Writ Petition No. 2474 of 2015. Case: Cineyug Worldwide Vs Union of India. High Court of Bombay (India)

Case NumberWrit Petition No. 2474 of 2015
CounselFor Appellant: Ms. Padmavati Patil, Advocate and For Respondents: Shri Jitendra B. Mishra, Advocate
JudgesS.C. Dharmadhikari and G.S. Patel, JJ.
IssueCentral Excise Act, 1944 - Sections 14, 32-I, 32-L(2)
Citation2016 (42) STR 219 (Bom)
Judgement DateJanuary 22, 2016
CourtHigh Court of Bombay (India)

Judgment:

G.S. Patel, J.

  1. Rule. Mr. Mishra for the 2nd Respondent waives service. By consent, Rule is made returnable forthwith. The writ petition is called out and taken up for hearing and final disposal. We have heard Ms. Patil, learned advocate for the petitioners and Mr. Mishra, learned advocate for the 2nd respondent at some length and considered their rival submissions and the material on record.

  2. This is a writ petition under Article 226 of the Constitution of India. It is directed against Final Order No. 24/Final Order/ST/RB/2015, dated 18th February, 2015 passed by the Settlement Commission, Additional Bench, Customs & Central Excise, Mumbai under Section 32F(5) of the Central Excise Act, 1944 in a Settlement Application No. 142/ST/JL/2014-SC(MB)SA(ST) 262/2014, dated 29th May, 2014. By that order, the Settlement Commission rejected the application in question as impermissible under Section 32E of the Central Excise Act, 1944 ("CEA").

  3. The petitioners are a partnership firm. They provide event management services. These services are covered by Section 65(40) read with Sections 65(41) and 65(105)(zu) of the Finance Act, 1994. The petitioners are registered with the Service Tax Department under registration No. AAFFC3158GST001.

  4. During the Financial Years 2007-2008 to 2010-2011, the petitioners claim to have suffered a setback in their business. This is inter alia attributed to various prominent clients defaulting in paying the petitioners'' fees for event management services rendered. The petitioners say that they had no option but to write off the amounts of unpaid fees by reversing the entries in question in their books of account.

  5. During this period (FY 2007-2008 to 2010-2011) in view of the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, service tax was payable by the 5th of the month immediately following the calendar month in which payments were received for taxable services rendered and billed. For assessees who were individuals, proprietorship or partnership firms, service tax was payable quarterly, by 5th of the month following the quarter in which such payments were received. According to the petitioners, their liability to pay service tax would have arisen only on their receiving fees from their clients. The petitioners claim that since they had not received fees from some of their clients (which included major enterprises such as Star India, Unilever Limited and Zee TV, etc.), the petitioners were unsure whether service tax would nonetheless be paid on the fees that they had billed or charged for services rendered, despite the fact that the fees in question had not actually been received by the petitioners at all. This, the petitioners say, resulted in a delay in payment of service tax as also short payment.

  6. During the course of a Service Tax Audit of the petitioners'' records, a written query was raised on 11th May, 2012 seeking details of an amount of Rs. 13,67,233/- shown as "other income" for the period 2009-2010. The petitioners responded to this query by their letter dated 15th June, 2012, saying that out of this amount of Rs. 13,67,233/- shown as ''other income'', an amount of Rs. 3,58,423/- was interest on fixed deposits with banks and the remainder, Rs. 10,08,800/- pertained to reimbursement of payments of music licence fees from Videocon Industries Limited. The petitioners explained that they had made these payments on behalf of Videocon Industries at its request and that this amount of Rs. 10,08,800/- was merely a reimbursement. The petitioners clarified that they had not charged Videocon Industries any amount as fees for making this payment on its behalf. The petitioners produced various ledger copies and other documents, including a copy of their agreement with Videocon Industries in this behalf.

  7. A reconciliation statement was also sent under cover of the petitioners'' letter dated 1st September, 2012 for FY 2006-2007 to 2010-2011. The petitioners state that in the Audit Report dated 19th November, 2012 certain differences or discrepancies between service tax paid and service tax payable were pointed out to the petitioners. It was claimed that there was a short-payment of service tax of Rs. 36,61,893/- for the period from FY 2007-2008 to 2010-2011.

  8. The petitioners responded by their letter dated 29th November, 2012 to this audit objection and submitted that the calculation of service tax allegedly short paid was incorrect due to various reasons. Among the reasons cited by the petitioners was the credit they gave to non-paying clients such as Star India, Hindustan Unilever Limited & Zee TV of the amount first charged for event management services. In other words, since the fees charged by the petitioners had not been paid, the amounts were reversed. It was also pointed out that an amount of Rs. 2,00,000/- due from Reliance Broadcast Network for the FY 2010-2011 was written off since the party did not agree to pay these amounts. Supporting documents were forwarded along with this response. The petitioners recomputed the amounts that, according to them, were due and arrived at a figure of Rs. 20,84,792/-. This was paid along with interest of Rs. 16,77,519/-. Thus, a total amount of Rs. 37,62,311/- was paid between 21st September, 2012 and 22nd May, 2014. Details of these payments, giving their dates, amounts and corresponding challan numbers are set out in the tabulation below paragraph 13 of the petition.

  9. On 19th April, 2013, the Joint Commissioner issued a show cause...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT