THE GAUHATI HIGH COURT v. THE UNION OF INDIA AND 2 ORS

4. Mr. Sahu, learned counsel appearing for the petitioner submits that in view of the exemption granted under the Mega exemption Notification dated 20th June, 2012, there is no question of the petitioner requiring to pay any service tax let alone any penalty. There is no reason as to how such order came to be passed on the petitioner by the respondent authority in view of the said notification dated

20.06.2012 being available before the respondent authorities. A perusal of the impugned order reveals that it also does not deal with the exemptions provided under said notification. Rather in the impugned order, it was held that the services provided by the petitioner are neither covered by the negative list nor under the mega exemption notification dated 20.06.2012. The learned counsel for the petitioner submits that since the very issue of the show cause notice and the subsequent proceedings leading to the order imposing service tax and penalty on the petitioner is without any basis and jurisdiction, he has approached this Court for appropriate relief by issuance of writ, direction or order.

5. Mr. Keyal, learned standing counsel for the department was permitted to Page No.# 4/17 obtain the required instructions in the matter. Mr. Keyal, learned standing counsel upon instructions has fairly submitted that the finding of the authority in the order impugned in the proceedings is perhaps because of non-appearance of the writ petitioner and non-furnishing of required documents in spite of notice being served on the petitioner. Consequently the department having left with no alternative had to pass the order which is impugned as the burden of tax is on the recipients of the services rendered by the petitioner and details of which were not furnished to the respondents by the petitioner.

6. The learned counsels for the parties have been heard. Pleadings on record have been duly perused.

7. It is seen that by notification No. 30/2012-S.T. dated 20th June, 2012 issued by the Finance Department, Government of India, it is categorically provided that services provided by transport agency in respect of the transportation of goods by service is exempted from service tax to the extent of 100%. The said Notification reads as under:- “Notification: 30/2012-S.T. dated 20th June, 2012 Services for which tax is payable or partially payable by persons receiving the service - Service tax payable by Reverse Charge System in relation to insurance business, GTA, sponsorship, Arbitral Tribunal, legal services by Advocates, support services provided by Govt. or local authorities (except specified services), renting of motor vehicles on abated value, renting of motor vehicles on unabated value (partially also payable by service provider), manpower supply (partially also payable by service provider), work contract (partially also payable by service provider), service provide from non-taxable territory but received in taxable territory (partially also payable by service Page No.# 5/17 provider) — Notification Nos. 15/2012-S.T. & 36/2004-S.T. superseded. In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of (i) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 15/2012-Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i),vide number G.S.R 213(E), dated the 17th March, 2012, and (ii) notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2004-Service Tax, dated the 31st December, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 849 (E), dated the 31st December, 2004, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section, namely:— I. The taxable services,— (A) (i) provided or agreed to be provided by an insurance agent to any person carrying on the insurance business; (ii) provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,— (a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948); (b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; (c) any co-operative society established by or under any law; (d) any dealer of excisable goods, who is registered under the Central Page No.# 6/17 Excise Act, 1944 (1 of 1944) or the rules made thereunder; (e) any body corporate established, by or under any law; or (f) any partnership firm whether registered or not under any law including association of persons; (iii) provided or agreed to be provided by way of sponsorship to anybody corporate or partnership firm located in the taxable territory; (iv) provided or agreed to be provided by,- (A) an arbitral tribunal, or (B) an individual advocate or a firm of advocates by way of support services, or (C) Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994, to any business entity located in the taxable territory; (v) provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers to any person who is not in the similar line of business or supply of manpower for any purpose or service portion in execution of works contract by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory; (B) provided or agreed to be provided by any person which is located in a non-taxable territory and received by any person located in the taxable territory; (II) The extent of service tax payable thereon by the person who provides the service and the person who receives the service for the taxable services specified in (I) shall be as specified in the following Table, namely:- Description of a service Sl No . Page No.# 7/17 Percentage of service tax payable by the person providing service Percentage of service tax payable person receiving the service

1. in respect of services provided or agreed to Nil 100% be provided by an insurance agent to any person carrying on insurance business

2. in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road Nil 100%

3. in respect of services provided or agreed to Nil 100% be provided by way of sponsorship

4. in respect of services provided or agreed to Nil 100% be provided by an arbitral tribunal Nil 100% Nil 100%

5. in respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services

6. in respect of services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in subclauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994

7. (a) in respect of services provided or Nil 100% agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business (b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business 60% 40%

8. in respect of services provided or agreed to be provided by way of supply of manpower for any purpose 25% 75%

9. in respect of services provided or agreed to 50% 50% Page No.# 8/17 be provided in service portion in execution of works contract 10 . in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory Nil 100% Explanation-I. - The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification. Explanation-II. - In works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service.

2. This notification shall come into force on the 1st day of July,

2012. [Notification No. 30/2012-S.T. dated 20.06.2012]” The services offered by the petitioner are seen to be exempted from the payment of service tax @ Sl. No. 2 of the chart specified in the said notification.

8. It is also seen that vide notification No. 26/2012-S.T., also dated

20.06.2012 the service tax on the activities specified therein will be collected/paid by way of Reverse Charge Mechanism from the recipient of the services offered by the petitioner. “Services of Goods Transport Agency in relation to transportation of Goods” is specified @ Sl. No. 7 in Page No.# 9/17 the list of services to which this notification is applicable. The said notification is also extracted below:- “Notification: 26/2012-S.T. dated 20th June, 2012 Exemption from Service tax in relation to transport of goods and passengers tour operators, financial leasing, hire purchase, renting of hotels, inns, guest houses, clubs campsites or other places, chit funds, renting of cabs, construction of complex/building for sale – Notification No. 13/2012-S.T. superseded In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act), and in supersession of notification number 13/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 211 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (2) of the Table below, from so much of the service tax leviable thereon under section 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said Table, of the amount charged by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the corresponding entry in column (4) of the said Table, namely;- Sl No. Description of a service Percentage Conditions (1) (2) (3) (4) Page No.# 10/17 1

3. 4 10 30 30 70 Services in relation to financial leasing including hire purchase Transport of goods by rail Transport of passengers, with or without accompanied belongings by rail Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises

5. Transport of passengers by air, with or without accompanied belongings 40 Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes.

6. Services of goods transport agency in relation to transportation of goods 25 Services provided in relation to chit Renting of any motor vehicle designed to carry passengers 10 Transport of goods in a vessel 70 40 50

9. Nil Nil Nil (i) CENVAT credit on any classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. Same as above. CENVAT credit on inputs,, capital goods an dinputs services, used for providing the taxable services, has not been taken under the provisions of the CENVAT Credit Rules, 2004. Same as above. Same as above. Same as above.

11. Services by a tour operator in relation to,- 25 (i) a package tour 10 (ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour (iii) any services other than specified at (i) and (ii) 40 Page No.# 11/17 (i)CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable services, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation. (iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation. (i) CENVAT credit on inputs, capital goods and input services, used Page No.# 12/17 for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 (ii) The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour. (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii)The value of land is included in the amount charged from the service receiver.

12. 25 Construction of a comple, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received ater issuance of completion certificate by the competent authority. Explanation. – A. For the purposes of exemption at Serial number 1 – (i) The amount charged shall be an amount, forming or representing as interest, i.e. the difference between the installments paid towards repayment of the lease amount and the principal amount contained in such installments; (ii) the exemption shall not apply to an amount, other than an amount forming or representing as interest, charged by the service provider such as lease management fee, processing fee, documentation charges and administrative fee, which shall be added to the amount calculated in terms of (i) above. Page No.# 13/17 B. For the purposes of exemption at Serial number 4 – The amount charged shall be the sum total of the gross amount charged and the fair market value of all goods and services supplied in or in relation to the supply of food or any other article of human consumption or any drink (whether or not intoxicating) and whether or not supplied under the same contract or any other contract, after deducting- (i) the amount charged for such goods or services supplied to the service provider, if any; and (ii) the value added tax or sales tax, if any, levied thereon: Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles. C. For the purposes of exemption at Serial number 12 – The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting- (i) the amount charged for such goods or services supplied to the service provider, if any; and (ii) the value added tax or sales tax, if any, levied thereon: Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles. Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

2. For the purposes of this notification, unless the context otherwise requires,- a. “chit” means a transaction whether called chit, chit fund, chitty, kuri, or by Page No.# 14/17 whatever name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to a prize amount, b. “package tour” means a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour, C. “tour operator’ means any person engaged in the business of planning, scheduling, organizing, 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.

3. This notification shall come into force on the 1st day of July, 2012. [Notification No. 26/2012-S.T., dated 20.06.2012]”

9. The learned counsel for the petitioner has submitted that there was no occasion not to appear before the authority; had notice been served upon the petitioner. Mr. Keyal, learned standing upon instructions received from the department produced a communication from the department stating that it was telephonically informed to one Sri Aman Paul who is stated to be the Accountant of the petitioner. Mr. Keyal, learned standing counsel had also produced the track consignment slips from the postal department to show that the delivery of notice issued by the department was shown to be confirmed. However, Mr. Sahu, learned counsel for the petitioner submits that there was no official receipt produced by the department to show that it was received in the office as stated to have been Page No.# 15/17 served. In the absence of such a receipt or signature produced by the department, mere track consignment details of the postal department is not a reliable evidence to come to the conclusion that notice was indeed properly served on the petitioner. Insofar as the telephonic intimation to Aman Paul stated to be the accountant of the petitioner is concerned, the learned counsel for the petitioner submits that Sri Paul is not a regular employee and also no intimation by Mr. Paul was sent to the office of the petitioner.

10. Upon hearing of the learned counsels and upon due perusal of the pleadings, it is seen that prima facie it does appear that vide notification No. 30/2012-S.T. dated 20th June, 2012 and notification No. 26/2012-S.T. dated 20.06.2012, the services offered by the petitioner are exempted from the purview of the service tax to be paid by the service provider, namely, the petitioner. The payment of service tax is recovered from the recipient of the service by virtue of Reverse Charge Mechanism.

11. Mr. Keyal, learned counsel has also not disputed the legal position projected by these two circulars. A careful perusal of the impugned order of demand reveals that there is no finding by the issuing authority as to why the Notification No. 30/2012-S.T. dated 20th June, 2012 and Notification No. 26/2012-S.T. dated

20.06.2012 shall not be applicable in the case of the petitioner. There is no finding that any particular instance(s) have been referred to by the Assessing Authority regarding service tax short paid or not levied or not paid in respect of services rendered by the petitioner under the Reserve Charge Mechanism. On the contrary, the Assessing Authority holds that the services offered by the petitioner neither fall under the negative list nor covered under the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012, without there being any reasons therefore. The only reason for issuing the demand appears to be on the ground that the petitioner did Page No.# 16/17 not appear before the assessee officer and present the necessary documents to support its case that of the petitioner concerned being eligible for the benefit under the said notification.

12. In that view of the matter, this Court is of the considered view that such a finding returned ex-parte by ignoring the notifications issued by the Ministry and not disputed by the department cannot be accepted. The non-appearance of the petitioner pursuant to any show cause notice, ipso facto, does not bar or take away the benefits accrued under any notification issued by the Ministry or by the department which has not been modified or withdrawn. Prima facie, this Court is of the view that in view of these notifications, the petitioner is exempted from the payment of service tax in respect of the services rendered by the petitioner and which is to be collected only from the recipients of such services.

13. Under the circumstances, this Court is inclined to interfere with the impugned order in Original No. 55/Addl. Commr./ST/GHY/2021-22 dated 10.02.2022 which is hereby interfered with and set aside. The matter is remanded back to the respondent authorities, namely, the Additional Commissioner of Central Goods and Service Tax, Guwahati to initiate a de novo hearing and pass appropriate orders. Since, the petitioner is represented by a counsel, no further notice is required to be issued. The petitioner will appear before the authorities concerned on 3rd March, 2023 and thereupon the authority will proceed with the hearing of the matter giving adequate opportunity to the petitioner of being heard and to furnish all relevant documents in support of his case. Upon such hearing, the respondent authority concerned will decide on the liability of the petitioner to pay service tax by passing an appropriate speaking order and a copy thereof should be served upon the petitioner. Since, this order is passed in the presence of both parties, no fresh notice for the de novo hearing need be issued to the writ petitioner.

14. The writ petition is accordingly disposed of in terms of the above. No order as to cost. Page No.# 17/17 Comparing Assistant JUDGE