1. The appellant is engaged in the business of advertisement and is registered for payment of service tax under the category of Advertising Agency Service. The appellant has several branches all over India in New Delhi, Bombay, Cochin, Madras and Bangalore. The appellant has not applied for centralised registration for payment of service tax and have taken separate registrations under the respective jurisdictional Service Tax authorities. The present dispute is in respect of Bangalore Branch. A show cause notice dated 4-7-2001 was issued by the Assistant Commissioner of Central Excise to the respondent-assessee which was adjudicated upon and an order came to be passed on 6-5-2002, by which the demand made in the show cause notice for a sum of Rs. 5,43,092/- was confirmed with regard to the service tax for the period October, 1998 to March, 2001 along with payment of interest of Rs. 2,26,689/- under Section 75 of the Finance Act (for short 'the Act') 1994 for the delayed payment of service tax. However, imposition of penalty under Sections 76-77 of the said Act was dropped. Subsequently, another show cause notice was issued on 3-4-2003 by the Assistant Commissioner of Central Excise, Bangalore, on the ground that there had been suppression of value of taxable service with an intention to escape payment of Service Tax amounting to Rs. 34,78,209/-. Proposal for payment of interest and penalty was also made for failure of payment of service tax. In response to the said show cause notice, a reply was given by the respondent-assessee and thereafter the said notice was adjudicated upon and an Order-in-Original dated 14-11-2005 (impugned order) came to be passed by the Commissioner of Central Excise, by which the demand made was confirmed under Section 73 of the Act. It was also directed that interest is to be paid under Section 75 of the Act as well as penalty under Section 76 of the Act. Being aggrieved by the said order, the respondent herein preferred an appeal before the CESTAT (for short 'the Tribunal'). The Tribunal by its order dated 26-6-2006 allowed the appeal of the respondent-assessee by placing reliance on a decision of the Apex Court in the case of Nizam Sugar Factory v. CCE reported in : 2008 (9) S.T.R. 314 (S.C.) : 2006 (197) E.L.T. 465 (S.C.). However the Revenue challenged the order of the Tribunal before Hon'ble High Court of Karnataka. The Hon'ble High Court remanded the matter to the Tribunal with the following observations:-
4. On consideration of the submission on both sides and on perusal of the material on record, we are of the view that the matter requires to be reconsidered by the Tribunal for the simple reason that the entire dispute has been adjudicated, without making any reference to the allegation of suppression regarding the value of taxable service, the nature of suppression and other details, the Tribunal, simply by placing reliance on the decision of the Apex Court has allowed the appeal.
5. In the instant case, we note that, after the adjudication of the first show cause notice, which culminated in an order passed by the Commissioner of Central Excise on 6-5-2002, a second show cause notice was issued on 3-4-2003. The said notice also in fact does not refer to the period in which the suppression is said to have been made by the respondent-assessee. However, the same is apparent from the order of the Commissioner of Service Tax (Annexure-E) wherein it is clearly mentioned that the assessee suppressed the value of taxable service pertaining to the year 1999-2000. In the absence of the details mentioned in the second show cause notice with regard to suppression, we have to rely only on the order of the Commissioner of Service Tax to ascertain what was the nature of suppression referred to issue second show cause notice. Being aggrieved by the order of the Commissioner, the assessee preferred an appeal before the Tribunal alleging that there was in fact no suppression of material before the Department and issue of second show cause notice was not valid in the eye of law. However, the Tribunal has not considered these facts nor given any finding as to whether the second show cause notice is valid in the eye of law, but merely referring to the case of Nizam Sugar Factory and has granted relief to the respondent. We find that the approach of the Tribunal in this particular case has been very cursory. In fact, in a matter like this, if the facts are involved pertaining to suppression of material and second show cause notice has been issued, the entire factual matrix had to be considered in order to give a finding with regard to validity of the second show cause notice issued by the Assistant Commissioner. In the absence of there being any application of mind on this issue, the Tribunal could not have allowed the appeal of the assessee by merely relying on the Apex Court's decision. The Tribunal could not have passed such an order by merely referring to a precedent and dispose of the matter without laying any foundation for the same in the form of narrating the facts and giving reasons and only by relying on the basis of the facts narrated and the contentions urged by the counsel.
With the above background, we heard Shri N. Anand, learned advocate appearing for the appellant as well as Shri Parashiva Murthy, learned AR appearing for the Revenue.
2. The learned advocate for the appellant explained the grounds of appeal and emphasized the following points:-
i. The appellant has separate registrations for payment of service tax in New Delhi, Bombay, Cochin, Madras and Bangalore and are paying service tax separately in the various jurisdictions and filing periodical returns. The show cause notice dated 3-4-2003 has been issued demanding payment of service tax in respect of services rendered by the appellant in respect of all the five jurisdictions. The Income Tax return of the appellant is a single consolidated one covering the business carried out in all the above locations. The Department culled out the amount received for taxable service in respect of all the jurisdictions and served a consolidated show cause notice.
ii. The learned counsel argued that in respect of services rendered in jurisdictions outside Bangalore, the Commissioner of Service Tax, Bangalore has no jurisdiction to issue show cause notice demanding payment of service tax. He further submitted that in respect of services rendered in Bangalore, service tax involved therein has already been paid in the normal course and periodical ST-3 returns have also been filed by them. Consequently, the demand of service tax raised in the show cause notice dated 3-4-2003 in respect of Bangalore is without basis inasmuch as it seeks to levy service tax twice for the same service rendered.
iii. The learned counsel clarified that a dispute arose for the period October, 1998 to March, 2001 during which certain services rendered at Delhi and Mumbai were billed at Bangalore. When the mistake was noticed by the appellant, they have come forward and paid the service tax amount involved amounting to Rs. 5,43,092/- along with interest for delayed payment amounting to Rs. 2,26,689/-. This was the subject matter of the original show cause notice issued by the Department dated 4-7-2011 which came to be adjudicated by the order dated 6-5-2002. The learned counsel further argued that the demand raised in the show cause notice dated 3-4-2003 also covered some of the period October, 1998 to March, 2001 for which a separate show cause notice was issued and adjudicated invoking the extended period of limitation. Consequently by relying on the decision of the Apex Court in the case of Nizam Sugar Factory v. Collector [2008 (9) S.T.R. 314 (S.C.)], he argued that the ground of suppression cannot be raised by the Department once again on the same facts for the same period.
3. The learned AR supported the impugned order. He submitted that the appellant before the learned Commissioner has made a blank assertion that the demand has covered the services rendered in respect of all the five jurisdictions. But they have failed to submit the details to justify the fact that the service tax has already been paid in respect of the various jurisdictions for the consideration included in the present show cause notice/impugned order. He further argued that the Department will be entitled to issue show cause notice invoking suppression in cases where different aspects of suppression came to light in the later period.
4. From the records, we find that in respect of Bangalore Branch of the appellant, there was a dispute pertaining to period October, 1998 to March, 2001, which was settled with the order passed by the Assistant Commissioner dated 6-5-2002. The appellant has also made payment of the service tax demanded therein to the tune of Rs. 5,43,092/- along with applicable interest for the period October, 1998 to March, 2001. Subsequently, it would appear from the records that the Department sought some information from the appellant in February, 2002. While comparing the value of taxable service for the year 1999-2000 reflected in the ST-3 returns with the Income Tax returns for the same period, it was noticed that there was substantial variation between the two. The value of total consideration received as reflected in the Income Tax returns for the same period was to the tune of Rs. 6.95 crores (approximately). Alleging that the appellant has failed to pay service tax on the entire consideration received, the Department issued show cause notice dated 3-4-2003 demanding service tax amounting to Rs. 34,78,209/-. In reply, the appellant submitted that the consideration to the tune of Rs. 6.95 crores pertains to all the branches. It was further submitted that service tax pertaining to each branch has been paid separately in the respective jurisdictions and that separate demand proceedings had already been initiated for the period 10/98 to 3/2001 and the differential service tax for the said period has already been paid along with interest. However the learned Commissioner went ahead with the confirmation of service tax as demanded in the show cause notice by taking the view that the appellant has failed to produce the registration certificate in respect of other branches. Further they have not produced any documentary evidence regarding payment of service tax by those branches during the period 1999-2000. Consequently he has confirmed the demand of service tax.
5. From the records submitted in the present appeal, we note that the appellant has separate registrations in New Delhi, Bombay, Cochin, Madras and Bangalore. Accordingly they are required to pay service tax within the respective jurisdiction for the consideration received for the provision of service in the respective areas. The appellant has also submitted the break-up of the considerations for the various branch offices making up the total of Rs. 6.95 crores.
It is evident that the service tax has to be paid separately in the various jurisdictions where branch offices are there even though the Income Tax return is filed consolidated for the entire operations of the appellant's company. From the above, we are of the view that the show cause notice dated 3-4-2003 and the impugned order passed thereon are not justified inasmuch as the Commissioner of Service Tax, Bangalore has the jurisdiction only to demand service tax, if not paid or short-paid within his jurisdiction. Since it is evident that the total demand of service tax to the tune of Rs. 34 lakhs also covers the service rendered within the jurisdiction of the four branch offices outside Bangalore for which separate registrations have been taken and service tax paid separately, it will be necessary to exclude such demand pertaining to outside jurisdictions. Further it is on record that the appellant has been discharging the service tax liability even within the jurisdiction of Bangalore periodically and submitting their ST-3 returns. The impugned order has failed to deduct the service tax already paid within the Bangalore jurisdiction, for which the demand obviously has become double taxation. Further it is on record that for the period October, 1998 to March, 2001 differential service tax to the tune of Rs. 5.43 lakhs has also been paid. This also needs to be taken into account in the requantification.
6. The appellant has vociferously argued that the show cause notice dated 3-4-2003 has been issued for demanding service tax without mentioning the period involved therein. From the other documents submitted, it appears to us that the demand pertains to the period 1999-2000. Such a demand can be enforced only by resorting to extended period of limitation under Section 73 for which sufficient justification should exist on record. The show cause notice has made no such allegation of suppression or willful misstatement on the part of the appellant. It is further on record that a show cause notice dated 17-4-2002 already has been issued to the appellant invoking the extended period of limitation and covering the period October, 1998 to March, 2001. Consequently the Department will not be entitled to invoke the larger period of limitation under Section 73 in the second show cause notice in view of the Apex Court's decision in the case of Nizam Sugar Factory. The Apex Court has held as follows:-
9. Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the afores
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aid judgment and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant. To conclude the above discussions, in view of the above, the conclusions are summarised as follows:- i. The department is not within its rights to make a demand for the longer period vide the show cause notice dated 3-4-2003. Consequently, the demand if any has to be restricted to the normal period of limitation. ii. Commissioner of Service Tax, Bangalore has no jurisdiction to make any demand of service tax in respect of consideration received for jurisdictions outside Bangalore. Consequently demands raised pertaining to outside jurisdictions are set aside and will need to be excluded. iii. In respect of Bangalore jurisdiction, the appellant has been paying service tax regularly which has not been taken into account in the impugned order. Further the differential service tax of Rs. 5.43 lakhs paid for the period October, 1998 to March, 2011 also has not been taken into account. iv. We consider it necessary to remand the matter to the original adjudicating authority to pass a de novo decision keeping in view of the above points. The appellant must be given an effective opportunity to submit further evidence as per law. Since the issue is long pending, the original authority is directed to comply with the de novo decision within a period of two months from the date of receipt of this order. v. Appeal is allowed by way of remand.