :-,,
(i) that the foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein, are entitled",,
Condition,"Allegation in the show
cause notice",Submission by the appellant
D iplomatic mission/
consular post must
provide an authenticated
copy of the certificate to
the service provider.","US Embassy did not
provide authenticated
certificate to the appellant.","The certificates received by the
appellant from the US Embassy were
authenticated. The certificates carry
the stamp of the US Embassy. Sample
copies of the certificates have been
enclosed in the appeal memo.
Diplomatic mission /
consular post must
provide original
undertakings to the
service provider. These
undertakings must be
serially numbered and
signed.","US Embassy did not
provide original
undertakings to the
appellant.","The appellant furnished copies of
original certificates received from the
US Embassy before the Department.
Copy of letter dated 10.07.2015 is
enclosed of the appeal memo. The
show cause notice also records
submission of original undertakings in
compliance with summons dated
11.01.2014. Similar observation has
also given at paragraph 27 of the
impugned order.
assessee had not submitted certificates in Form III-A showing that the goods were sold to a dealer for resale in the same condition. While deciding,,
whether a certificate in Form IIIA would be the only proof of sale to a dealer for resale, the Allahabad High Court held that rule 12-A must be",,
construed to mean to provide merely a convenient mode of proving that the purchase of the goods was for resale in the same condition. It was,,
observed that this rule did not lay down that the only mode of proving this was by furnishing certificates in Form III-A. The certificate in Form III-A,,
was one mode by which the dealer could establish that he had not sold the goods to the consumer, but this was not the only mode.",,
30. The view of the Allahabad High Court was affirmed by the Supreme Court in Chunni Lal Parshadi Lal vs. Commissioner of Sales Tax, UP.,",,
Lucknow, 1986 (3) TMI 297- Supreme Court, wherein it was held that the furnishing of a particular certificate in a prescribed manner cannot be",,
treated as the only method for a registered dealer to prove otherwise.,,
31. In the present case, as noticed above, the appellant was able to correlate the invoices with the undertakings. It can, therefore, be concluded that",,
the appellant satisfied the substantial conditions set out in the Exemption Notifications.,,
32. It needs to be noted that even for the subsequent period, the appellant continued to provide such services to the US Embassy and the exemption",,
has been allowed.,,
33. Learned counsel for the appellant also contented that the extended period of limitation could not have been invoked in the facts and circumstances,,
of the present case as there is no mala fide on the part of the appellant. The learned counsel for the appellant submitted that the appellant was the only,,
service provider to the US Embassy for air travel services and the services rendered by it were supported by certificate and undertakings. Learned,,
counsel also submitted that details about availing the benefit under the Exemption Notification was duly declared in the ST-3 returns and this fact has,,
been admitted by the Department at paragraph 16 of the show cause notice. The submission, therefore, is that since the ST-3 returns were filed with",,
the Department, it was aware of the fact that the appellant was claiming benefit under the Exemption Notifications and so no element of suppression",,
or mala fide can be attributed to the appellant in such circumstances. In this connection reliance has been placed on the following decisions:,,
a) Delhi International Airport Limited vs. Commissioner of CGST, Delhi 2019 (24) GSTL 403 (Tri.- Del.);",,
b) Onward E-Services Ltd. vs. Commissioner Of Service Tax, Mumbai-Ii 2019 (21) G.S.T.L. 167 (Tri. - Mumbai); and",,
c) Bharat Hotels Limited vs. Commissioner, Central Excise (Adjudication) 2018 (2) TMI 123- Delhi High Court.",,
34. The period of dispute in the present appeal is from 01.10.2008 to 31.03.2013. The show cause notice was issued on 16.04.2014.,,
35. The submissions advanced by the learned counsel for the appellant deserves to be accepted. The appellant had in the ST-3 returns clearly,,
mentioned about availing the benefit of the Exemption Notifications. The Department cannot, therefore, contend that the appellant had suppressed any",,
fact, much less with an intent to evade payment of service tax.",,
36. The Supreme Court and the Delhi High Court have held that suppression of facts has to be “wilful‟ with an intent to evade payment of service,,
tax.,,
37. In Pushpam Pharmaceuticals Co. vs. Commissioner of Central Excise, Bombay, 1995 (78) E.L.T. 401 (SC), the Supreme Court examined",,
whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso,,
to section 11A of the Excise Act. The proviso to section 11A of the Act carved out an exception to the provisions that permitted the Department to,,
reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years,,
from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme",,
Court observed that since “suppression of facts‟ had been used in the company of strong words such as fraud, collusion, or wilful default,",,
suppression of facts must be deliberate and with an intent to escape payment of duty.,,
38. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I, 2007 (216) E.L.T. 177",,
(SC) held:,,
“10. The expression 'suppression"" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or",,
collusion"" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was",,
deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When,,
the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the",,
Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect,,
statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the,,
statement was not correct.â€,,
39. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication), 2018 (12) GSTL 368 (Del.) also examined at",,
length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Act and held as follows;,,
“27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word „suppression‟ in the",,
proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. “fraud, collusion, wilful",,
misstatementâ€. As explained in Uniworth (supra), “misstatement or suppression of facts†does not mean any omission. It must be",,
deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a",,
positive act of the assessee to avoid excise duty.,,
xxxxxxx,,
Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere",,
omission or mere failure to pay duty or take out a license without the presence of such intention.â€,,
xxxxxxx,,
The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is,,
clear that the Appellant did not have any such intention and was acting under a bonafide belief.â€,,
40. In Delhi International Airport, the Tribunal held as follows:",,
“Second issue on which the appellant has asserted is that extended period of limitation cannot be invoked in the present case and the,,
demand, if any, is time-barred. We find that there is nothing brought out on record that the appellant had any intent to evade payment of",,
Service Tax on the consideration paid by the developers for renting, as alleged. In fact the appellant had paid Service Tax on the",,
consideration being licence fees. There appears no suppression as everything was revealed and was available on balance sheet submitted,,
to the Department during Audit conducted from July, 2012 to 2013 and also the same were reflected in ST-3 returns. It is clear that the",,
appellant nurtured a bona fide belief and it involves interpretation. The Department was also not clear on the matter, as is clear from",,
various correspondences discussed in the preceding paras. Reliance in this regard is placed on : 2016 (42) S.T.R. 634 (Cal.): in the matter,,
of Simplex Infrastructure Ltd. v. Commissioner Service Tax, Kolkata - Extended period not applicable-when assessee is diligent in",,
responding to all notices issued by the Department explaining nature and scope of their business with supporting documents - There was,,
full and sufficient disclosure of nature of assessee’s business - There was no suppression of material facts to keep Department in dark,,
with deliberate intent to evade payment of Service tax - Section 73 of Finance Act, 1994 not invocable. It is settled law that the element of",,
‘intent to evade’ is inbuilt in the expression ‘suppression’ - Reliance in this regard is also placed on 2006 (4) S.T.R. 583 (Tri.-,,
Bang.) in the matter of Elite Detective Pvt. Ltd. v. Commissioner, and Religare Securities Ltd. v. CST, Delhi as reported in 2014 (36) S.T.R.",,
937 (Tri.-Del.): wherein it was held that the suppression of fact has to be ‘with intent to evade’.â€,,
41. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when",,
“suppression‟ or “collusion†is wilful with an intent to evade payment of duty. The invocation of the extended period of limitation, therefore,",,
cannot be sustained.,,
42. In such circumstances it would not be necessary to examine the contention advanced by learned counsel for the appellant that impugned order has,,
gone beyond the allegations made in the show cause notice.,,
43. Thus, for all the reasons stated above, the impugned order dated 30.09.2015 passed by the Principal Commissioner cannot be sustained and is set",,
aside. The appeal is, accordingly, allowed.",,
(Pronounced in open Court on 20.09.2021),,
