GROUNDS OF APPEAL

ISSUE (1) Whether the Appellant are liable to pay Service Tax amounting to Rs.
5,02,160/-?

The impugned order asserts that the appellant have not disputed the fact that service tax
was payable by them. This finding by the learned adjudicator is without any basis. He has
in another para 4.2 of the SCN states that it is the contention of the appellant that no
service tax is payable by them. The order is contradictory as at one place it states that the
appellant did not dispute their service tax liability and in another it says that the appellant
contend that no service tax is payable by them. The narration of the facts in para 1 to 5
clearly show that the appellant are engaged in trading activity only and therefore the
question of paying service tax does not arise.
(Enclosure of Order passed by Additional Commissioner marked as “Annexure F”)

The learned adjudicator has at one place in his order observed that the appellant were
required to pay service tax on reverse charge basis. Neither in the show cause notice nor
in the impugned order any fact has been stated which would go to show that courier
packages were imported making the appellant liable to pay service tax on reverse charge
basis. The appellant would assert that all courier companies were registered with service
tax department in India. Copy of bills of the clients indicating payment of service tax
by them have already been enclosed as “Annexure C”. The supposition that the
appellant imported packages or in some manner used services of courier companies who
were not liable to pay service tax and that the appellant by some unknown fact were
liable to pay service tax on reverse charge basis is totally unfounded.

ISSUE (2). Whether CENVAT was admissible to the appellant?

The impugned order has held that the appellant failed to demonstrate that they were
eligible for CENVAT credit. Such input credit would have been available to the appellant
if they had been providing any service to anyone. In the present case no service has been
provided by the appellant hence the issue of admissibility of CENVAT credit is not
relevant.

ISSUE (3). Whether without the revision of ST3 within one month of filing it, the
appellant would be held to have provided service?

The appellant order holds that if there was error in filing the return the only recourse
available with the appellant was to revise it within one month of its filing. The appellant
no doubt admit that there has been a procedural lapse on their part but such an error
causes no prejudice or injury to the department. When no service had been rendered and
no tax was leviable, the question of filing any return does not arise. The ST3 is a non-est
factum and it does not necessitate a correction.

ISSUE (4). Whether the notice are liable to penalty under section 76 of the Finance
Act,1994 for their failure to pay service tax in accordance with the provisions of
section 68 read with Rule 6 of the service tax rules, 1994.

The learned adjudicator in the present case has held that the appellant had failed to
discharge their service tax liability in accordance with the provisions of section 68 of the
Act, ibid, read with Rule 6 of the service tax rules, 1994 and thus the appellant were
liable to penalty under section 76 of the Finance Act, 1994. Thus the Additional
Commissioner imposed a penalty on the Appellant.

Section 76 has been reproduced below for your kind perusal:

“SECTION 76: Penalty for failure to pay service tax. – Any person, liable to pay
service tax in accordance with the provisions of section 68 or the rules made under this
Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on
that tax in accordance with the provisions of the section 75, a penalty which shall not be
less than [one hundred rupees] for every day during which such failure continues or at
the rate of [one hundred rupees] for every day per month, whichever is higher, starting
with the first day after the due date till the date of actual payment of the outstanding
amount of service tax.
Provided that the total amount of the penalty payable in terms of this section shall not
exceed [fifty percent of] of the service tax payable.”

It is settled principle of law, that section 76 of the Finance Act is applicable or imposed
on any person when he or she is a service provider and in so providing has defaulted in
the payment of service tax either willfully or otherwise. In the present case, the Appellant
is into the business of purchasing and selling items on behalf of Hero Honda. It receives
payment directly from their buyer/consignee who are sub-distributors/ Authorized dealers
of Hero Honda. The appellant use services of local courier companies who are registered
service tax payers. Hence for the reasons set forth in paragraphs 1 to 6. For carrying out
this, the Appellant is responsible for number of activities like its shall be them who shall
be responsible to take orders from the authorized dealers. The Appellant, for this purpose
takes courier services namely M/s Gati Express Ltd. M/s TCII Xps. Thus, they are taking
input services of these courier service provider. It is the Courier service provider who has
provided service. At the end of every month, these courier service provider raises bill
which include the courier charges and the service tax. The appellant makes payment to
them then and there. It is to be noted that, here, the appellant are the service receiver and
for the same, proper payment is made as per the invoices raised. Thu, wherever payment
of service taxis required, the same is done by the courier company. And the same needs
to be shown by the courier company and not by the Appellant.

In the absence of any service being rendered by the Appellant as they are into trading of
goods and not in any form, a provider of service. Section 76 of the Finance Act, 1994
cannot be imposed upon in the absence of any service.
PRAYER

The appellant plead before Your Honour the Commissioner of Central Excise (Appeals)
Delhi II, Gurgaon, Haryana, to grant relief in the manner stated below-

A. Allow the present appeal and quash/ set aside the Order-in-Original No.
87/VPS/ADC/Adjn/FBD-1/2015-16 dated 16.03.2016 passed by the Additional