1. The present is an appeal by the department against the Order-in-Original No. 19/SC/CCE/ST/2014 dated 14.07.2014 passed by the Commissioner, Central Excise, Commissionerate, Delhi-III, Gurgaon.
2. The facts in brief for the purpose are that an Anti-Evasion branch of Service Tax, Commissionerate, Delhi got an information about the noticee/respondent herein, being one of the firms of M/s. Mukher Group of Companies, to be engaged in Management Consultancy Services and Management Maintenance or Repair Services, but was not discharging their Service Tax liability. Various letters were issued to the noticee, and finally the summons to furnish data/documents were served upon him. But the noticee or the respondent failed to comply with the same except for providing some incomplete copies of balance-sheets for the years 2008-09 and 2009-10. In absence of any information/data/document to have been provided by the noticee or the respondent, the department gathered the information about their income for the year 2007-08 to 2009-10 from the Registrar of Companies, Ministry of Corporate Affairs, Government of India, which had shown the income under the head management and agency. The same being taxable, however, in the absence of any information about the precise amount to be levied with, the best judgment provision as prescribed under Section 72 of the Finance Act 1994 was invoked.
3. Accordingly, a Show Cause Notice dated 23.04.2013, was issued for the period 2007-08 to 2011-12, demanding the Service Tax to the tune of Rs. 32,62,52,414/- in view of Section 73 of the Finance Act, 1994 along with interest under Section 75 of the Act, and the proposed penalties under Section 76, 77 and 78 of the Act. Proceedings initiated vide the said Show Cause Notice were completely dropped by the Commissioner vide the order under challenge. We have heard both the parties herein, where it is submitted on behalf of the department that despite demand, the respondent has failed to provide complete and relevant information, no evidence was ever produced by the respondent about his company to have been wound up. The company was rendering a Management Consultancy Services and Management Maintenance or Repair Services, being very much taxable in view of Section 65(105)(R) and Section 65(105)(ZZG), respectively, of Finance Act, 1994. Still the noticee/respondent was not registered with the Service Tax. While impressing upon Para 5.3 and 5.4 of the impugned appeal, the appellant department has prayed for appeal to be allowed and the demand of Service Tax of Rs. 32,62,50,440/- as raised in the Show Cause Notice to be the declared as legal and justified.
4. While rebutting these arguments, it is mentioned on behalf of the noticee/respondent that the Show Cause Notice has been issued on the basis of mere presumption, conjectures and surmises as the information concerned was obtained by the department while investigating Ms. Mukhar Group of Companies. Though the company under the name of M/s. Resolution Capital and Global Pvt. Ltd. got incorporated in the year 2007, but it did not conduct any business, and finally wound up its operations. It is impressed upon that Show Cause Notice itself corroborates the same where it is recited that during investigation, when the premises of respondent were visited, a meager staff of three females with no knowledge about the conduct of business of the company was found available. The respondent has also relied upon the order of Delhi High Court dated 14.03.2014 admitting the winding up of the respondent's company. The affidavit of the respondent himself is also impressed upon where he asserted to have no bank account apart from the one with Union Bank of India, that too, for a period 01.03.2010 to 08.01.2014, showing that no income was ever incurred. As a result, there arises no question of the assessment in question as against the respondent. The proceedings of the Show Cause Notice have rightly been dropped by the Commissioner. The appeal is accordingly prayed to be rejected.
5. To a query from the Bench, the learned Chartered Accountant representing the Respondent admitted that they have not responded to the letters received from Revenue, seeking details. He also requested that the Respondent may be permitted to submit a certificate from the Chartered Accountant to the effect that during the period of demand, no service was rendered and no consideration was received, and also that the records of the Registrar of companies for the said period is reflecting incorrect picture.
6. After hearing both the sides at length and perusing the entire record of the present appeal, we are of the considered opinion as follows:
(i) The Commissioner of Central Excise has dropped the proceedings under the Show Cause Notice dated 23.04.2013 on the following grounds:
• 26AS - Generated from Income Tax web site does not indicate any revenue or tax.
• The bank statement does not show any receipt except a deposit from a group company -
• Use of term consolidated while preparing financial statements
Though exaggerated figures to show a healthy financial picture of the company
• May be case of making up of books
But there was no revenue generated by the notice as alleged in SCN
• Revenue has proceeded purely on the basis of data uploaded on site of MCA and information provided by the complainant
• Revenue was unable to procure any financial document from ROC or ITAX Department to substantiate the allegation that noticee earned revenue to the tune as alleged in SCN
• Unless revenue is able to prove that noticee generated revenues as alleged in SCN legal provisions quoted cannot be invoked by revenue which has to first establish that the noticee earned service income as alleged, which revenue failed miserably to do.
• Documents placed on record by the notice, show it did not generate any service income.
(ii) The admitted facts in the case are that respondent's company got incorporated in the year 2007 to render the Management Services and Management, Maintenance and Repair Services duly taxable under Section 65(105)(R) and 65(105)(ZZG) of the Finance Act. Subsequent admission is that the company was never got registered under Service Tax. Once the company was incorporated with the only object of rendering such services as invite the Service Tax liability, there can be no justified reason for still not applying for registration under Service Tax immediately after the incorporation.
(iii) The Commissioner has failed to appreciate the same, rather has observed that the Income Tax Returns, as generated from the Income Tax Department's site, does not indicate any revenue or tax. The Commissioner has failed to appreciate that there is document/data provided about the balance sheets of the respondent's company for continuous three years, that is, 2008-09, 2009-10 and 2010-11 as was provided by the Registrar of the Company.
(iv) Further, it is also on record that despite the summons being issued to the respondent to provide the complete details of his business for the period in question to the department, he failed to supply the complete data.
(v) Under Section 72 of the Finance Act, the Central Excise Officer may require any person to produce such accounts, documents or other evidences as he may deem necessary, and in case the person who otherwise is liable to pay Service Tax in view of Section 70 of the Act, fails to provide such an officer can apply the best judgment assessment.
(vi) The Commissioner has miserably failed to appreciate the conduct of the respondent while not obeying the Excise Officer, who was discharging his duty under the prescribed law. The mere affidavit of the respondent that he had no bank account except the one since the year 2010-14, is highly insufficient to prove that there were no transactions by the respondent's company during the period in question, i.e., with effect from 2007 till the year 2011 or till the said account was got opened. It was incumbent upon the noticee/respondent to produce the details of the bank account which his company maintained since the incorporation in the year 2007.
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/> 7. In spite of our observations in the above paragraphs, we are of the view that the Respondent should be allowed one more opportunity to prove that no service was rendered and no consideration was received during the period covered by the Show Cause Notice and that the record of ROC is not correct. The learned representative of the Respondent offered to submit a CA's certificate to this effect. To facilitate submission and consideration of such a certificate, we set aside the impugned order and remand the matter to the adjudicating authority for a de novo decision. The adjudicating authority will pass such orders after considering the CA's certificate as above, if produced before him. The Respondent is directed to produce such a certificate before the adjudicating authority within a period of three months from the date of this order, failing which the de novo decision must be completed without such a certificate.