OFFICE OF THE COMMISSIONER, CENTRAL EXCISE & SERVICE

TAX, 38, M.G. MARG, CIVIL LINES, ALLAHABAD-211001

C. No. VI(ST)Dem(12)-Adj- 126/2011/ Dated:- .05.2013

OIO No. (ST-07/2012) 35 of 2013 Dated:- .05.2013

Brief fact of the case:-

These proceedings are initiated against Smt. Asha Singh, W/O Sh. Sadanand Singh, 5/48, J-
6, Tagore Colony, Ardali Bazar, Varanasi (hereinafter referred to as the 'party') who is the owner of
the commercial building situated at S-2/335 D1, Sikraul, Paragana Shivpur, Varanasi (hereinafter
referred to as the 'property'). Investigations have revealed that the party have given the above
property comprising of 18455 sq , ft, divided into Ground Floor 4465 sq Ft., First Floor 4673 Sq.
Ft., Second Floor 4673 Sq Ft., Third Floor 4644 Sq Ft. to M/s Vishal Retail Ltd., having registered
office at RZ/ A-95 & 96, Mahipalpur Extension, New Delhi-110037 for running up a Retail
Showroom namely Vishal Mega Mart for a period of twelve years on a monthly rent of Rs.
4,98,285/- per month calculated @ Rs. 27/- per sq ft. for an area of 18455 sq. ft. with the condition
that party shall solely and exclusively bear all charges and expenses towards the property such as all
taxes and duties levied by any Govt. Body or Agency, any and all statutory liabilities etc. The party,
in this way engaged herself in providing "renting of immovable property" service to M/s Vishal
Retail Ltd for running its retail showroom.

With effect from 01.06.2007, "renting of immovable property" has been defined under sub-
clause (zzzz) of Section 65(l05) of the Finance Act, 1994 (hereinafter referred to as the Act) as
"taxable service means any service provided or to be provided 'to any person, by any other person,
by renting of immovable property or any other service in relation to such renting, for use in the
course of or for furtherance of, business or commerce. Clause (90a) of section 65 of the Act defines
the words 'renting of immovable property' as follows:

Renting of immovable property includes renting, letting leasing, licensing or other similar
arrangements of immovable property for use in the course of furtherance of business or commerce
but does not include –
(i) renting of immovable property by a religious body or to a religious body; or
(ii) renting of immovable property to an educational body, imparting , skill or knowledge or
lessons on any subject or field, other than a commercial training or coaching centre;
Explanation-For the purpose of this clause, "for use in the course of furtherance of business
or commerce" includes use of immovable property as factories, office buildings, warehouses,
theatres, exhibition halls and multiple-use buildings:." Section 65 (105) sub-clause (zzzz shall be a
taxable service and shall be charged to Service Tax under Section 66 of the Act.

It has been revealed that the said party has been providing renting of immovable property
services and have indulged in huge evasion of service tax without having themselves registered
under Sec. 69 of the Act and Rule 4 of the Service Tax Rules, 1994 and without having filed
Service Tax Returns under Section 70 of the Act and Rule 7 of the Rules. A letter C.No. .II(8)01/
Prev./St/VNS/2010/5693 dt. 12.07.2010 was sent to the Assistant Manager of the tenant i.e. M/s
Vishal Mega Mart asking therein, interalia, to submit the details of payment made to the owner of
the property since inception, copy of the rent receipts provided by the landlord in respect of
payments made to that effect and copy of the rent agreement entered into with the landlord in
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respect of tenancy and terms of payment. Summon under Section 14 of the Central Excise Act,
1944 read with Section 83 of the Finance Act, 1994 was issued to the store manager of tenant to
appear before the Supdt. (Prev), Central Excise Division, Varanasi on 11.10.2010 alongwith the
documents already demanded vide above mentioned letters.

In reply to above, Shri Sudhakar Mishra, Store Manager, M/s Vishal Mega Mart. Bhojubeer,
Varanasi submitted the chart showing the details of rent paid by M/s Vishal Mega Mart to Smt.
Asha Singh during the period from June, 2008 to March, 2010 as well as the copy of the Fixed
Term Lease agreement entered into between Mrs. Asha Singh and M/s Vishal Retail Ltd., New
Delhi. Scrutiny of the documents, as submitted by M/s Vishal Mega Mart, it is revealed that the
party have received huge amounts towards providing renting of commercial building without
having paid service tax leviable thereon.

On scrutiny of the chart mentioning therein the details of rent paid to Mrs. Asha Singh, it is,
revealed that the during the year 2008-09 (from June, 2008 to March. 2009) the party received the
total rent of Rs. 49,82,850/- and Rs. 59,79,420/- during the year 2009-10 (from April, 2009 to Mar,
2010). Further, on scrutiny of the lease agreement it is revealed that the same was executed on
September, 01, 2008 between Mrs. Asha Singh and M/s Vishal Retail Ltd. to lease a commercially
approved area of 18,455 sq.ft. for setting up a Retail Showroom, for a period of 12 years; that the
lease rents has been mutually agreed and decided at Rs. 4,98,285/- per month calculated @ Rs. 27
per sq.ft..; that the lessor i.e. Smt. Asha Singh shall solely and exclusively bear all charges and
expenses towards the property such as all taxes and duties levied by any Govt. Body or Agency, any
and all statutory liabilities, etc.

Smt Asha Singh, the owner of the property was sent a letter vide C. No.
II(8)01/PREV./ST/VNS/2010/8456 dt. 14.10.2010 asking therein to submit the copy of the
Registration Certificate obtained from the Service Tax department, if any, details of the service tax
paid to the department in lieu or providing "Renting of Immovable Property Services". if any, detail
of amounts received from the tenant/lessee for the said property w.e.f. 01.06.2007, copies of
lease/rent agreements entered into between for the said premises covering the period 2007-08,
2008-09, 2009-10, 2010-11 and details of the all the other property rented/leased, if any. Since, no
reply was received, a summon u/s 14 of the Central Excise Act, 1944 read with Section 83 of the
Finance Act, 1994 was issued to the party by the Superintendent (Prev), Central Excise Division,
Varanasi to appear on 06.12.2010 along with the above mentioned documents. However, the party
did not co- operate in the investigation and did not appear before the appropriate authority inspite of
opportunities given to her, for reasons best known to her.

From the above, it is amply clear that the party, inspite of opportunities having been
afforded by the department, the party neither appeared for tendering evidence before the appropriate
authority, nor submitted the documents desired by the department. Thus the party have willfully
and consciously evaded from tendering evidence and suppressed the documents from the
department with intention to evade the service tax due.

From the scrutiny of documents as submitted by M/s Vishal Mega Mart, it is revealed that
total rent received by the party during the year 2008-09 is Rs.49,82,850/- and in the year 2009-10 is
Rs. 59,79,420/- in lieu of providing "Renting of Immovable Property Services" without having paid
service tax leviable thereon, without having themselves registered and without having filed their
statutory returns. Further, on the basis of lease agreement signed between the owner and the tenant
for the period of twelve years renting the 18455 sq ft. of property @ Rs. 27/- per sq ft., rent amount
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for the year 2010-11 come to the tune of Rs. 59,79,420/- (Rs. 4,98,285 x 12). The party appears to
have willfully and consciously suppressed the facts and contravened the provisions contained in
Section 68,69, and 70 of the Act and Rule 4,4A,5,6 and 7 of the Service Tax Rules, 1994 with intent
to evade payment of Service Tax amounting to Rs. 17,83,846/- (+) Education Cess Rs. 35,680/-(+)
SHE Cess Rs. 17823/-[Total amounting to Rs.18,37,349/- ] which is recoverable from them by
invoking the extended period of limitation envisaged under proviso to Sec.73(1) of the Act.

Case for the Department:

A Show Cause Notice No. 08/ Joint Commr./Alld./2012 dated 08.02.2012 [issued vide
C.No. VI(ST)Dem(12)Adj.-126/2011/202-204 dated 29.02.2012] was issued by the Joint
Commissioner, Central Excise & Service Tax, Commissionerate, Allahabad, requiring the party to
show cause as to why:-
(i) Service Tax amounting to Rs, 18,37,349/- should not be demanded and recovered from them
under proviso to Section 73(1) of the Act alongwith interest under Section 75 of the Act.
(ii) Penalty should not be imposed upon them under Section 77 and 78 of the Act for having
contravened the provisions contained in Section 68,69 and 70 of the Act and Rule 4,4A,5,6 and 7
of the Rules, with intent to evade payment of Service Tax.

Case for the Party:

Inspite of having been granted enough time to file their defence reply against the above
show cause notice, the party did not file any reply for reasons best known to them. For the purpose
of imparting natural justice, the party were granted opportunity to be heard in person on 11.01.2013.
The party, vide their letter of even date sought adjournment on the grounds of sickness. Personal
hearing was again granted to the party on 24.01.2013. Shri Ashok Kumar Srivastava, Advocate,
appeared on behalf of the party and pleaded that their client have discharged their entire service tax
liability before 31.12.2012. He submitted copies of relevant GAR-7 challans. He also pleaded that
penalty may be waived.

Discussion and Findings:

I have carefully gone through the facts of the case, evidence available on record and
averments putforth by the party in support of their defence. Show cause notice has been issued to
the party for demand of service tax on “renting of immovable property” services provided by the
party to M/s Vishal Retail Ltd during the period 2008-09, 2009-10 and 2010-11. It has been alleged
that the party have neither obtained service tax registration nor filed their statutory returns and
contravened the provisions contained in the Finance Act, 1994 and the rules framed thereunder,
with intent to evade payment of service tax. The party, having accepted their liability, have
deposited certain amounts under demand, which have been detailed as under:
S.No Challan No. & Period as Service tax demand as per SCN (Rs.) Service tax deposited (Rs.)
. Dt. mentioned Service Edu.Cess S&H Edu. Service Edu.Cess S&H Edu.
in Challan Tax Cess Tax Cess
1. 00001 dt.17.07.12 Jun.08 to 587974 11752 5871 534374 10687 5344
31.03.09
2. 00002 dt.17.07.12 01.04.09 to 597936 11964 5976 591582 11832 5916
31.03.10
3. 00003 dt.17.07.12 01.04.10 to 597936 11964 5976 591582 11832 5916
31.03.11
TOTAL 1783846 35680 17823 1717538 34351 17176
GRAND TOTAL 1837349 1769065

In light of the fact that consequent upon investigation, the party were found to have indulged
in suppression of facts and contravention of provisions contained in the Finance Act, 1994 and the
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rules framed thereunder, with intent to evade payment of service tax and the party having accepted
their Service Tax liability and have deposited certain amounts against their said liability, there is not
much left to discuss on merit. Hence, I confirm the demand as above.

Now I take up the proposal for imposition of penalty under Section 77 and 78 of the Finance
Act, 1994.

As regards imposition of penalty under Section 77 of the said Act for failure to comply with
the statutory provisions of the Service Tax Act and Rules made thereunder, I find that the party has
failed to comply with the provisions and therefore for their act of omission and commission, I hold
the penalty under Section 77 of the Finance Act, 1994.

As regards imposition of penalty under Section 78, I observe that the party has consciously
and deliberately suppressed the value of taxable service and never disclosed the payment received
or services rendered by them. As I have observed herein above, in this case the party was conscious
that the services being provided by them are taxable services liable to Service Tax but did not
deposit in clear disregard to the law. Hon’ble Tribunal in the case of Suhita Ethnic Marketing
Services Pvt Ltd. Vs. CCE [2005] 2 STT 222 (Mumbai-CESTAT), Mett MacDonald Ltd. Vs.
CCE [1994-2006] STT 239 (New Delhi-CEGAT) and ACME Tele Power Pvt. Ltd. Vs. CCE,
Chandigarh AIT-2008-13 (CESTAT) it has been held that when the amount of service tax has
been determined by the department during the course of investigation then the levy of penalty is
justified. In view of the facts and circumstances of the case the proposal for imposition under
Section 78 of the Finance Act, 1994 is justified.

In view of the above discussion and finding, I pass the following order:
ORDER
1. I confirm the demand of service tax amounting to Rs. 18,37,349/- under the proviso to
Section 73(1) of the Act alongwith appropriate interest under Section 75 of the Act.
2. I impose a penalty of Rs. 10,000/- under Section 77 of the Act for violation of Section 70
read with rule 7 of the Rules.
3. I impose a penalty of Rs. 18,37,349/- under Section 78 of the Act.
4. However, since the party have deposited an amount of Rs. 1769065/- through various GAR
7 challans, as mentioned hereinabove, I order for its appropriation against the said demand.

( Somesh Tiwari)
Joint Commissioner (Adj.)
Central Excise: Allahabad

To
Smt. Asha Singh, W/O Sh. Sadanand Singh,
5/48, J-6, Tagore Colony, Ardali Bazar, Varanasi.

OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX 38,

M.G.MARG CIVIL LINES, ALLAHABAD
C;No. VI(ST)Dem-12 (Adj)-126/2011 Date: .05.2013
Copy forwarded for information and necessary action to :-
1. The Commissioner, Central Excise, Allahabad alongwith copy of Show Cause Notice
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2. The Assistant/ Commissioner, Central Excise Division, Varanasi.
3. The Superintendent, Central Excise & Service Tax Range, Sarnath, Varanasi.
4 The C.A.O., Central Excise Commissionerate , Allahabad.
5. Guard File

Superintendent (Adj)
Central Excise
Allahabad