KHANDWALA SECURITIES LTD. Vs. COMMISSIONER OF SERVICE TAX
LAWS(CE)-2015-6-33
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on June 03,2015

Khandwala Securities Ltd. Appellant
VERSUS
COMMISSIONER OF SERVICE TAX Respondents




JUDGEMENT

ANIL CHOUDHARY, J. - (1.)BOTH the Revenue and the assessee are in the cross appeal against the impugned order dated 6.5.2011 passed by the Commissioner (Appeals), Central Excise, Mumbai -I. The Revenue is aggrieved by the deletion of penalty under Section 76 and the assessee s appeal is against the confirmation of part of penalty under Section 78 of the Finance Act, 1994.
(2.)The brief facts are that the assessee M/s. Khandwala Securities Ltd. engaged in the business of providing various services like sale and purchase of share/security on which it earned brokerage and is also engaged in other activities being Corporate Advisory services and underwriting services, etc. The assessee is registered with the department since 1986 with respect to share broking services and have been paying tax regularly along with other compliances as prescribed. A show -cause notice dated 24.7.2002 was issued on the assessee stating therein that on scrutiny of profit and loss account by Audit Officer, it was observed that the assessee has received income for providing Corporate Advisory services which is a Management Consultant s Service and have also received underwriting commission and brokerage for providing Underwriter s service for the year 1998 -99 and 1999 -2000. The show -cause notice, on perusal by this Tribunal is found to be lacking of very basic facts as to whether in what manner the assessee was made aware to discharge their obligation to pay Service Tax for underwriting commission and for the Management Constant s service. The show -cause notice is also silent as to whether the assessee admitted its liability or not and/or whether reasonable opportunities were provided to the assessee for depositing the tax, if any, admitted by the appellant. Further, from the Order -in -Original and other documents on record, it is evident that the assessees have filed amendment in registration certificate on 14.8.2002 for inclusion of service like underwriter s services and management consultant s service. The amended certificate was issued only in Dec, 2002 and thereafter the assessee have deposited admitted tax on 23.12.2002 and 13.12.2002 before passing of the Order -in -Original dated 31.7.2008. The assessee also pointed out in the reply to the show -cause notice filed on 26.8.2002 and 5.4.2003 taking the categorical stand that Service Tax is not payable on Corporate Advisory services, which are not classifiable under Management Consultancy services and these services are classifiable under Banking and Other Financial Services for which the assessee has already registered on 17.12.2002, and the assessee have discharged Service Tax liability. It is further case of the appellant that they are providing underwriter s services since 1993. They have fully discharged their Service Tax liability on the services since the introduction of the tax liability on 16.10.1998, for underwriter s services. It is further pointed out that some amount have escaped from the tax payment, resulted into short payment, but there is no contumacious conduct on the part of the assessee, as the transaction is properly recorded in the Books of Account, in the ordinary course of business. Further, the gross amount of underwriting service is also disputed, alleged to have escaped tax liability and part of it is on account of brokerage. The show -cause notice was adjudicated and the demand of Service Tax of Rs. 13,92,874/ - was confirmed under the head Management Consultant Services and an amount of Rs. 6,90,000/ - was confirmed under the Head Underwriter Services for the period 1998 -99 and 1999 -00, upholding the invocation of extended period of limitation. Further, interest was also directed to be paid under Section 75 and further penalty under Section 76 @ Rs. 100/ - per day from the due dates of payment of Service Tax till the actual dates of payment of Service Tax was imposed and further penalty for concealment of particulars from the Revenue, was imposed under Section 78 for Rs. 20,82,874/ -.
2.1 Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who vide the impugned order found that Corporate Advisory Service did not qualify as Management Consultant Service and thereby reduced the demand of Rs. 13,92,874/ - under Management Consultant Service to Rs. 8,70,961/ -. He further found that income of Rs. 1,04,38,250/ - was received for placement of equity shares and was credit to EEFC account maintained with Union Bank of India and vide Notification No. 6/99 -ST, the same was exempted from the Service Tax. He further found that part of the turnover on which tax was charged under Management Consultant s Service was actually covered under Banking and other Financial Service, which is introduced w.e.f. 16.7.2001. It was further found that the correct demand under the head Underwriter s service for the financial year 1998 -99 is Nil and for the year 1999 -00, an amount of Rs. 6 lakhs instead of Rs. 6,90,000/ - and the same has been wrongly calculated allowing the same as cum duty. It has been further held that the assessee have not charged Service Tax not collected and accordingly cum tax benefit has been allowed. It is also held that part of the service included under the Management Consultant Service is actually Portfolio Management service rendered for fulfillment of regulation of SEBI and cannot be called Management Consultant service. It was further held that there is no motive with an intent to evade tax. It was further observed that so far extended period is concerned, in respect of the other demand the services of Underwriting has been introduced w.e.f. 16.10.1998, as there was no doubt regarding the scope of the said service on part of the assessee, without reasonable cause have short deposited the Service Tax for underwriting service. Accordingly, the penalty under Section 76 was set aside as not called for, and penalty under section 78 was reduced to Rs. 6,57,143/ - being amount equivalent to Service Tax payable for underwriting service.

(3.)THE learned Counsel for the assessee states that in view of the finding on record, it is evident that all the transactions are duly recorded in the Books of Account regularly maintained. It is further admitted that the assessee is regularly paying the tax and filed the return, save and except in stray instance Service Tax has not been charged in the bill and not paid, is merely a case of oversight. Further, no case of deliberate default is made out with an intent to evade payment of Service Tax as required for imposition of penalty. The learned Counsel further placed reliance to the following rulings of this Tribunal: -
(i) Jubilant Enpro (P) Ltd. Vs. Commissioner of Central Excise, Noida : 2015 (38) STR 625 (Tri -Del)

(ii) Palm Grove Beach Hotels Pvt. Ltd. Vs. Commissioner of Central Excise, Mumbai : 2015 (38) STR 872 (Tri -Mum).

(iii) Amravati Peoples Co -op Bank Ltd. Vs. Commissioner of Central Excise, Nagpur : 2014 (36) STR 456 (Tri -Mum).

In all these rulings, the transactions had already been recorded in the Books of Account and no Service Tax has been collected, this Tribunal and Hon'ble High Court held that no case has been made out for imposition of penalty under Section 76 and 78.

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