tag:blogger.com,1999:blog-54974812553853097992023-11-15T06:37:35.092-08:00SERVICE TAX JUDGEMENTSvenkatrao kedarihttp://www.blogger.com/profile/03753665157339360626noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5497481255385309799.post-89131297336506868022013-01-12T03:22:00.000-08:002013-01-12T03:46:12.045-08:00INTERIM ORDER OF STAY AGAINST CIRCULAR NO: 967<div dir="ltr" style="text-align: left;" trbidi="on">
<div align="center">
<b><span style="color: #006600; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">CBEC's Draconian Circular - All Roads Lead to HC </span></b></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>THE</b> CBEC's draconian recovery Circular No. 967/2013 dated 01.01.2013 <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16652" target="_blank"><b>(DDT 2015 - 02.01.2013</b></a><b><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16652">)</a></b>
has spurred Central Excise officers into issuing threatening notices to
assessees whose cases are pending in appellate forums. The poor
assessees have no option but to rush to the High Courts. Yesterday, nine
petitions came up in the Andhra Pradesh High Court seeking: </span></div>
<blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">1.
to issue a Writ, Order or direction particularly one in the nature of a
WRIT OF CERTIORARI quashing the clarification issued vide Circular No.
967/01/2013-CX dated 01.01.2013. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">2. to grant stay of clarification issued vide Circular No.967/01/2013-CX dated 01.01.2013 </span></div>
</blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">The
High Court has granted interim stay and stayed the recovery of the
demand till the appellate authorities decide the stay applications. The
High Court also made it clear that the assessee shall be bound by the
orders of the appellate authority and the pendency of the writ petition
before the High Court would not be a bar against the appellate
authorities' order.</span><br />
<br />
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">-------------- </span><br />
<br />
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>THE</b>
report in yesterday's DDT on the AP High Court's Order evoked huge
response, mostly from lawyers. They were all asking for a copy of the
order. We carry the order today. Please see <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2013/2013-TIOL-23-HC-AP-CX.htm"><span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: xx-small;"><b>2013-TIOL-23-HC-AP-CX</b></span></a></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">The whole order is as given below: </span></div>
<blockquote>
<div align="justify">
<span style="color: red; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Petition
under Section 151 of C.P.C. praying that in the circumstances stated in
the affidavit filed in the W.P. the High Court may be pleased to grant
stay of clarification issued vide Sl.No.3 of the Circular
No.967/01/2013-CX dated 01.01.2013 and consequent Letter
O.C.No.496/2012-13 dated 04.01.2013 issued by the Respondent No.2,
pending disposal of WP No. 734 of 2013 on the file of the High Court. </span></div>
<div align="justify">
<span style="color: red; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">The
court, while directing issue of notice to the Respondents herein to
show cause as to why this petition should not be complied with, made the
following order.(The receipt of this order will be deemed to be the
receipt of notice in the case). </span></div>
<div align="center">
<span style="color: red; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b><u>ORDER </u></b></span></div>
<div align="justify">
<span style="color: red; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">There
shall be interim stay of recovery of the amount involved, till the
appellate authority disposes of the application for stay. </span></div>
</blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">There
were nine such writ petitions challenging various provisions of the
controversial circular. Though the High Court did not quash or stay the
Circular, the recovery of the amount involved has been stayed. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">In
the next few days all High Courts in the Country will be flooded with
such writ petitions - the lawyers should be grateful to the CBEC for
this most unexpected prosperous New Year gift. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">When
I discussed the issue with a senior advocate, he asked me, "What are
you complaining about? When you are in the business of selling coffins,
you should be happy about people dying; if they don't die, how can you
sell your coffins?" </span></div>
<div align="center">
<b><span style="color: #006600; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Recovery of Service Tax and Customs Dues not Governed by Draconian Circular </span></b></div>
<div align="justify">
<i><span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>A</b> netizen sent us this mail - </span></i></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">"Sir,
while every taxation portal & publication is abuzz with the
supposedly foolhardy Circular 967 issued by the CBEC when the sun rose
on the Indian sub-continent this New Year and mention of petitions being
filed in the High Court seeking to strike down this Circular, I know
for sure that the women-powered Board would stand by its decision unless
of course they have a change of heart. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">That
apart, the Circular has been issued under the File number having
extension CX.6 and which means it purely relates to Central Excise
matters. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">For
the benefit of readers, I would like to extract the following paragraph
5 from the Board Circular 661/52/2002-CX dated 11.09.2002 (as updated)
& titled ‘Work distribution amongst various sections of CBEC". It
reads - </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>"5. <a href="http://www.blogger.com/blogger.g?blogID=5497481255385309799">CX-6 Section</a></b></span></div>
<div align="justify">
<b><span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">List of Subject :- </span></b></div>
<blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">1.
Amendments to Central Excise Rules and interpretation thereof
(excepting matters relating to Modvat, Cenvat, Proforma Credit and
sampling)</span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">2.
Procedures relating to Assessment, Internal Audit, Preventive Control,
Exports, Licencing and Bonds, Delegation of powers, overtime fees and
Budget and pre-Budget day clearances, prosecution, adjudication, Rewards
under Central Excise Act and all other matters not covered by CX-8
Section. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">3. Amendments to the Basic Excise Manual, the Audit Manual, the Preventive Manual and the S.R.P. Hand book.</span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">4.
Policy concerning anti-evasion, prosecution, approval of action plan of
Directorate General of Central Excise Intelligence, submission of
periodical reports and returns concerning preventive work etc. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">5. All complaints, representations and Parliament Questions relating to the above items of work." </span></div>
</blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">My conclusion is also supported by the paragraph 4 of the Circular 967 which mentions - </span></div>
<blockquote>
<div align="justify">
<i><span style="color: red; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">"4) Instructions in CBEC's <b>Excise</b>
Manual of Supplementary instructions on the above subject or any other
circular, instruction or letter contrary to this circular stand amended
accordingly."</span></i></div>
</blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">I
would like to place emphasis on this word "EXCISE" because it would
mean that the Circular does not apply to "CUSTOMS" although there is in
existence a Manual brought out by CBEC catering to Customs also but the
Board has chosen to ignore this fact. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Now,
this would leave us with "Service Tax" and to this my answer would be -
Service Tax Circulars are issued with the extension "ST" and which is
not the case here. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">So,
for the moment, the New Year Circular would be applicable only to
Central Excise matters, where the recovery is envisaged in terms of
section 11 of the CEA, 1944. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">For
recovery of Customs & Service Tax dues, the Board may come out with
another Circular after reading this note of mine, I presume!" </span></div>
</div>
<div align="justify">
<br />
<a href="http://taxguru.in/excise-duty/hc-stays-cbecs-circular-recovery-confirmed-demand-pendency-stay-application.html">http://taxguru.in/excise-duty/hc-stays-cbecs-circular-recovery-confirmed-demand-pendency-stay-application.html</a></div>
<div align="justify">
<h5 data-ft="{"type":1,"tn":"K"}" style="text-align: justify;">
The High Court of Judicature of Andhra Pradesh has granted an interim stay against<a href="http://taxguru.in/excise-duty/recovery-confirmed-demand-pendency-stay-application.html" target="_blank" title="Recovery of confirmed demand during pendency of stay application"> <b>Circular No.</b><b> 967/01/2013 – CX, </b>Dated 1<sup>st</sup> January, 2013</a> issued by the CBEC, seeking the recovery of confirmed demand during pendency of stay application.<span id="more-54480"></span></h5>
<span class="IL_AD" id="IL_AD2">Full text</span> of the Order is as follows :-<br />
<div style="text-align: center;">
<span class="IL_AD" id="IL_AD4">ANDHRA PRADESH</span> <span class="IL_AD" id="IL_AD3">HIGH COURT</span> AT <span class="IL_AD" id="IL_AD6">HYDERABAD</span></div>
<div style="text-align: center;">
Dated- 09.01.2013</div>
<div style="text-align: center;">
WPMP.NO:873 of 2013 IN WP.N0:730 of 2013</div>
<div style="text-align: center;">
<strong>Ultratech Cement Ltd. </strong></div>
<div style="text-align: center;">
<strong>Vs.</strong></div>
<div style="text-align: center;">
<strong>Union Of India</strong></div>
<div style="text-align: justify;">
Petition under Section 151 of C.P.C. praying that in the circumstances stated in the affidavit filed in the W.P. the High Court
may be pleased to grant stay of clarification issued vide SI.No.3 of
the circular No.967/01/2013-CX dated 01.01.2013 and consequent Letter
C.No.490/2012-13 dated 04.01.2013 issued by the Respondent No.2, pending
disposal of WP No. 730 of 2013 on•the file of the High Court.</div>
<div style="text-align: justify;">
The court, while directing issue of
notice to the Respondents herein to show cause as to why this petition
should not be complied with, made the following order.(The receipt of
this order will be deemed to be the receipt of notice in the case).</div>
<div style="text-align: justify;">
ORDER</div>
<div style="text-align: justify;">
<strong>There shall be interim stay of recovery of the amount involved, till the appellate authority disposes of the <span class="IL_AD" id="IL_AD1">application for</span> stay.</strong></div>
<strong>It is made clear that the
petitioner shall be under obligation to abide by the order that may be
passed by the appellate authority and the pendency of this writ petition
shall not be treated as a factor to avoid the liability</strong></div>
<div align="justify">
<strong> </strong></div>
<div align="justify">
<strong> </strong></div>
<div align="justify">
<strong> </strong></div>
</div>
venkatrao kedarihttp://www.blogger.com/profile/03753665157339360626noreply@blogger.com1tag:blogger.com,1999:blog-5497481255385309799.post-45036689719968568172012-12-22T05:27:00.000-08:002012-12-22T05:27:05.136-08:00MALABAR GOLD CASE ON SERVICE TAX ON TRADE MARK<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://blog.amitbajajadvocate.com/2012/11/trade-mark-is-goods-royalty-for-its-use.html">http://blog.amitbajajadvocate.com/2012/11/trade-mark-is-goods-royalty-for-its-use.html</a><br />
<br />
<br />
<br /></div>
venkatrao kedarihttp://www.blogger.com/profile/03753665157339360626noreply@blogger.com1tag:blogger.com,1999:blog-5497481255385309799.post-46753461769980943322012-12-08T03:57:00.000-08:002012-12-15T22:05:52.282-08:00Reimbursement of Expenses not subject to Service Tax<div dir="ltr" style="text-align: left;" trbidi="on">
<h2 class="title">
</h2>
<h2 class="title">
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<div style="text-align: justify;">
We are sharing with you an important analysis of judgment of Hon’ble Delhi High Court in the W.P. (C) 6370/2008 of <b>Intercontinental Consultants and Technocrats Pvt. Ltd. Vs. Union of India & ANR (2012-TIOL-966-HC-DEL-ST)</b> on the following issue:-</div>
<div style="text-align: justify;">
<b>Issue:</b></div>
<div style="padding-left: 30px;">
<b>♣ Whether reimbursement of expenses includible in gross consideration for the chargeability of <span class="IL_AD" id="IL_AD4">Service Tax</span>? </b></div>
<div style="padding-left: 30px;">
<b>♣ Whether Rule 5(1) of Service Tax (Determination of Value) Rules is ultra vires Sections 66 and 67 of Finance Act, 1994?<span id="more-53899"></span></b><b></b></div>
<div style="text-align: justify;">
<b>Facts: </b></div>
<div style="text-align: justify;">
The Petitioner Company is engaged in providing consulting <span class="IL_AD" id="IL_AD10">engineer services</span> and receives payments not only for its service but also for reimbursed expenses incurred by it such as air travel, <span class="IL_AD" id="IL_AD3">hotel stay</span>, etc. It was paying service tax in respect of amounts received by it for services rendered to its clients. It was not paying any service tax in respect of the expenses incurred by it, which was reimbursed by the clients. Department issued Show Cause Notice demanding service tax on the expenses reimbursed by invoking the provisions of Rule 5(1) of the Service Tax (Determination of value) Rules 2006. The Petitioner Company has challenged Rule 5(1) in a Writ Petition.</div>
<div style="text-align: justify;">
The Service Tax (Determination of Value)
Rules, 2006, (hereinafter referred to as “Rules”), was brought into
effect from 01.06.2007. Rule 5 provided for “inclusion in or exclusion <span class="IL_AD" id="IL_AD9">from value</span> of certain expenditure or costs”. Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, reads as:-</div>
<div style="text-align: justify;">
<i>“(1) Where any expenditure or costs
are incurred by the service provider in the course of providing taxable
service, all such expenditure or costs shall be treated as consideration
for the taxable service provided or to be provided and shall be
included in the value for the purpose of charging service tax on the said service.”</i></div>
<div style="text-align: justify;">
Illustration 3 to this Rule reads as: -</div>
<div style="text-align: justify;">
<i>“Illustration 3: A contracts with B, an architect for <span class="IL_AD" id="IL_AD7">building a house</span>. During the course of providing the taxable service, B incurs expenses such as telephone charges, air travel <span class="IL_AD" id="IL_AD1">tickets</span>, <span class="IL_AD" id="IL_AD6">hotel accommodation</span>,
etc., to enable him to effectively perform the provision of services to
A. In such a case, in whatever form B recovers such expenditure from A,
whether as a separately itemised expense or as part of an inclusive
overall fee, service tax is payable on the total amount charged by B. Value of the taxable service for charging service tax is what A pays to B.”</i></div>
<div style="text-align: justify;">
Rule 5(2) of Rules state that Subject to
the provisions of sub-rule (1), the expenditure or costs incurred by
the service provider as a pure agent of the recipient of service, shall
be excluded from the value of the taxable service if all the specified
conditions are satisfied.</div>
<div style="text-align: justify;">
The contention of the Department was that as per the provisions of sub-rule (1) of Rule 5 of Rules, service tax
was to be charged on the gross value including reimbursable and out of
pocket expenses such as travelling, boarding and lodging,
transportation, <span class="IL_AD" id="IL_AD12">office rent</span>, <span class="IL_AD" id="IL_AD2">office supplies</span>
and utilities, testing charges, etc. which, were “essential expenses
for providing the taxable service of consulting engineers”.</div>
<div style="text-align: justify;">
<b>Held: </b></div>
<div style="text-align: justify;">
It was held that Section 67 authorises the determination of the value of the taxable service for the purpose of charging service tax
under Section 66 as the gross amount charged by the service provider
for such service provided or to be provided by him, in a case where the
consideration for the service <span class="IL_AD" id="IL_AD8">is money</span>. It is only the value of such service which is that of a <span class="IL_AD" id="IL_AD11">consulting engineer</span>,
that can be brought to charge and nothing more. The quantification of
the value of the service can therefore never exceed the gross amount
charged by the service provider for the service provided by him.</div>
<div style="text-align: justify;">
The contention of the petitioner that
Rule 5(1) of the Rules, in as much as it provides that all expenditure
or costs incurred by the service provider in the course of providing the
taxable service shall be treated as consideration for the taxable
service and shall be included in the value for the purpose of charging service tax
goes beyond the mandate of Section 67 merits acceptance. Section 67 as
it stood both before 01.05.2006 and thereafter. This section quantifies
the charge of service tax provided in Section 66 <i>(Replaced by Section 66B w.e.f 1-7-2012)</i>,
which is the charging section. Section 67, both before and after
01.05.2006 authorises the determination of the value of the taxable
service for the purpose of charging service tax under Section 66 as the
gross amount charged by the service provider for such service provided
or to be provided by him, in a case where the consideration for the
service is money.</div>
<div style="text-align: justify;">
The underlined words i.e. <b><i>“for such service” are important in the setting of Section 66 and 67</i></b>. The charge of service tax
under Section 66 is on the value of taxable services. The taxable
services are listed in Section 65(105). The service provided by the
petitioner falls under clause (g). It is only the value of such service
that is to say, the value of the service rendered by the petitioner to
NHAI, which is that of a consulting engineer, that can be brought to
charge and nothing more. The quantification of the value of the service
can therefore never exceed the gross amount charged by the service
provider for the service provided by him. Even if the rule has been made
under Section 94 of the Finance Act, which provides for delegated
legislation and authorises the Central Government to make rules by
notification in the official gazette, such rules can only be made <b><i>“for carrying out the provisions of this Chapter” i.e. Chapter V of the Act</i></b> which provides for the levy, quantification and collection of the service tax. The power to make rules can never exceed or go beyond the section which provides for the charge or collection of the service tax.</div>
<div style="text-align: justify;">
Rule 5(1) of Rules, which provides for
inclusion of the expenditure or costs incurred by the service provider
in the course of providing the taxable service in the value for the
purpose of charging service tax is ultra vires Section 66 and 67 and
travels much beyond the scope of those sections. The expenditure or
costs incurred by the service provider in the course of providing the
taxable service can never be considered as the gross amount charged by
the service provider “for such service” provided by him.</div>
<div style="text-align: justify;">
Further, it was held that Section 66 levies service tax
at a particular rate on the value of taxable services. Section 67(1)
makes the provisions of the section subject to the provisions of Chapter
V, which includes Section 66. This clarifies that the value of taxable
services for charging service tax has to be in consonance with Section
66 which levies a tax only on the taxable service and nothing else.
There is thus in built mechanism to ensure that only the taxable service
shall be evaluated under the provisions of Section 67.</div>
<div style="text-align: justify;">
Furthermore, if the expenses such as <span class="IL_AD" id="IL_AD5">on air travel</span> tickets are already subject to service tax and is included in the bill, to charge service tax again on the expense would amount to double taxation.</div>
<div style="text-align: justify;">
Therefore, Hon’ble Delhi High Court,
while allowing the petition, observed, “We have no hesitation in ruling
that Rule 5 (1) which provides for inclusion of the expenditure or costs
incurred by the service provider in the course of providing the taxable
service in the value for the purpose of charging service tax is ultra
vires Section 66 and 67 and travels much beyond the scope of those
sections. To that extent it has to be struck down as bad in law. The
expenditure or costs incurred by the service provider in the course of
providing the taxable service can never be considered as the gross
amount charged by the service provider “for such service” provided by
him.”</div>
<div style="text-align: justify;">
<b>Food for Thought:</b></div>
<div style="text-align: justify;">
This judgement will open up new debate & litigation across the Country on following points:-</div>
♣ Whether application of this judgement can travel beyond territorial jurisdiction of the High Court<br />
♣ Whether the Govt. is going to accept this judgment in right spirit to extend benefits to the Trade and Commerce<br />
♣ Retrospective Amendment: The Government would be tempted to
retrospectively validate an invalid levy – Rule 5 (1) of the Rules runs
counter and is repugnant to Sections 66 <i>(Replaced by Section 66B w.e.f 1-7-2012) </i>and
67 of the Finance Act and to that extent it is ultra vires – So many
instances under the Direct Tax & Indirect Tax e.g. – Renting of
immovable Properties, etc.<br />
—————————<br />
<div style="text-align: justify;">
<b>Bimal Jain</b><br />
FCA, ACS, LLB, B.Com (Hons)<br />
Mobile: +91 9810604563<br />
E-mail: bimaljain@hotmail.com<br />
<br />
---------------------------------------------------------------------------------------------------------------<br />
<br />
<span class="textamericaorange"><b>Reimbursements in Service Tax - Ramification of Delhi HC Decision</b></span>
<br />
<br />
<div align="left">
<span style="color: #ff6633; font-family: Verdana, Arial, Helvetica, sans-serif;"><b><span style="color: #663399; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">DECEMBER 14, 2012 </span></b></span></div>
<div align="center">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b><u>By S Sivakumar, Advocate</u></b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>THE</b> decision of the Delhi Court, in the case of <i>Intercontinental Consultants and Technocrats Pvt Ltd v. Union of India and Anr</i>, reported in <b><i><span style="font-size: xx-small;"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2012/2012-TIOL-966-HC-DEL-ST.htm" target="_blank">2012-TIOL-966-HC-DEL-ST</a></span></i>, </b>is a truly landmark judgment. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">As
reported, the Delhi High Court has unequivocally held and reiterated
the well accepted principle that the Rules cannot override the statutory
provisions contained in the Act and that Rule 5(1) of the Service Tax
(Determination of Valuation of Services) Rules, 2006 is <i>ultra vires </i>Sections 66 and 67 of the Finance Act, 1994. The relevant extract of the decision is reproduced below… </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Quote : </b></span></div>
<blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><i>11.
In the aforesaid backdrop of the basic features of any legislation on
tax, we have no hesitation in ruling that Rule 5 (1) which provides for
inclusion of the expenditure or costs incurred by the service provider
in the course of providing the taxable service in the value for the
purpose of charging service tax is ultra vires Section 66 and 67 and
travels much beyond the scope of those sections. To that extent it has
to be struck down as bad in law. The expenditure or costs incurred by
the service provider in the course of providing the taxable service can
never be considered as the gross amount charged by the service provider
“for such service” provided by him. The illustration 3 given below the
Rule amplifies what is meant by sub-rule (1). In the illustration given,
the architect who renders the service incurs expenses such as telephone
charges, air travel tickets, hotel accommodation, etc. to enable him to
effectively perform the services. The illustration, therefore, says
that these expenses are to be included in the value of the taxable
service. The illustration clearly shows how the boundaries of Section 67
are breached by the Rule. Apart from travelling beyond the scope and
mandate of the Section, the Rule may also result in double taxation. If
the expenses on air travel tickets are already subject to service tax
and is included in the bill, to charge service tax again on the expense
would certainly amount to double taxation. It is true that there can be
double taxation, but it is equally true that it should be clearly
provided for and intended; at any rate, double taxation cannot be
enforced by implication…. </i></span></div>
</blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b><i>Unquote</i>: </b></span></div>
<blockquote>
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<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Now…
in the aftermath of this important judicial development, several
questions could arise. This piece is an attempt to quickly address some
of these… </span></div>
</blockquote>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Any possibility of refunds? </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Most
assessees have been collecting service tax on reimbursements and have
been remitting the service tax so collected to the account of the
Government. Is there a possibility for such assessees to claim a refund
of the service tax paid on such reimbursements? If the service tax
burden has already been passed on to the service recipients, the service
providers would not be allowed to file the refund claims. Of course,
the service recipient, assuming that he has not passed on the service
tax burden to his own customers/service receivers, is entitled to file a
refund claim, subject to the time limit specified in Section 11B of the
Central Excise Act, made applicable to service tax related refunds. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">From
a purely legal perspective since the amounts paid by the assessees
cannot be treated as ‘service tax' in the first place a view can be
taken that the provisions of Section 11B cannot be invoked in respect of
these refund claims. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Economic Impact of this decision on current cases being litigated </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Several
appeals have been filed before the CESTAT, on the levy of service tax
on expenses reimbursed by the service receiver to the service provider.
Orders passed by Commissioners confirming several crores of rupees of
service tax liability on the levy of service tax on reimbursements such
as electricity supplied by Developers of commercial complexes, amounts
charged by Advertising Agencies, etc. are currently being litigated
before the various CESTAT benches. The CESTAT, as we know, is not
authorized to go into the legality of Rule 5(1) vis-à-vis Section 67.
Having said so, the CESTAT Benches would now be duty bound to follow the
law laid down by the Delhi High Court and the Government could end up
losing these cases resulting in a significant loss of revenue. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Can the Government amend Section 67? </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">This
would be a very interesting development that we would need to wait and
see. Given the stakes involved, one would not be surprised to see the
Government taking the most predictable route of amending Section 67,
albeit, retrospectively, apart from challenging the Delhi High Court
decision, in the Supreme Court. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">We
must bear in mind the fact that the methodology for valuation of
services derives its legal sanctity from Section 67 of the Finance Act,
1994 even under the new service tax law. Hence, the pain arising out of
this decision will affect the Government, under the new service tax, as
well. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">One
should definitely expect some kind of a legislative action in the
coming Budget to overcome the effects arising out of this decision. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Inter-Group billings for reimbursements at actuals will now come out of tax net </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Thanks
to this decision corporates recovering costs or expenses, at actuals,
from sister companies, etc. will no longer be required to discharge
service tax on the reimbursement of expenses. Charging sister companies
for reimbursements, at actuals, is a practice, widely practiced, even
between companies in India and their associated enterprises. Most of
these transactions including import transactions could get out of the
service tax net. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Income tax angle? </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">It
is a well-recognized principle under the Income tax law that, only
‘income' can be subjected to tax, especially, in the case of provisions
related to tax deduction at source. Thus, an importer, who is only
reimbursing the expenses incurred by his parent company, let's say, is
not required to deduct tax at source under Section 195 of the Income tax
Act. One is happy that this principle has got indirectly confirmed, in
the decision of the Delhi High Court, inasmuch as, service tax can be
levied only on the value of ‘services' rendered and not on claims of
‘reimbursements', which cannot be treated as services rendered. So far
so good. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>"Pure Agent" concept - no longer a pre-requisite for exemption of service tax on reimbursements </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">In
terms of Rule 5, at it has stood from 19-4-2006, reimbursements are
exempted only if the eight golden conditions laid down therein, are
fulfilled, cumulatively. In most practical situations, it would be
impossible to fulfil all the eight conditions laid down, with the
result, that, most reimbursements are now being subjected to service
tax. In terms of this decision, the concept of ‘pure agent' being a
pre-requisite for claiming exemption from levy of service tax on
reimbursements would no longer be valid. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Implications on valuation of free supply of materials by service receiver </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">As
we know, practice of the service receiver providing materials for use
by the service provider, is a widely used concept, especially, in the
Realty Sector. There have been judicial decisions for and against the
value of the materials supplied free of cost, by the service receiver
(popularly known as FOC materials). While the Madras High Court in the <i>L & T </i>case <i><span style="font-size: xx-small;"><b>[ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2007/2007-TIOL-176-HC-MAD-ST.htm" target="_blank">2007-TIOL-176-HC-MAD-ST</a> ]</b></span></i><b>,</b> the Delhi High Court in the <i>Era Infra Engg Ltd's </i>case <b><i><span style="font-size: xx-small;">[<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-386-HC-DEL-ST.htm" target="_blank">2008-TIOL-386-HC-Del-ST</a>]</span></i></b> and the Calcutta High Court in the <i>Simplex Infrastructures Ltd's </i>case <span style="font-size: xx-small;"><b><i>[<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-899-HC-KOL-ST.htm" target="_blank"> 2010-TIOL</a></i></b></span><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-899-HC-KOL-ST.htm"><span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><span style="font-size: xx-small;"><b><i>-899</i></b></span></span><span style="font-size: xx-small;"><b><i>-HC-KOL-ST</i></b></span></a><span style="font-size: xx-small;"><b><i> ]</i></b></span> have taken a <i>prima facie </i>view
that, the value of the FOC materials cannot be included under the
‘gross amount charged', we also have the final decision of the CESTAT in
the <i>Jaihind Projects Ltd's </i>case <i><span style="font-size: xx-small;"><b>[ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-124-CESTAT-AHM.htm" target="_blank">2010-TIOL-124-CESTAT-Ahm</a> ]</b></span></i><b>,</b>
taking the view that service tax has to be paid on the free supply of
materials. It would seem that the validity of Rule 5(1) has not been
considered in these cases. With the Delhi High Court now striking down
Rule 5(1), the whole question of taxability of FOC materials would need
to be looked into afresh. It is felt that there is a possibility to take
the view that the FOC materials are nothing but a ‘cost' in terms of
the project being executed and consequently cannot form part of the
‘gross amount charged', so long as adequate documentation is maintained
by both the service provider as well as the service receiver. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Any planning possible, post this decision </b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">There
can be little doubt that, this decision gives rise to a number of
legally sustainable planning possibilities for Industry. It would now
make sense for service providers to keep documentation to clearly show
the different categories of costs and expenses and bill these separately
on service receivers, under claims of ‘reimbursement' and raise
separate bills for services charging service tax at the full rates. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;"><b>Before concluding...</b></span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">The
ramifications arising out of this decision could be far and wide. In
the Realty sector, as I know, flat buyers are charged service tax by
Developers/Builders on a host of ‘reimbursements' and with no mechanism
to avail of cenvat credit, the overall cost of buying an apartment goes
up significantly. Hopefully, post this decision, apartment buyers can
get flats at lesser overall prices. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">Similarly,
the recoveries made by employers from employees of expenses would no
longer be taxable as it can be said that the employer is only claiming a
reimbursement from the employee of these expenses. In fact, post this
decision, the reach of ‘Reverse Charge Mechanism' would seem to get
limited. </span></div>
<div align="justify">
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">The
Department, on the basis of Rule 5(1) has been taking the view that all
the money that flows, whether related to the services or not, from the
service receiver to the service provider is to be included under ‘gross
amount charged'. This decision comes as a huge relief in these cases
also and the whole concept of ‘gross amount charged' is bound to undergo
a sea change to the advantage of the service provider. </span></div>
<span style="font-family: Verdana, Arial, Helvetica, sans-serif; font-size: x-small;">As
mentioned a retrospective amendment cannot be ruled out…which, when it
happens, would give rise to a fresh round of litigation</span><br />
<br />
-------------------------------------------------------------------------------------------------<br />
W.P. (C) 6370/2008 Page 1 of 17 <br />
<br />
<br />
* IN THE HIGH COURT OF DELHI AT NEW DELHI <br />
<br />
Reserved on: 1st<br />
November, 2012 <br />
% Date of Decision: 30th<br />
November, 2012 <br />
<br />
+ W.P. (C) 6370/2008 <br />
<br />
INTERCONTINENTAL CONSULTANTS AND <br />
TECHNORATS PVT. LTD. .....Petitioner <br />
Through: Mr. J. K. Mittal, Mr. Arun Gulati and <br />
Mr. V. K. Jha, Advocate. <br />
versus <br />
<br />
U.O.I. & ANR. ......Respondents <br />
Through: Ms. Sonia Sharma and Mr. V. C. Jha, <br />
Advocates. <br />
<br />
CORAM: <br />
MR. JUSTICE S. RAVINDRA BHAT <br />
MR. JUSTICE R.V. EASWAR <br />
<br />
R.V. EASWAR, J.: <br />
<br />
<br />
In this writ petition, the petitioner challenges the constitutional validity of <br />
Rule 5 of the Service Tax (Determination of Value) Rules, 2006 to the extent it <br />
includes re-imbursement of expenses in the value of taxable services for the <br />
purposes of levy of service tax. The petitioner also contends, in the alternative that <br />
the said rule is ultra vires of the provisions of Section 66 and 67 of Chapter V of <br />
the Finance Act, 1994. <br />
2. The petitioner is a company providing consulting engineering services. It <br />
specialises in highways, structures, airports, urban and rural infrastructural projects <br />
and is engaged in various road projects outside and inside India. In the course of <br />
the carrying on of its business, the petitioner rendered consultancy services in <br />
respect of highway projects to the National Highway Authority of India (NHAI). <br />
The petitioner receives payments not only for its service but is also reimbursed W.P. (C) 6370/2008 Page 2 of 17 <br />
<br />
expenses incurred by it such as air travel, hotel stay, etc. It was paying service tax <br />
in respect of amounts received by it for services rendered to its clients. It was not <br />
paying any service tax in respect of the expenses incurred by it, which was <br />
reimbursed by the clients. On 19.10.2007, the Superintendent (Audit) Group II <br />
(Service Tax), New Delhi issued a letter to the petitioner on the subject “service <br />
tax audit for the financial year 2002-03 to 2006-07” and informed the petitioner as <br />
follows: - <br />
“During the scrutiny of the records it was observed that you have <br />
been charging and depositing service tax on remuneration income <br />
only in the case of invoices issued in the name of M/s. NHAI <br />
(National Highway Authority of India). As per the provision of <br />
sub-rule (i) of Rule 5 of the Service Tax (Determination of value) <br />
Rules, (Notification number 12/2006-ST, dated 19.04.2006) the <br />
service tax is liable to be charged on the gross value including <br />
reimbursable and out of pocket expenses like travelling, lodging <br />
and boarding etc. <br />
As per records, it was found that you have short paid <br />
Service Tax amounting to `1,30,26,572/- for the financial year <br />
2006-07. You are hereby directed to deposit the due service tax <br />
along with interest @ 13% under section 73 and 75 respectively of <br />
the Finance Act, 1994 within 15 days. <br />
The matter may please be treated MOST URGENT/ TIME <br />
BOUND.” <br />
<br />
3. In response to the above letter the petitioner provided monthwise details of <br />
professional income as well as reimbursable out of pocket expenses for the period <br />
mentioned in the letter. On 17.03.2008, a show-cause notice was issued by the <br />
Commissioner, Service Tax Commissionerate by which the petitioner was asked to <br />
show-cause why service tax of `3,55,80,738/- should not be recovered from it <br />
along with interest and penalty under Sections 76 to 78 of the Finance Act, 1994. <br />
The aforesaid figure of service tax was arrived at in the following manner in the <br />
show-cause notice. W.P. (C) 6370/2008 Page 3 of 17 <br />
<br />
<br />
Period <br />
Reimbursable <br />
Income <br />
Rate of <br />
Service <br />
Tax <br />
Service Tax Payable <br />
Total <br />
Service Tax <br />
Edu. <br />
Cess <br />
Oct’02 to <br />
April’03 <br />
99,42,433/- 5% 4,97,122/- - 4,97,122/- <br />
May’03 to <br />
Aug’04 <br />
4,87,83,282/- 8% 39,02,662/- - 39,02,662/- <br />
Sep’04 to <br />
March’06* <br />
13,22,66,980/- 10.2% 1,32,26,698/- 2,64,534/- 1,34,91,232/- <br />
April’06 to <br />
March’07 <br />
14,45,23,874/- 12.24% 1,73,42,865/- 3,46,857/- 1,76,89,722/- <br />
Total 33,55,16,569/- 3,49,69,347/- 6,11,391/- 3,55,80,738/- <br />
*(Note: - For the period prior to April’06, the reimbursable income on account of <br />
traveling lodging and boarding have not been taken into account). <br />
<br />
4. The basis of the show-cause notice was the provisions of sub-rule (1) of <br />
Rule 5 of the Service Tax (Determination of Value) Rules, 2006. It was the case of <br />
the respondent that under the aforesaid rule, service tax was to be charged on the <br />
gross value including reimbursable and out of pocket expenses such as travelling, <br />
boarding and lodging, transportation, office rent, office supplies and utilities, <br />
testing charges, etc. which, according to the respondent, were “essential expenses <br />
for providing the taxable service of consulting engineers”. It was stated in the <br />
show-cause notice that prior to 19.04.2006, under Section 67 of the Finance Act, <br />
1994, the value of taxable services in relation to consulting engineer services <br />
provided or to be provided by a consulting engineer to the client shall be the gross <br />
amount charged from the client in respect of engineering services. W.P. (C) 6370/2008 Page 4 of 17 <br />
<br />
5. The petitioner has filed the present writ petition with three prayers; (i) <br />
quashing rule 5 in its entirety of the Service Tax (Determination of Value) Rules, <br />
2006 to the extent it includes the reimbursement of expenses in the value of taxable <br />
service for the purpose of charging service tax and (ii) declaring the rule to be <br />
unconstitutional and ultra vires Sections 66 and 67 of the Finance Act, 1994 and <br />
(iii) for quashing the impugned show-cause notice-cum-demand dated 17.03.2008 <br />
holding that it is illegal, arbitrary, without jurisdiction and unconstitutional. <br />
6. There is no dispute that the petitioner obtained service tax code from <br />
service tax authorities for future payment of service tax w. e. f. 01.07.2002, nor is <br />
it in dispute that on 09.07.2007 the petitioner got itself registered with the service <br />
tax department as consulting engineering services and was paying service tax since <br />
1997 regularly. <br />
7. Service tax was introduced by Chapter V of the Finance Act, 1994. Section <br />
65 (105) defined “taxable service”. It contains several clauses but, herein we are <br />
concerned only with clause (g) which is applicable to the petitioner. Any service <br />
provided to any person, by a consulting engineer in relation to advice, consultancy <br />
or technical assistance in any manner in one or more disciplines of engineering <br />
including the discipline of computer hardware engineering is defined to be a <br />
taxable service under this clause. The charge of service tax is effectuated in <br />
Section 66 of the Act. It says that “there shall be levy of tax (hereinafter referred <br />
to as the service tax) @ 12% of the value of taxable services referred to in sub-<br />
clauses…………….of Section 65 and collected in such manner as may be <br />
prescribed”. Section 67 of the Act as it stood before being substituted by the <br />
Finance Act, 2006, w. e. f. 01.05.2006 was as under: - <br />
“67. Valuation of taxable services for charging service tax <br />
For the purposes of this Chapter, the value of any taxable service <br />
shall be the gross amount charged by the service provider for such <br />
provided or to be provided by him. W.P. (C) 6370/2008 Page 5 of 17 <br />
<br />
Explanation 1.- For the removal of doubts, it is hereby declared that <br />
the value of a taxable service, as the case may be, includes,- <br />
(a) the aggregate of commission or brokerage charges by a broker <br />
on the sale or purchase of securities including the commission or <br />
brokerage paid by the stock-broker to any sub-broker. <br />
(b) the adjustments made by the telegraph authority from any <br />
deposits made by the subscriber at the time of application for <br />
telephone connection or pager or facsimile or telegraph or telex or <br />
for leased circuit; <br />
(c)the amount of premium charged by the insurer from the policy <br />
holder; <br />
(d) the commission received by the air travel agent from the airline; <br />
(e) the commission, fee or any other sum received by an actuary, or <br />
intermediary or insurance intermediary or insurance agent from the <br />
insurer; <br />
(f) the reimbursement received by the authorized service station <br />
from manufacturer for carrying out any service of nay motor car, <br />
light motor vehicle or two wheeled motor vehicle manufactured by <br />
such manufacturer; and <br />
(g) the commission or any amount received by the rail travel agent <br />
from the Railways or the customer, <br />
But does not include- <br />
(i) initial deposit made by the subscriber at the time of application <br />
for telephone connection or pager or facsimile (FAX) or telephone <br />
or telex or for leased circuit; <br />
(ii) the cost of unexposed photography film, unrecorded magnetic <br />
tape or such other storage devices, if any, sold to the client during <br />
the course of providing the service; <br />
(iii) the cost of parts or accessories, or consumable such as <br />
lubricants and coolants, if any, sold to the customer during the <br />
course of service or repair of motor cars, light motor vehicle or two <br />
wheeled motor vehicles; <br />
(iv) the airfare collected by air travel agent in respect of service <br />
provided by him; W.P. (C) 6370/2008 Page 6 of 17 <br />
<br />
(v) the rail fare collected by rail travel agent in respect of service <br />
provided by him; <br />
(vi) the cost of parts or other material, if any, sold to the customer <br />
during the course of providing maintenance or repair service; <br />
(vii) the cost of parts or other material, if any, sold to the customer <br />
during the course of providing erection, commissioning or <br />
installation service; and <br />
(viii) interest on loan. <br />
Explanation 2 – Where the gross amount charged by a service <br />
provider is inclusive of service tax payable, the value of taxable <br />
service shall be such amount as with the addition of tax payable, is <br />
equal to the gross amount charged. <br />
Explanation 3.- For the removal of doubts, it is hereby declared that <br />
the gross amount charged for the taxable service shall include any <br />
amount received towards the taxable service before, during or after <br />
provision of such service.” <br />
8. The new Section 67 which came into effect from 01.05.2006 is shorter and <br />
it is as follows: - <br />
“67. Valuation of taxable services for charging service tax <br />
(1) Subject to the provisions of this Chapter, where service tax <br />
is chargeable on any taxable service with reference to its value, <br />
then such value shall, - <br />
(i) in a case where the provision of service is for a <br />
consideration in money, be the gross amount charged by <br />
the service provider for such service provided or to be <br />
provided by him; <br />
(ii) in a case where the provision of service is for a <br />
consideration not wholly or partly consisting of money, be <br />
such amount in money as, with the addition of service tax <br />
charged, is equivalent to the consideration; <br />
(iii) in a case where the provision of service is for a <br />
consideration which is not ascertainable, be the amount as <br />
may be determined in the prescribed manner. <br />
(2) Where the gross amount charged by a service provider, for <br />
the service provided or to be provided is inclusive of service tax W.P. (C) 6370/2008 Page 7 of 17 <br />
<br />
payable, the value of such taxable service shall be such amount as, <br />
with the addition of tax payable, is equal to the gross amount <br />
charged. <br />
(3) The gross amount charged for the taxable service shall <br />
include any amount received towards the taxable service before, <br />
during or after provision of such service. <br />
(4) Subject to the provisions of sub-sections (1), (2) and (3), <br />
the value shall be determined in such manner as may be <br />
prescribed. <br />
Explanation: For the purpose of this section, - <br />
(a) “consideration” includes any amount that is payable <br />
for the taxable services provided or to be provided; <br />
(b) “money” includes any currency, cheque, promissory <br />
note, letter of credit, draft, pay order, travelers cheque, <br />
money order, postal remittance and other similar <br />
instruments but does not include currency that is held <br />
for its numismatic value; <br />
(c) “gross amount charged” includes payment by cheque, <br />
credit card, deduction from account and any form of <br />
payment by issue of credit notes or debit notes and book <br />
adjustment, and any amount credited or debited, as the <br />
case may be, to any account, whether called “Suspense <br />
account” or by any other name, in the books of <br />
accounts of a person liable to pay service tax, where <br />
the transaction of taxable service is with any associated <br />
enterprise.” <br />
<br />
9. The Service Tax (Determination of Value) Rules, 2006, hereinafter referred <br />
to as “Rules”, was brought into effect from 01.06.2007. Rule 5 provided for <br />
“inclusion in or exclusion from value of certain expenditure or costs”. It is <br />
necessary to reproduce the rule, which is as follows: - <br />
“5. Inclusion in or exclusion from value of certain expenditure <br />
or costs <br />
(1) Where any expenditure or costs are incurred by the service <br />
provider in the course of providing taxable service, all such <br />
expenditure or costs shall be treated as consideration for the W.P. (C) 6370/2008 Page 8 of 17 <br />
<br />
taxable service provided or to be provided and shall be included in <br />
the value for the purpose of charging service tax on the said <br />
service. <br />
(2) Subject to the provisions of sub-rule (1), the expenditure or <br />
costs incurred by the service provider as a pure agent of the <br />
recipient of service, shall be excluded from the value of the taxable <br />
service if all the following conditions are satisfied, namely: - <br />
the service provider acts as a pure agent of the <br />
recipient of service when he makes payment to third <br />
party for the goods or services procured; <br />
the recipient of service receives and uses the goods or <br />
services so procured by the service provider in his <br />
capacity as pure agent of the recipient of service; <br />
the recipient of service is liable to make payment to the <br />
third party; <br />
the recipient of service authorities the service provider <br />
to make payment on his beahfl; <br />
the recipient of service knows that the goods and <br />
services for which payment has been made by the <br />
service provider shall be provided by the third party; <br />
the payment made by the service provider on behalf of <br />
the recipient of service has been separately indicated in <br />
the invoice issued by the service provider to the <br />
recipient of service; <br />
the service provider recovers from the recipient of <br />
service only such amount as has been paid by him to <br />
the third party; and <br />
the goods or services procured by the service provider <br />
from the third party as a pure agent of the recipient of <br />
service are in addition to the services he provides on <br />
his own account. <br />
Explanation 1 : For the purposes of sub-rule (2), “pure agent” <br />
means a person who – <br />
enters into a contractual agreement with the recipient <br />
of service to act as his pure agent to incur expenditure <br />
or costs in the course of providing taxable service; W.P. (C) 6370/2008 Page 9 of 17 <br />
<br />
neither intends to hold nor holds any title to the goods <br />
or services so procured or provided as pure agent of <br />
the recipient of service; <br />
does not use such goods or services so procured; and <br />
receives only the actual amount incurred to procure <br />
such goods or services. <br />
Explanation 2 : For the removal of doubts it is clarified that the <br />
value of the taxable service is the total amount of consideration <br />
consisting of all components of the taxable service and it is <br />
immaterial that the details of individual components of the total <br />
consideration is indicated separately in the invoice. <br />
Illustration 1 : X contracts with Y, a real estate agent to sell his <br />
house and thereupon Y gives an advertisement in television. Y <br />
billed X including charges for Television advertisement and paid <br />
service tax on the total consideration billed. In such a case, <br />
consideration for the service provided is what X pays to Y. Y does <br />
not act as an agent behalf of X when obtaining the television <br />
advertisement even if the cost of television advertisement is <br />
mentioned separately in the invoice issued by X. Advertising <br />
service is an input service for the estate agent in order to enable or <br />
facilitate him to perform his services as an estate agent. <br />
Illustration 2 : In the course of providing a taxable service, a <br />
service provider incurs costs such as traveling expenses, postage, <br />
telephone, etc., and may indicate these items separately on the <br />
invoice issued to the recipient of service. In such a case, the <br />
service provider is not acting as an agent of the recipient of service <br />
but procures such inputs or input service on his own account for <br />
providing the taxable service. Such expenses do not become <br />
reimbursable expenditure merely because they are indicated <br />
separately in the invoice issued by the service provider to the <br />
recipient of service. <br />
Illustration 3 : A contracts with B, an architect for building a <br />
house. During the course of providing the taxable service, B incurs <br />
expenses such as telephone charges, air travel tickets, hotel <br />
accommodation, etc., to enable him to effectively perform the <br />
provision of services to A. In such a case, in whatever form B <br />
recovers such expenditure from A, whether as a separately <br />
itemised expense or as part of an inclusive overall fee, service tax <br />
is payable on the total amount charged by B. Value of the taxable <br />
service for charging service tax is what A pays to B. W.P. (C) 6370/2008 Page 10 of 17 <br />
<br />
Illustration 4 : Company X provides a taxable service of rent-a-cab <br />
by providing chauffeur-driven cars for overseas visitors. The <br />
chauffeur is given a lump sum amount to cover his food and <br />
overnight accommodation and any other incidental expenses such <br />
as parking fees by the Company X during the tour. At the end of <br />
the tour, the chauffeur returns the balance of the amount with a <br />
statement of his expenses and the relevant bills. Company X <br />
charges these amounts from the recipients of service. The cost <br />
incurred by the chauffeur and billed to the recipient of service <br />
constitutes part of gross amount charged for the provision of <br />
services by the company X.” <br />
<br />
10. The contention of the petitioner that Rule 5(1) of the Rules, in as much as it <br />
provides that all expenditure or costs incurred by the service provider in the course <br />
of providing the taxable service shall be treated as consideration for the taxable <br />
service and shall be included in the value for the purpose of charging service tax <br />
goes beyond the mandate of Section 67 merits acceptance. Section 67 as it stood <br />
both before 01.05.2006 and after has been set out hereinabove. This section <br />
quantifies the charge of service tax provided in Section 66, which is the charging <br />
section. Section 67, both before and after 01.05.2006 authorises the determination <br />
of the value of the taxable service for the purpose of charging service tax under <br />
Section 66 as the gross amount charged by the service provider for such service <br />
provided or to be provided by him, in a case where the consideration for the <br />
service is money. The underlined words i.e. “for such service” are important in the <br />
setting of Section 66 and 67. The charge of service tax under Section 66 is on the <br />
value of taxable services. The taxable services are listed in Section 65(105). The <br />
service provided by the petitioner falls under clause (g). It is only the value of <br />
such service that is to say, the value of the service rendered by the petitioner to <br />
NHAI, which is that of a consulting engineer, that can be brought to charge and <br />
nothing more. The quantification of the value of the service can therefore never <br />
exceed the gross amount charged by the service provider for the service provided <br />
by him. Even if the rule has been made under Section 94 of the Act which <br />
provides for delegated legislation and authorises the Central Government to make <br />
rules by notification in the official gazette, such rules can only be made “for W.P. (C) 6370/2008 Page 11 of 17 <br />
<br />
carrying out the provisions of this Chapter” i.e. Chapter V of the Act which <br />
provides for the levy, quantification and collection of the service tax. The power <br />
to make rules can never exceed or go beyond the section which provides for the <br />
charge or collection of the service tax. <br />
11. In the aforesaid backdrop of the basic features of any legislation on tax, we <br />
have no hesitation in ruling that Rule 5 (1) which provides for inclusion of the <br />
expenditure or costs incurred by the service provider in the course of providing the <br />
taxable service in the value for the purpose of charging service tax is ultra vires <br />
Section 66 and 67 and travels much beyond the scope of those sections. To that <br />
extent it has to be struck down as bad in law. The expenditure or costs incurred by <br />
the service provider in the course of providing the taxable service can never be <br />
considered as the gross amount charged by the service provider “for such service” <br />
provided by him. The illustration 3 given below the Rule amplifies what is meant <br />
by sub-rule (1). In the illustration given, the architect who renders the service <br />
incurs expenses such as telephone charges, air travel tickets, hotel accommodation, <br />
etc. to enable him to effectively perform the services. The illustration, therefore, <br />
says that these expenses are to be included in the value of the taxable service. The <br />
illustration clearly shows how the boundaries of Section 67 are breached by the <br />
Rule. Apart from travelling beyond the scope and mandate of the Section, the Rule <br />
may also result in double taxation. If the expenses on air travel tickets are already <br />
subject to service tax and is included in the bill, to charge service tax again on the <br />
expense would certainly amount to double taxation. It is true that there can be <br />
double taxation, but it is equally true that it should be clearly provided for and <br />
intended; at any rate, double taxation cannot be enforced by implication. A <br />
Constitution Bench of the Supreme court in Jain Brothers v. Union of India, (1970) <br />
77 ITR 107 observed as follows, expounding the principles relating to double <br />
taxation: - <br />
“It is not disputed that there can be double taxation if the <br />
legislature has distinctly enacted it. It is only when there are <br />
general words of taxation and they have to be interpreted, they W.P. (C) 6370/2008 Page 12 of 17 <br />
<br />
cannot be so interpreted as to tax the subject twice over to the <br />
same tax (vide Channell J. in Stevens v. Durban-Roodepoort Gold <br />
Mining Co. Ltd.). The Constitution does not contain any <br />
prohibition against double taxation even if it be assumed that such <br />
a taxation is involved in the case of a firm and its partners after the <br />
amendment of section 23(5) by the Act of 1956. Nor is there any <br />
other enactment which interdicts such taxation. It is true that <br />
section 3 is the general charging section. Even if section 23(5) <br />
provides for the machinery for collection and recovery of the tax, <br />
once the legislature has, in clear terms, indicated that the income <br />
of the firm can be taxed in accordance with the Finance Act of <br />
1956 as also the income in the hands of the partners, the <br />
distinction between a charging and a machinery section is of no <br />
consequence. Both the sections have to be read together and <br />
construed harmoniously. It is significant that similar provisions <br />
have also been enacted in the Act of 1961. Sections 182 and 183 <br />
correspond substantially to section 23(5) except that the old <br />
section did not have a provision similar to sub-section (4) of <br />
section 182. After 1956, therefore, so far as registered firms are <br />
concerned the tax payable by the firm itself has to be assessed and <br />
the share of each partner in the income of the firm has to be <br />
included in his total income and assessed to tax accordingly. If <br />
any double taxation is involved the legislature itself has, in express <br />
words, sanctioned it. It is not open to any one thereafter to invoke <br />
the general principles that the subject cannot be taxed twice over.” <br />
12. There is ample authority for the proposition that the rules cannot override <br />
or overreach the provisions of the main enactment. In Central Bank of India v. <br />
Their Workmen, AIR 1960 SC 12, a Constitution Bench of the Supreme Court was <br />
concerned with the Banking Companies Act, 1949. Section 10 of the Act prohibit <br />
the grant of industrial bonus to bank employees in as much as such bonus is <br />
remuneration which takes the form of a share in the profits of the banking <br />
company. Rule 5 of the Banking Companies Rules, 1949, which were statutory <br />
rules, required a banking company to send periodically to the principle office of <br />
the Reserve Bank a statement in Form-I showing the remuneration paid during the <br />
previous calendar year to officers of the company. In a footnote to the Form, it <br />
was stated that remuneration includes salary, house allowance, dearness allowance, <br />
bonus, fees and allowances to Directors, etc. The contention was that Rule 5 <br />
enlarged the meaning and content of Section 10. The contention was repelled but W.P. (C) 6370/2008 Page 13 of 17 <br />
<br />
not on the ground that the rule can validly enlarge the content of the Section, but <br />
on the ground that the Section itself used the word “remuneration” in the widest <br />
sense. It was however acknowledged by the Court that the Rule cannot go beyond <br />
the statute. The relevant observations are: - <br />
“We do not say that a statutory rule can enlarge the meaning of <br />
S.10; if a rule goes beyond what the Section contemplates, the rule <br />
must yield to the statute. We have, however, pointed out earlier <br />
that S.10 itself uses the word “remuneration” in the widest sense, <br />
and R.5 and Form-I are to that extent in consonance with the <br />
Section.” <br />
It has not been suggested in the present case that the words “consideration in <br />
money” or “the gross amount charged” themselves have been used in section 67 in <br />
the widest sense of including the amounts collected by the service provider for his <br />
travel, hotel stay, transportation and other out of pocket expenses. These words <br />
have been defined in the Explanation below the section and it is significant that the <br />
out of pocket expenses such as travel, hotel stay, transportation etc. have not been <br />
included in those expressions. <br />
13. In Babaji Kondaji Garad v. Nasik Merchants Co-operative Bank Ltd., <br />
(1984) 2 SCC 50, the Supreme Court (Three-Judge Bench) observed as under: - <br />
“Now if there is any conflict between a statute and the subordinate <br />
legislation, it does not require elaborate reasoning to firmly state <br />
that the statute prevails over subordinate legislation and the bye-<br />
law, if not in conformity with the statute in order to give effect to <br />
the statutory provision the Rule or bye-law has to be ignored. The <br />
statutory provision has precedence and must be complied with.” <br />
<br />
14. A learned single Judge of this Court in Devi Datt v. Union of India, AIR <br />
1985 Delhi 195 held that though the language of Rule 102 of the Displaced <br />
Persons (Compensation and Rehabilitation) Rules, 1955 was wider in its ambit and <br />
covered the properties comprised in the compensation bill and entrusted to a <br />
managing officer for management, “but obviously the said rule has to be construed W.P. (C) 6370/2008 Page 14 of 17 <br />
<br />
in the light of the parent Section and it cannot be construed as enlarging the scope <br />
of Section 19 itself. It is a well settled canon of construction that the Rules made <br />
under a statute must be treated exactly as if they were in the Act and are of the <br />
same effect as if contained in the Act. There is another principle equally <br />
fundamental to the rules of construction, namely, that the Rules shall be consistent <br />
with the provisions of the Act. Hence, Rule 102 has to be construed in conformity <br />
with the scope and ambit of Section 19 and it must be ignored to the extent it <br />
appears to be inconsistent with provisions of Section 19”. In making these <br />
observations, the learned single Judge referred to and followed the judgment of the <br />
Supreme Court in State of Uttar Pradesh v. Babu Ram Upadhyay, AIR 1961 SC <br />
751. <br />
15. In the tax jurisprudence the position is no different and it has been held in <br />
CIT v. S.Chenniappa Mudaliar, (1969) 74 ITR 41 that if a rule clearly comes into <br />
conflict with the main enactment or if there is any repugnancy between the <br />
substantive provisions of the Act and the Rules made therein, it is the rule which <br />
must give way to the provisions of the Act. In Bimal Chandra Banerjee v. State of <br />
M.P. and Ors., (1971) 81 ITR 105, Hegde J. was examining the provisions of the <br />
M.P. Excise Act, 1915. The legislature levied excise duty only on those articles <br />
which came within the scope of Section 25 of that Act. The rule-making authority, <br />
which was the State Government, purported to levy duty on articles which did not <br />
fall within the scope of the Section. Holding this act of the State Government to be <br />
ultra vires the Section, it was observed as under: - <br />
“No tax can be imposed by any bye-law or rule or regulation <br />
unless the statute under which the subordinate legislation is made <br />
specially authorises the imposition even if it is assumed that the <br />
power to tax can be delegated to the executive. The basis of the <br />
statutory power conferred by the statute cannot be transgressed by <br />
the rule making authority. A rule making authority has no plenary <br />
power. It has to act within the limits of the power granted to it. <br />
16. In CIT, Andhra Pradesh v. Taj Mahal Hotel, (1971) 82 ITR 44 it was held <br />
by the Supreme Court that W.P. (C) 6370/2008 Page 15 of 17 <br />
<br />
“the Rules were meant only for the purpose of carrying out the <br />
provisions of the Act and they could not take away what was <br />
conferred by the Act or whittle down its effect.” <br />
17. In Commissioners of Customs and Excise v. Cure and Deeley Ltd., (1961) 3 <br />
WLR 788 (QB) the facts were these. Section 33(1) of the Finance Act, 1940 of the <br />
United Kingdom enacted that the Commissioners might make regulations <br />
providing for any method for which provision appeared to them to be necessary for <br />
the purpose of giving effect to the provisions of the Act and of enabling them to <br />
discharge the functions. The Commissioners framed Regulation 12 of the <br />
Purchase Tax Regulations, 1945. It stated that if any person failed to furnish a <br />
return as required by the regulation or furnished an incomplete return, then the <br />
Commissioners could determine the amount of tax appearing to them to be due <br />
from such person, and demand payment thereof. Such amount determined by the <br />
Commissioners was to be deemed to be the proper tax due from such person and <br />
the tax had to be paid within 7 days of the demand. The regulations did not <br />
provide for any appeal or for taking up the decision of the Commissioners to any <br />
Court of law. The validity of the regulation came up for consideration before the <br />
Court. Sachs J., observed as follows: - <br />
“To my mind a Court is bound before reaching a decision on the <br />
question whether a regulation is intra vires to examine the nature, <br />
objects, and scheme of the piece of legislation as a whole, and in <br />
the light of that examination to consider exactly what is the area <br />
over which powers are given by the section under which the <br />
competent authority is purporting to act.” <br />
It was ultimately held by the Court that Regulation 12 was ultra vires on three <br />
grounds. One of the grounds, which is relevant for our purpose, was that the <br />
regulation rendered the subject liable to pay such tax as the Commissioner believed <br />
to be due whereas the charging Section imposed a liability to pay such tax as in <br />
law was due. <br />
18. Section 66 levies service tax at a particular rate on the value of taxable <br />
services. Section 67 (1) makes the provisions of the section subject to the W.P. (C) 6370/2008 Page 16 of 17 <br />
<br />
provisions of Chapter V, which includes Section 66. This is a clear mandate that <br />
the value of taxable services for charging service tax has to be in consonance with <br />
Section 66 which levies a tax only on the taxable service and nothing else. There <br />
is thus in built mechanism to ensure that only the taxable service shall be evaluated <br />
under the provisions of 67. Clause (i) of sub-section (1) of Section 67 provides <br />
that the value of the taxable service shall be the gross amount charged by the <br />
service provider “for such service”. Reading Section 66 and Section 67 (1) (i) <br />
together and harmoniously, it seems clear to us that in the valuation of the taxable <br />
service, nothing more and nothing less than the consideration paid as quid pro quo <br />
for the service can be brought to charge. Sub-section (4) of Section 67 which <br />
enables the determination of the value of the taxable service “in such manner as <br />
may be prescribed” is expressly made subject to the provisions of sub-section (1). <br />
The thread which runs through Sections 66, 67 and Section 94, which empowers <br />
the Central Government to make rules for carrying out the provisions of Chapter V <br />
of the Act is manifest, in the sense that only the service actually provided by the <br />
service provider can be valued and assessed to service tax. We are, therefore, <br />
undoubtedly of the opinion that Rule 5 (1) of the Rules runs counter and is <br />
repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires. It <br />
purports to tax not what is due from the service provider under the charging <br />
Section, but it seeks to extract something more from him by including in the <br />
valuation of the taxable service the other expenditure and costs which are incurred <br />
by the service provider “in the course of providing taxable service”. What is <br />
brought to charge under the relevant Sections is only the consideration for the <br />
taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond <br />
the charging provisions and cannot be upheld. It is no answer to say that under <br />
sub-section (4) of Section 94 of the Act, every rule framed by the Central <br />
Government shall be laid before each House of Parliament and that the House has <br />
the power to modify the rule. As pointed out by the Supreme Court in Hukam <br />
Chand v. Union of India, AIR 1972 SC 2427: - W.P. (C) 6370/2008 Page 17 of 17 <br />
<br />
“The fact that the rules framed under the Act have to be laid before <br />
each House of Parliament would not confer validity on a rule if it <br />
is made not in conformity with Section 40 of the Act.” <br />
Thus Section 94 (4) does not add any greater force to the Rules than what they <br />
ordinarily have as species of subordinate legislation. <br />
19. For the above reasons we quash the impugned show-cause notice and allow <br />
the writ petition with no order as to costs. <br />
<br />
<br />
(R.V. EASWAR) <br />
JUDGE <br />
<br />
<br />
<br />
(S. RAVINDRA BHAT) <br />
JUDGE <br />
NOVEMBER 30, 2012 <br />
hs <br />
<br />
<br />
<br /></div>
</div>
venkatrao kedarihttp://www.blogger.com/profile/03753665157339360626noreply@blogger.com1tag:blogger.com,1999:blog-5497481255385309799.post-20806796537573812882012-11-11T02:36:00.000-08:002012-11-11T02:36:56.568-08:00EXTENDED PERIOD OF LIMITATION - JUDGEMENTS FROM JUDIS AND TIOL<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "Courier New";">IN THE CUSTOMS,
EXCISE AND SERVICE TAX</span></div>
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<span style="font-family: "Courier New";">APPELLATE TRIBUNAL</span></div>
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<span style="font-family: "Courier New";">SOUTH ZONAL BENCH AT
BANGALORE</span></div>
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<span style="font-family: "Courier New";">COURT - I</span></div>
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<span style="font-family: "Courier New";">Cross Objection
& Appeal No: ST/CO/27/2011 in ST/721/2010</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(Arising out of Order-in-Appeal No.3/2009 ST dt.5.1.2010
passed by the Commissioner of Central Excise, Bangalore.)</span></div>
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<span style="font-family: "Courier New";">Date of Hearing:
28.09.2011</span></div>
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<span style="font-family: "Courier New";">Date of decision:
28.09.2011 </span></div>
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<span style="font-family: "Courier New";">The Commissioner of
Service Tax </span></div>
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<span style="font-family: "Courier New";">Bangalore</span><span style="font-family: "Courier New";">.</span></div>
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<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">Appellant</span></div>
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<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">M/s. Gowri Computers (P) Ltd.</span></div>
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<span style="font-family: "Courier New";">Respondent</span></div>
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<span style="font-family: "Courier New";">For the appellants :
Ms. Sabrina Cano, DR for the department.</span></div>
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<span style="font-family: "Courier New";">For the respondents
: Mr. Pradyumna G.H, Advocate for the assessee</span></div>
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<span style="font-family: "Courier New";">CORAM</span></div>
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<span style="font-family: "Courier New";">SHRI P. G. CHACKO,
HON BLE MEMBER (JUDICIAL)</span></div>
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<span style="font-family: "Courier New";">FINAL ORDER
No._______________________2011</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>In the appeal filed by the department,
the short question to be considered is whether the lower appellate authority is
right in having set aside the penalties imposed on the assessee by the original
authority under Sections 76 and 78 of the Finance Act, 1994. The assessee
(respondent in the Revenue s appeal) has filed a counter styled as Cross
Objection and inappropriately registered by the registry. I have examined the
grounds of the appeal and the submissions of the respondent and have also heard
both sides.</span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>There was a dispute between the assessee and
the department as to whether the former was liable to pay Service Tax under the
head Commercial Training and Coaching Service over a period including the
period from 27.9.2004 to 8.3.2005. The assessee had not paid Service Tax even
after collecting it from the students (service recipients) during the said
period, nor had they filed Service Tax returns. However, during the course of
investigations launched by the department, the party paid Service Tax with
interest thereon for the period from 27.9.2004 to 8.3.2005. This payment was made
on 13.8.2005. The department issued a show-cause notice on 9.1.2006 for
appropriating this payment under Sections 73 and 75 of the Finance Act, 1994
and imposing penalties on the party under Sections 76 to 78 of the Act. The
proposal to impose penalties was contested. The Assistant Commissioner
(adjudicating authority) confirmed the demand of Service Tax of Rs.1,95,436/-
and interest of Rs.8,254/- against the assessee under Sections 73 and 75
respectively and appropriated the payment towards the demand. He imposed a
penalty of Rs.100 per day on them under Section 76 and a penalty equal to
Service Tax under Section 78 of the Act. In an appeal filed by the assessee,
learned Commissioner (Appeals) set aside both the penalties by relying on the
Board s Circular No.137/167/2006-CX-4 dated 3.10.2007. The decision of the
Commissioner (Appeals) was reviewed in the department. Hence the present
appeal.</span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Learned
DR</span><span style="font-family: "Courier New";">
submits that the Board s circular is not applicable to this case as this case
involves suppression of facts and contravention of Rules by the assessee with
intent to evade payment of Service Tax. It is submitted that this case is
governed by Section 73(1A) of the Act and that the provisions of Section 73(3)
of the Act are not applicable. Learned DR has also claimed the benefit of the
following decisions :</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">(i) Kedia Business
Centre Vs. CCE, Mumbai-I - 2009 (15) STR 550 (Tri.-Mumbai)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii) Global Telecom
Vs. CST, Mumbai - 2009 (15) STR 553 (Tri.-Mumbai)</span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Learned counsel for the respondent submits
that any suppression of taxable value of the service was not alleged in the
show-cause notice and also that a major part of the demand of Service Tax is
within the normal period of limitation as reckoned from the due date of filing
Service Tax returns. In this connection, reliance is placed on Ashpra Textiles
Pvt. Ltd. Vs. CCE, Mumbai-II - 2010 (253) ELT 138 (Tri.-Mumbai). Therefore,
according to the learned counsel, the show-cause notice cannot be considered to
have been issued under the proviso to Section 73(1) of the Finance Act, 1994
and consequently there can be no penalty on the respondent under Section 78 of
the Act. It is also argued that the respondent cannot be penalized under
Section 76 in view of the Board s circular. Finally, it is urged that the appeal
of the Revenue be dismissed.</span></div>
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<span style="font-family: "Courier New";">5.<span style="mso-tab-count: 1;"> </span>Neither of the rival arguments can be
accepted in toto. The show-cause notice in this case was issued on 9.1.2006
principally for confirming demand of Service Tax against the assessee for the
period from 27.9.2004 to 8.3.2005. The demand for the said period barring a few
days (27th to 30th September 2004) was within the normal period of limitation
as reckoned from the due date of filing Service Tax returns. This fact is not
in dispute. Though, in the show-cause notice, there was a proposal to impose
penalty under Section 78 of the Act for willful suppression of the value of
taxable services rendered by them , there was no allegation of any such
suppression elsewhere in the notice in the context of demanding / appropriating
Service Tax. Nowhere in the show-cause notice was there any specific allegation
of suppression of taxable value, nor was it stated as to how much of the
taxable value was suppressed. The show-cause notice also did not allege any of
the other ingredients of the proviso to Section 73 (1) of the Act for invoking
the extended period of limitation. In this scenario, it can hardly be inferred
that the show-cause notice invoked the proviso to Section 73(1) of the Act.
Mere mention of the proviso to Section 73(1) of the Act in the operative part
of the show-cause notice would not suffice. It has, therefore, to be held that
the proviso was not invoked by the department. Consequently the appellant s
prayer for imposing penalty on the respondent under Section 78 is not
acceptable.</span></div>
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<span style="font-family: "Courier New";">6.<span style="mso-tab-count: 1;"> </span>The Board s circular dated 3.10.2007 deals
with two situations. In one situation, Section 73(1A) of the Finance Act, 1994
(which proviso is no more in the statute book today) is invoked in the
show-cause notice and the noticee pays Service Tax with interest thereon along
with penalty equal to 25% of the Service Tax within 30 days of receipt of the
notice. In such a situation, as per the Board s clarification, the payments so
made by the party should conclude the adjudication proceedings. In other words,
the party will have no further liability including penalty. In the second
situation, a person liable to pay Service Tax self-determines it and pays it up
before service of show-cause notice on him. Alternatively, he makes the payment
as determined by a Central Excise Officer before issue of show-cause notice. In
either case, the payment is made under intimation to the Central Excise Officer
whereupon no show-cause notice shall be served on the party in respect of the
amount paid. According to the Board s circular, such payments made by the party
should conclude all proceedings against them.</span></div>
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<span style="font-family: "Courier New";">7.<span style="mso-tab-count: 1;"> </span>Neither sub-section (1A) nor sub-section (3)
of Section 73 is applicable to the facts of this case and, therefore, the
Board s clarification is irrelevant. This apart, the Board s clarification
under Section 73(3) of the Act seems to be incorrect inasmuch as this provision
only prohibits issue/service of show-cause notice under sub-section (1) in
respect of the amount paid by the party. The amount paid by the party is an
amount of Service Tax. As per Section 73(3), there shall be no show-cause
notice under sub-section (1) of Section 73 in respect of the Service Tax
already paid by the party. There is no bar to issuance of a show-cause notice
for imposing a penalty. The Board s clarification on the point, therefore, does
not disclose the correct legal position.</span></div>
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<span style="font-family: "Courier New";">8.<span style="mso-tab-count: 1;"> </span>Reverting to the penal issue, I have, now, to
consider the question whether the respondent is liable to be penalized under
Section 76 of the Act. Default of payment of Service Tax from 27.9.2004 to
8.3.2004 is an admitted fact. The Service Tax for that period was paid only in
August 2005. Such default in payment of Service Tax would per se invite Section
76 as rightly found by the original authority. Indeed, nobody has argued before
me that Section 76 is not applicable to cases involving default of payment of
Service Tax. Therefore the decision of the lower appellate authority in
relation to Section 76 of the Finance Act, 1994 cannot be accepted. The
original authority imposed penalty at the rate of Rs.100 per day in terms of
Section 76, which is correct in law.</span></div>
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<span style="font-family: "Courier New";">9.<span style="mso-tab-count: 1;"> </span>In the result, the Revenue s appeal is partly
allowed by restoring the penalty imposed by the original authority under
Section 76 of the Finance Act, 1994. The respondent shall pay this penalty
without unreasonable delay. The Cross Objection is also disposed of for the
records.</span></div>
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<span style="font-family: "Courier New";">(Pronounced and
dictated in Open Court)</span></div>
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<span style="font-family: "Courier New";">(P. G. CHACKO) </span></div>
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<span style="font-family: "Courier New";">Member (Judicial)</span></div>
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<span style="font-family: "Courier New";">rv</span></div>
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<span style="font-family: "Courier New";">??</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>IN THE ,CUSTOMS, EXCISE & SERVICE TAX</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>APPELLATE TRIBUNAL </span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>SOUTH ZONAL BENCH, FKCCI<span style="mso-spacerun: yes;"> </span>COMPLEX, K.G. ROAD, </span></div>
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<span style="font-family: "Courier New";">BANGALORE</span><span style="font-family: "Courier New";"> <span style="mso-spacerun: yes;"> </span>56009.</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>DATE OF HEARING<span style="mso-spacerun: yes;"> </span>: 30/3/2011</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>DATE OF DECISION :
30/3/2011</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Cross Objection No.
56/2007</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Service Tax<span style="mso-spacerun: yes;"> </span>Appeal No. 194 of 2006 </span></div>
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<span style="font-family: "Courier New";">[Arising out of
Order-in-Appeal No. 56/2006 Central Excise dated 28.4.2006, passed by the
Commissioner of Central Excise (Appeals), Bangalore)</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";">For approval and
signature:</span></div>
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<span style="font-family: "Courier New";">Hon ble Shri M. V.
Ravindran, Member (Judicial)</span></div>
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<span style="font-family: "Courier New";">Hon ble Shri P.
Karthikeyan, Member (Technical)</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">1<span style="mso-tab-count: 1;"> </span>Whether Press Reporters may be allowed to
see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules,
1982?<span style="mso-tab-count: 1;"> </span>No</span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>Whether it should be released under Rule 27
of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative
report or not ?<span style="mso-tab-count: 1;"> </span>No </span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Whether Their Lordships wish to see the fair
copy of the Order?<span style="mso-tab-count: 1;"> </span>Seen </span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Whether Order is to be circulated to the
Departmental authorities?<span style="mso-tab-count: 1;"> </span>Yes</span></div>
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<span style="font-family: "Courier New";">Commissioner of
Service Tax, <span style="mso-tab-count: 4;"> </span><span style="mso-spacerun: yes;"> </span>Appellant </span></div>
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<span style="font-family: "Courier New";">Bangalore</span><span style="font-family: "Courier New";">.</span></div>
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<span style="font-family: "Courier New";">Vs.</span></div>
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<span style="font-family: "Courier New";">M/s Indian Institute
of Management,<span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span>Respondent</span></div>
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<span style="font-family: "Courier New";">Bangalore</span><span style="font-family: "Courier New";">. </span></div>
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<span style="font-family: "Courier New";">Present for the
Appellant<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span>Shri D. P. Nagendra Kumar, Jt. CDR</span></div>
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<span style="font-family: "Courier New";">Present for the
Respondent : S/Shri ARJ Nayak & Sai Prasad, Advocates </span></div>
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<span style="font-family: "Courier New";">CORAM : Hon ble Shri
M. V. Ravindran, Member (Judicial)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Hon ble Shri<span style="mso-spacerun: yes;"> </span>P. Karthikeyan, Member (Technical) </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>ORDER No..Dated 30/3/2011</span></div>
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<span style="font-family: "Courier New";">PER :<span style="mso-spacerun: yes;"> </span>M. V. RAVINDRAN</span></div>
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<span style="font-family: "Courier New";">This appeal is filed
by the Revenue against the Order-in-Appeal No. 56/2006-Central Excise dated
28.4.2006.<span style="mso-spacerun: yes;"> </span>The assessee has also filed
Cross Objection No. ST/Cross/56/2007 against the same Order-in-Appeal. Since
the issue involved has arisen out of the same impugned order, both the appeal
filed by the Revenue as well as the Cross Objection filed by the assessee are
disposed of<span style="mso-spacerun: yes;"> </span>by this common order. </span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>The facts of the case for consideration are
that the respondent herein<span style="mso-spacerun: yes;"> </span>periodically
conducts Campus Recruitment Programme in which various business organizations
participate and select the candidates for employment in their organizations.
The institute collects fees from the companies for participation and for
recruitment of the candidates separately.<span style="mso-spacerun: yes;">
</span>The Revenue authority is of the view that the activity undertaken by the
respondent is covered under Manpower Recruitment Agency attracting service
tax under the provisions of Finance Act, 1994.<span style="mso-spacerun: yes;">
</span>It is undisputed that in this case, the entire period is prior to
1.5.2006.<span style="mso-spacerun: yes;"> </span>The adjudicating authority had
held against the respondent herein.<span style="mso-spacerun: yes;">
</span>Against such an order, the respondent had<span style="mso-spacerun: yes;"> </span>filed an appeal before the Commissioner
(Appeals).<span style="mso-spacerun: yes;"> </span>The Commissioner (Appeals)
allowed the appeal filed by the respondent and set aside the Order-in-Original
by recording the following findings :</span></div>
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<span style="font-family: "Courier New";"> From the definition
of Commercial Concern and definition of commercial provided in various
dictionaries it is very clear that a commercial concern must be engaged in
business or trade having profit as the primary aim.<span style="mso-spacerun: yes;"> </span>An educational institution such as Indian
Institute of Management which is solely engaged in imparting education and at
times facilitates recruitment on their campus through interviews which is
incidental or ancillary to their main objective cannot be called as a
commercial concern, as they are not engaged in trade or commerce.<span style="mso-spacerun: yes;"> </span>Further the essence of trade or commerce
viz., the profit motive.<span style="mso-spacerun: yes;"> </span>No commercial
concern does the business for the sake of business without a profit
motive.<span style="mso-spacerun: yes;"> </span>The case law cited by the appellants
in the case of Deputy Commissioner Vs. South India Textile Research Association
and State of Tamil Nadu Vs. Cement Research Institute are very<span style="mso-spacerun: yes;"> </span>much relevant and the ratio of decisions
rendered are squarely applicable to the appellants case. </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span></span></div>
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<span style="font-family: "Courier New";">In view of the above
I hold that the appellants are not a commercial concern for the purpose of
charging service tax under the category manpower recruitment agency. </span></div>
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<span style="font-family: "Courier New";">The adjudicating
authority in her order observed that the appellants have registered themselves
with the service tax department for Management Consultancy Service , therefore
they should have registered themselves and paid service tax under the category
of man power recruitment agency also.<span style="mso-spacerun: yes;">
</span>This observation is meaningless., because in the definition of
management consultant the term commercial concern is not found and whoever
renders management consultancy services including institutes like Indian
Institute of Management should pay service tax. </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span></span></div>
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<span style="font-family: "Courier New";">Regarding demand
made for five years under Section 73 of the Finance Act, 1994, it is seen that
the show cause notice does not contain any allegation about fraud, collusion,
suppression of facts with an intent to evade payment of service tax.<span style="mso-spacerun: yes;"> </span>The adjudicating authority also agreed that
the appellant had reasonable cause for failure to register themselves to pay
service tax on the impugned service.<span style="mso-spacerun: yes;">
</span>This being the case demanding service tax for extended period of five
years is not tenable. </span></div>
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<span style="font-family: "Courier New";">In view of the
foregoing facts, I set aside the impugned Order-in-Original and allow the
appeal. </span></div>
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<span style="font-family: "Courier New";">Aggrieved by such an
order, the Revenue filed an appeal before the Tribunal. </span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>The learned Jt. CDR reiterates the Grounds
of Appeal which are as under :</span></div>
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<span style="font-family: "Courier New";">(i) The order of the
Commissioner (Appeals) in setting aside the OIO is not correct in fact or in
law.<span style="mso-spacerun: yes;"> </span>It is an undisputed fact that the
Institute is organizing / conducting periodical Campus Recruitment programmes
and various business organizations participate in the said programmes and
recruit the students / candidates for employment in their organizations.<span style="mso-spacerun: yes;"> </span>As a consideration towards service, the
Institute collects fee from all the business organizations for participation
and for recruitment of the candidates separately.<span style="mso-spacerun: yes;"> </span>It is admitted fact that the Institute receives
a consideration for the services provided by them.<span style="mso-spacerun: yes;"> </span>Therefore, the activity of the Institute in
allowing interviews inside their campus for a consideration is an activity of
Commercial Concern.<span style="mso-spacerun: yes;"> </span>The activity of the
Institute to facilitate Recruitment to various business organizations, even
if undertaken at times, merits to be categorized under Manpower Recruitment
Agency , as defined under Section 65 (68) of the Finance Act, 1994.<span style="mso-spacerun: yes;"> </span>The reference to various dictionary meanings
by the Commissioner (Appeals) is not correct, as the expression Commercial
Concern is defined in the Collection of Statistics Act, 1953 (32 of 1953), an
Act of the Parliament.<span style="mso-spacerun: yes;"> </span>It is well
settled that the expression defined in any law will prevail over dictionary
meanings. </span></div>
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<br /></div>
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<span style="font-family: "Courier New";">(ii) Indian
Institute of Management, Bangalore
is an academic institution.<span style="mso-spacerun: yes;"> </span>However,
nothing prevents them to get themselves engaged in activities of commercial
concern.<span style="mso-spacerun: yes;"> </span>Whenever the Institution
provides services of the aforesaid nature viz., recruitment, the institution
becomes a commercial concern and accordingly, the said services rendered shall
be taxable under Section 65 (68) of the Finance Act, 1994. </span></div>
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<br /></div>
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<span style="font-family: "Courier New";">(iii) The
Commissioner (Appeals) erroneously held that the demanding of Service Tax
invoking the extended period of five years is not tenable.<span style="mso-spacerun: yes;"> </span>In this case, the Institute was engaged in
the activity of providing taxable service of Manpower Recruitment
Agency .<span style="mso-spacerun: yes;"> </span>They have (i) failed to obtain
Registration under Section 69 of the Act in respect of the above services; (ii)
failed to pay appropriate Service Tax on the taxable value realized by them, as
required under Section 68 of the Act and (iii) failed to file periodical ST-3
returns under Section 77 of the Act.<span style="mso-spacerun: yes;">
</span>They had not informed the Department of their activity pertaining to
above service or its taxable value in any other manner.<span style="mso-spacerun: yes;"> </span>The evasion of Service Tax is clearly
established from the facts of the case.<span style="mso-spacerun: yes;">
</span>The assessee violated the provisions of law with intent to evade payment
of Service Tax.<span style="mso-spacerun: yes;"> </span>Therefore, the extended
period of five years under Section 73 (1) of the Act as invoked in the show
cause notice is legally tenable.<span style="mso-spacerun: yes;"> </span>In view
of the above, the impugned OIA is not proper nor legal and is liable to be set
aside. </span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>The learned Counsel on behalf of the
respondent submits that the period involved in this case is prior to 1.5.2006
and the Board vide Circular No. 86/4/2006-ST dated 1.11.2006 has clarified that
the institutes like IITs or IIMs were not liable to pay service tax for the period<span style="mso-spacerun: yes;"> </span>prior to 1.5.2006.<span style="mso-spacerun: yes;"> </span>It is the submission that the cross
objection filed by the assessee is nothing but in support of the order of the
Commissioner (Appeals). </span></div>
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<br /></div>
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<span style="font-family: "Courier New";">5.<span style="mso-tab-count: 1;"> </span>On a careful consideration of the submissions
made by both sides, we find that the finding of the Commissioner (Appeals) as
reproduced in Para 2 above is squarely as per
law settled by various judicial fora.<span style="mso-spacerun: yes;"> </span>It
is undisputed that the definition of manpower recruitment or supply agency
prior to 1.5.2006, was indicating<span style="mso-spacerun: yes;"> </span> any
commercial concern engaged in providing any service, directly or indirectly,
in any manner for recruitment of supply of manpower, temporarily or otherwise,
to a client. However with effect from 1.5.2006, the words commercial concern
have been replaced by the words any person .<span style="mso-spacerun: yes;">
</span>This would indicate that the Government is of the view that prior to
1.5.2006, services rendered by the institutes which are not commercial concern
would not fall under the service tax net.<span style="mso-spacerun: yes;">
</span>Since the issue involved in this case is prior to 1.5.2006 is squarely
covered various judicial fora and followed by Government s view, we hold that
the impugned order passed by the Commissioner (Appeals) is correct and legal
and does not suffer from any infirmity.<span style="mso-spacerun: yes;">
</span>The appeal filed by the Revenue is dismissed.<span style="mso-spacerun: yes;"> </span>Cross Objection filed by the assessee in
support of the impugned order is also disposed. </span></div>
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<span style="font-family: "Courier New";">(Pronounced and
dictated in the open court)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(P. Karthikeyan)<span style="mso-spacerun: yes;"> </span>(M. V.
Ravindran)</span></div>
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<span style="font-family: "Courier New";">Member
(Technical)<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Member (Judicial)</span></div>
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<span style="font-family: "Courier New";">/vc/</span></div>
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<span style="font-family: "Courier New";">IN THE CUSTOMS,
EXCISE AND SERVICE TAX APPELLATE TRIBUNAL</span></div>
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<span style="font-family: "Courier New";">SOUTH ZONAL BENCH AT
CHENNAI</span></div>
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<span style="font-family: "Courier New";">ST/219/2009</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>[Arising out of Order-in-Original No.01/2009
dated 05.01.2009<span style="mso-spacerun: yes;"> </span>passed by the
Commissioner of </span></div>
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<span style="font-family: "Courier New";">Central Excise,
Chennai-III]</span></div>
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<span style="font-family: "Courier New";">M/s. T.V.S. Motor
Company Limited</span></div>
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<span style="font-family: "Courier New";">Appellant</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Versus</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Commissioner of<span style="mso-spacerun: yes;"> </span>Central</span></div>
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<span style="font-family: "Courier New";">Excise, Chennai-III</span></div>
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<span style="font-family: "Courier New";">Respondent</span></div>
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<span style="font-family: "Courier New";">Appearance :</span></div>
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<span style="font-family: "Courier New";">None </span></div>
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<span style="font-family: "Courier New";">Shri V.V. Hariharan,
JCDR</span></div>
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<span style="font-family: "Courier New";">For the Appellant</span></div>
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<span style="font-family: "Courier New";">For the Respondent</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Heard and reserved
on: 7.6.2012<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;">
</span>Pronounced:<span style="mso-spacerun: yes;"> </span>13.6.2012<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">CORAM:<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">Dr.<span style="mso-spacerun: yes;"> </span>Chittaranjan Satapathy, Hon ble Technical
Member</span></div>
<div class="MsoNormal">
<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">Shri D.N. Panda,<span style="mso-spacerun: yes;"> </span>Hon ble<span style="mso-spacerun: yes;"> </span>Judicial Member</span></div>
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<span style="font-family: "Courier New";">Final Order
No.652/2012 dt.13.6.2012</span></div>
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<span style="font-family: "Courier New";">Per D.N. Panda</span></div>
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<span style="font-family: "Courier New";">1.<span style="mso-tab-count: 1;"> </span>Pursuant to Miscellaneous Order
No.258/2011<span style="mso-spacerun: yes;"> </span>passed by the Bench on
6.6.2011 against Revenue s application dated 30.11.2009 for early hearing, this
matter<span style="mso-spacerun: yes;"> </span>came up for hearing today after 3
(Three) years of passing Stay order vide No.411/2009<span style="mso-spacerun: yes;"> </span>dt. 18.5.2009 granting full waiver of
predeposit to the appellant against service tax demand of Rs.1,65,53,563/-
followed by levy of equal amount of penalty imposed under Section 78 of Finance
Act, 1994 (hereinafter referred to as the Act ) and interest on the said
service tax demanded.<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>None present for Appellant even though the
matter was repeatedly called<span style="mso-spacerun: yes;"> </span>and<span style="mso-spacerun: yes;"> </span>stay order as well as Miscellaneous order
aforesaid disclosed<span style="mso-spacerun: yes;"> </span>name of Shri K.S.
Venkatagiri and<span style="mso-spacerun: yes;"> </span>Shri V. Panchanathan
learned<span style="mso-spacerun: yes;"> </span>Counsels respectively in the
case. </span></div>
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<span style="font-family: "Courier New";">3. An application
addressed to the Assistant Registrar of<span style="mso-spacerun: yes;">
</span>Tribunal and signed by an unnamed person<span style="mso-spacerun: yes;">
</span>for Lakshmikumaran and Sridhanan was filed<span style="mso-spacerun: yes;"> </span>in Court today and none was found to be
present to state<span style="mso-spacerun: yes;"> </span>reasons of default of
Appellant or its Authorized Representative.<span style="mso-spacerun: yes;">
</span>The application stated<span style="mso-spacerun: yes;"> </span>that the
matter is listed today for final hearing at serial number 37 and Shri K.S.
Venkatagiri, Advocate who is authorized to appear in this matter<span style="mso-spacerun: yes;"> </span>is unable to appear due to his personal
reasons.<span style="mso-spacerun: yes;"> </span>Prayer was<span style="mso-spacerun: yes;"> </span>made<span style="mso-spacerun: yes;">
</span>therein<span style="mso-spacerun: yes;"> </span>to adjourn to a short
date after<span style="mso-spacerun: yes;"> </span>two weeks.<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>The application<span style="mso-spacerun: yes;"> </span>aforesaid not being signed naming the
signatory, an enquiry was made from record to ascertain whether any Vakalatnama
of Sri K.S. Venkatagiri is existing on record.<span style="mso-spacerun: yes;">
</span>But on thorough scrutiny of record containing 8 pages of order sheets<span style="mso-spacerun: yes;"> </span>and 278 pages<span style="mso-spacerun: yes;">
</span>appeal memo<span style="mso-spacerun: yes;"> </span>and other papers
(in appeal folder I) no vakalatnama<span style="mso-spacerun: yes;"> </span>was
found on record.<span style="mso-spacerun: yes;"> </span>The Court Master
accordingly noted as under:<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span> No vakalatnma has been filed by any one </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>in this case.<span style="mso-spacerun: yes;"> </span>Shri K.S.Venkatagiri, Advocate</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>who sought for adjournment has also
not filed</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>vakalat. <span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">5.<span style="mso-tab-count: 1;"> </span>Record further revealed that although early
hearing application of Revenue was allowed on 6.6.2011, for hearing the matter
on 11.8.2011, due to no Benches available,<span style="mso-spacerun: yes;">
</span>the matter was adjourned from time to time<span style="mso-spacerun: yes;"> </span>on 3 (three) occasions<span style="mso-spacerun: yes;"> </span>and finally came up to Board today.<span style="mso-spacerun: yes;"> </span>It is also apparent from record<span style="mso-spacerun: yes;"> </span>that the<span style="mso-spacerun: yes;">
</span>adjournments were noted under some signatures.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">6.<span style="mso-tab-count: 1;"> </span>Law is laid down by Apex Court in para 21 of the judgment in
the case of Uday Sankar Triyar<span style="mso-spacerun: yes;"> </span>Vs. <span style="mso-spacerun: yes;"> </span>Ram Kalesawar Prasad Singh and Anr. <span style="mso-spacerun: yes;"> </span>AIR 2006 SC 269<span style="mso-spacerun: yes;"> </span>with regard to filing up proper Vakalatnama
in a proceeding before Courts. which reads as under:</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span> 21.?We may at this juncture digress and
express our concern in regard to the manner in which defective Vakalatnamas are
routinely filed in courts. Vakalatnama, a species of Power of Attorney, is an
important document, which enables and authorizes the pleader appearing for a
litigant to do several acts as an Agent, which are binding on the litigant who
is the principal. It is a document which creates the special relationship
between the lawyer and the client. It regulates and governs the extent of
delegation of authority to the pleader and the terms and conditions governing
such delegation. It should, therefore, be properly filled/attested/accepted
with care and caution. Obtaining the signature of the litigant on blank
Vakalatnamas and filling them subsequently should be avoided. We may take
judicial notice of the following defects routinely found in Vakalatnamas filed
in courts :</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(a)<span style="mso-tab-count: 1;"> </span>Failure to mention the name/s of the person/s
executing the Vakalatnama, and leaving the relevant column blank;</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b)<span style="mso-tab-count: 1;"> </span>Failure to disclose the name, designation or
authority of the person executing the Vakalatnama on behalf of the grantor
(where the Vakalatnama is signed on behalf of a company, society or body) by
either affixing a seal or by mentioning the name and designation below the
signature of the executant (and failure to annex a copy of such authority with
the Vakalatnama).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(c)<span style="mso-tab-count: 1;"> </span>Failure on the part of the pleader in whose
favour the Vakalatnama is executed, to sign it in token of its acceptance.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(d)<span style="mso-tab-count: 1;"> </span>Failure to identify the person executing the
Vakalatnama or failure to certify that the pleader has satisfied himself about
the due execution of the Vakalatnama.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(e)<span style="mso-tab-count: 1;"> </span>Failure to mention the address of the pleader
for purpose of service (in particular in cases of outstation counsel).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(f)<span style="mso-tab-count: 1;"> </span>Where the Vakalatnama is executed by someone
for self and on behalf of someone else, failure to mention the fact that it is
being so executed. For example, when a father and the minor children are
parties, invariably there is a single signature of the father alone in the
Vakalatnama without any endorsement/statement that the signature is for self and
as guardian of his minor children . Similarly, where a firm and its partner, or
a company and its Director, or a Trust and its trustee, or an organisation and
its officebearer, execute a Vakalatnama, invariably there will be only one
signature without even an endorsement that the signature is both in his/her
personal capacity and as the person authorized to sign on behalf of the
corporate body/firm/society /organisation.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(g)<span style="mso-tab-count: 1;"> </span>Where the Vakalatnama is executed by a
power-of-attorney holder of a party, failure to disclose that it is being
executed by an Attorney-holder and failure to annex a copy of the power of
attorney;</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(h)<span style="mso-tab-count: 1;"> </span>Where several persons sign a single
vakalatnama, failure to affix the signatures seriatim, without mentioning their
serial numbers or names in brackets. (Many a time it is not possible to know
who have signed the Vakalatnama where the signatures are illegible scrawls);</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i)<span style="mso-tab-count: 1;"> </span>Pleaders engaged by a client, in turn,
executing vakalatnamas in favour of other pleaders for appearing in the same matter
or for filing an appeal or revision. (It is not uncommon in some areas for
mofussil lawyers to obtain signature of a litigant on a vakalatnama and come to
the seat of the High Court, and engage a pleader for appearance in a higher
court and execute a Vakalatnama in favour of such pleader).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">We have referred to
the above routine defects, as Registries/ Offices do not verify the
Vakalatnamas with the care and caution they deserve. Such failure many a time
leads to avoidable complications at later stages, as in the present case. The
need to issue appropriate instructions to the Registries/Offices to properly
check and verify the Vakalatnamas filed requires emphasis. Be that as it may
[Emphasis supplied].<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">7.<span style="mso-tab-count: 1;"> </span>Following aforesaid rulings<span style="mso-spacerun: yes;"> </span>of Apex
Court, Hon ble High Court of Delhi<span style="mso-spacerun: yes;"> </span>disposing a writ petition W.P.No.2651 of
2009<span style="mso-spacerun: yes;"> </span>on 8.10.2009<span style="mso-spacerun: yes;"> </span>in the case of Deepak Khosla Vs. UOI directed
as under:<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> 13.?We direct that
henceforth while scrutinizing the vakalatnamas filed, be it in the Registry of
this Court, the Subordinate Courts in Delhi or the Tribunals, Authorities and
Foras in Delhi, failure/defect in the vakalatnamas, noted in sub paras a to
e of Para 21 of the decision of the Supreme Court in Uday Shankar s case
(supra), shall be treated as a deficiency in the execution of the vakalatnamas
making liable the said vakalatnama to be returned Further, in the situation
contemplated by sub paras f to i of Para 21 of the decision in Uday
Shankar s case (supra), vakalatnamas not executed in the manner indicated in
the said sub paras shall also be treated as a deficiency in the execution of
the vakalatnama, making liable said vakalatnama to be returned.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">14.?We are passing
the directions in public interest for the reason even we have come across
vakalatnamas which are filed in a most lackadaisical manner. Many a times,
precious judicial time is lost in determining whether a proper representation
is being made under a proper authority . [Emphasis<span style="mso-spacerun: yes;"> </span>supplied]<span style="mso-spacerun: yes;">
</span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>The Hon ble Court further directed<span style="mso-spacerun: yes;"> </span>as under;<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>?<span style="mso-spacerun: yes;">
</span> 16.<span style="mso-spacerun: yes;"> </span>The Registrar General of
this Court is directed to make available a copy of this order to the Registry
of this Court and to forward a copy thereof to all the District Judges in Delhi
with a direction that strict compliance should be made with the letter and
spirit of the law and our directions pertaining to execution of vakalatnamas.
Similarly, to the Registrars of the Tribunals and Foras functioning in Delhi, a copy of this
order may be sent for compliance. [Emphasis supplies]<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">8.<span style="mso-spacerun: yes;"> </span>It is surprising that in this case,
Advocates<span style="mso-spacerun: yes;"> </span>from the cited<span style="mso-spacerun: yes;"> </span>law firm have appeared earlier and have
obtained waiver of pre-deposit and stay without there being any vakalatnama in
their favour.<span style="mso-spacerun: yes;"> </span>In the absence of<span style="mso-spacerun: yes;"> </span>a valid vakalatnama, they can neither be
allowed to represent the appellants nor any adjournment request from them can
be entertained. Hence, the adjournment request is declined.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">9.<span style="mso-tab-count: 1;"> </span>Considering that the appeal is already 3
years old and prayer<span style="mso-spacerun: yes;"> </span>of Revenue was to
expeditiously dispose the appeal due to blockage of crores of rupees of tax and
penalty involved in the appeal<span style="mso-spacerun: yes;"> </span>as well
as Appellant s knowledge of hearing<span style="mso-spacerun: yes;">
</span>granted by the<span style="mso-spacerun: yes;"> </span>Miscellaneous
order aforesaid, the matter was taken up for hearing<span style="mso-spacerun: yes;"> </span>with assistance of Representative for
Revenue.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10.<span style="mso-tab-count: 1;"> </span>Heard Revenue.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.<span style="mso-tab-count: 1;"> </span>Shri V.V. Hariharan, ld. Commissioner (AR) for
Revenue submitted that for the period March 2004 to September 2007, the<span style="mso-spacerun: yes;"> </span>Appellant was recipient of technical
consultancy and project consultancy services from service providers abroad
having no place of business in<span style="mso-spacerun: yes;"> </span>India and
such service falls under Consultancy Engineering Service.<span style="mso-spacerun: yes;"> </span>The service so received being taxable service
under the Act, the recipient was liable to pay service tax in terms of Section 66A
of the Act read with Rule 2(1)(d)(v)<span style="mso-spacerun: yes;"> </span>of
the Service Tax Rules, 1994.<span style="mso-spacerun: yes;"> </span>Admittedly
the appellant paid service tax on the reduced value of<span style="mso-spacerun: yes;"> </span>such taxable servicve without including the
income<span style="mso-spacerun: yes;"> </span>tax deducted at source under
Income tax Law to the consultancy fees<span style="mso-spacerun: yes;">
</span>paid to foreign consultant.<span style="mso-spacerun: yes;"> </span>That
resulted in short payment of service tax for which<span style="mso-spacerun: yes;"> </span>adjudication was made and that resulted in
proper demand<span style="mso-spacerun: yes;"> </span>by adjudication
order.<span style="mso-spacerun: yes;"> </span>It was categorically submitted by
Revenue<span style="mso-spacerun: yes;"> </span>that<span style="mso-spacerun: yes;"> </span>there was difference between<span style="mso-spacerun: yes;"> </span>the value paid to foreign service provider
and value disclosed in the service tax return giving rise to understatement of
gross amount resulting in short<span style="mso-spacerun: yes;"> </span>payment
of service tax.<span style="mso-spacerun: yes;"> </span>Tax deducted<span style="mso-spacerun: yes;"> </span>at source under income tax law was not
included in gross payment. Therefore,<span style="mso-spacerun: yes;">
</span>adjudication order which levied service tax on the gross value of
taxable service was correct and invocation of proviso to Section 73(1) of the
Act was justified for which that<span style="mso-spacerun: yes;"> </span>does
not call for interference in the present appeal.<span style="mso-spacerun: yes;"> </span>According tax, interest and penalty levied in
adjudication should be upheld.<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">12. <span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>Examined
the adjudication order thoroughly in absence of Appellant.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">13.<span style="mso-tab-count: 1;"> </span>Record reveals that Learned Adjudicating
Authority examined the Service tax<span style="mso-spacerun: yes;">
</span>Returns of the appellant for the admitted<span style="mso-spacerun: yes;"> </span>period i.e. March 2004 to September 2007 and
considered pleadings of the appellant to complete adjudication to the best of
his judgment when there was no proper<span style="mso-spacerun: yes;">
</span>disclosure of gross amount<span style="mso-spacerun: yes;"> </span>in the
return. He confirmed adjudication for above period during which<span style="mso-spacerun: yes;"> </span>technical consultancy and project consultancy
services<span style="mso-spacerun: yes;"> </span>were availed by appellant from
abroad and nature of service remained undisputed.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">14.<span style="mso-tab-count: 1;"> </span>One of the grounds of present appeal of
appellant is that services rendered outside Indi were not liable to service tax
prior to 18.4.2006 in view of no provision in that regard existed to realize
service tax from service recipient.<span style="mso-spacerun: yes;">
</span>There is no difference to this proposition when there was no law to tax
the impugned service received from abroad<span style="mso-spacerun: yes;">
</span>prior to 18.4.2006.<span style="mso-spacerun: yes;"> </span>Section 66A
was incorporated into the statute book<span style="mso-spacerun: yes;">
</span>with effect from 18.4.2006 to tax the taxable services provided<span style="mso-spacerun: yes;"> </span>by<span style="mso-spacerun: yes;">
</span>foreign service providers having no permanent address or usual place of
residence<span style="mso-spacerun: yes;"> </span>in India.<span style="mso-spacerun: yes;"> </span>The service so provided made<span style="mso-spacerun: yes;"> </span>recipients of<span style="mso-spacerun: yes;">
</span>the<span style="mso-spacerun: yes;"> </span>service in India who have<span style="mso-spacerun: yes;">
</span>their place of business or fixed establishment or permanent address
or<span style="mso-spacerun: yes;"> </span>usual place of residence is in India, liable to pay the service tax as if such
service<span style="mso-spacerun: yes;"> </span>is provided by the recipients in
India.<span style="mso-spacerun: yes;"> </span>Also Rule 2(i)(d)(iv) of Service tax Rules,
1994 made provision for recovery of service tax from such recipients.<span style="mso-spacerun: yes;"> </span>Thus the value of service received by the
appellant prior to 18.4.2006 shall not be liable to tax and adjudication order
to such extent shall get modified following the decision of Apex Court in Union
of India Vs<span style="mso-spacerun: yes;"> </span>Indian National Shipowners
Association [(2010 (17) STR j57 (SC)] where the decision of Hon ble High Court
of Bombay in Indian National Shipowners Association<span style="mso-spacerun: yes;"> </span>Vs. UOI [2009 (13) STR 235 (Bom)] holding no
liability arises<span style="mso-spacerun: yes;"> </span>against assessee<span style="mso-spacerun: yes;"> </span>was merged.<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">15.<span style="mso-tab-count: 1;"> </span>The crucial ground of appeal which caused
anxiety to Revenue is valuation of of taxable service.<span style="mso-spacerun: yes;"> </span>While appellant claimed that assessable value
of Consultancy Engineering service provided by the foreign consultant shall be
exclusive of income tax deducted<span style="mso-spacerun: yes;"> </span>at
source under the Income tax law<span style="mso-spacerun: yes;"> </span>for levy
of service tax if there shall be levy at all,<span style="mso-spacerun: yes;">
</span>Revenue claims that gross amount to be exigible to service tax shall
be<span style="mso-spacerun: yes;"> </span>before deduction of income tax at
source therefrom<span style="mso-spacerun: yes;"> </span>to tax.<span style="mso-spacerun: yes;"> </span>Appellant s further claim was that as per
contract it was obligation of appellant to make payment to the service
provider<span style="mso-spacerun: yes;"> </span>the<span style="mso-spacerun: yes;"> </span>engineering consultancy fees net of tax for
which the amount actually remitted to the service provider shall be basis of
levy.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">16.<span style="mso-tab-count: 1;"> </span>Section 67 of the Act has made provision for
valuation of taxable service for charging service tax.<span style="mso-spacerun: yes;"> </span>According to Section 67(1)(a) of the Act
where there is a monetary consideration paid to<span style="mso-spacerun: yes;">
</span>provide taxable<span style="mso-spacerun: yes;"> </span>service,<span style="mso-spacerun: yes;"> </span>the assessable value for levy of service tax
is gross amount charged by the Service provider for the taxable service
provided.<span style="mso-spacerun: yes;"> </span>Sub section (2) of the said
section has made provision to include the amount of service tax to the gross
valuie of consideration<span style="mso-spacerun: yes;"> </span>where taxable
service provided is inclusive<span style="mso-spacerun: yes;"> </span>of service
tax.<span style="mso-spacerun: yes;"> </span>The term consideration <span style="mso-spacerun: yes;"> </span>for the<span style="mso-spacerun: yes;">
</span>valuation<span style="mso-spacerun: yes;"> </span>of taxable service is
defined by explanation appearing under Section<span style="mso-spacerun: yes;">
</span>67 meaning that consideration includes any amount that is payable for
the taxable service provided or to be provided.<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">17.<span style="mso-tab-count: 1;"> </span>The liability of the appellant arose under the
Act in terms of Section 66A<span style="mso-spacerun: yes;"> </span>of the Act
as recipient of service of Engineering Consultancy<span style="mso-spacerun: yes;"> </span>from<span style="mso-spacerun: yes;">
</span>the Consultant abroad.<span style="mso-spacerun: yes;"> </span>Rule 7
(1) of the<span style="mso-spacerun: yes;"> </span>Service tax (determination of
value) Rules, 2006 which came into<span style="mso-spacerun: yes;"> </span>force
with effect from 19.4.2006<span style="mso-spacerun: yes;"> </span>has made
provision in respect of services covered by Section 66A<span style="mso-spacerun: yes;"> </span>of the Act.<span style="mso-spacerun: yes;">
</span>According to this<span style="mso-spacerun: yes;"> </span>Rule, measure
of value for taxation of<span style="mso-spacerun: yes;"> </span>service covered
by that Section<span style="mso-spacerun: yes;"> </span>shall be such amount as
is equal to the actual consideration charged for the services provided or to be
provided.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">18.<span style="mso-tab-count: 1;"> </span>Although the Show Cause Notice dated
19.11.2002 refers to para 5.1 at page 19 (Appendix 2 <span style="mso-spacerun: yes;"> </span>Terms and conditions) of the Agreement and a
copy thereof was enclosed to the said notice,<span style="mso-spacerun: yes;">
</span>that paper was not available in the<span style="mso-spacerun: yes;">
</span>paper<span style="mso-spacerun: yes;"> </span>book filed by the
appellant.<span style="mso-spacerun: yes;"> </span>The show cause notice
indicates that on perusal<span style="mso-spacerun: yes;"> </span>of the
agreement entered into between the assessee and<span style="mso-spacerun: yes;">
</span>M/s. Prodrive Automation Technology (Europe)<span style="mso-spacerun: yes;"> </span>Ltd (one of the service providers<span style="mso-spacerun: yes;"> </span>abroad) it appears that<span style="mso-spacerun: yes;"> </span>the price set out<span style="mso-spacerun: yes;"> </span>in the Consultancy<span style="mso-spacerun: yes;"> </span>Agreement as was examined<span style="mso-spacerun: yes;"> </span>by notice issuing authority<span style="mso-spacerun: yes;"> </span>noticed that to be<span style="mso-spacerun: yes;"> </span>net of all duties, taxes and other Government
charges which, where applicable were payable in addition to the price.<span style="mso-spacerun: yes;"> </span>Accordingly, Revenue held that income
deducted at source formed part of gross amount of consideration paid to<span style="mso-spacerun: yes;"> </span>foreign consultant.<span style="mso-spacerun: yes;"> </span>It appears that there were 22 service
providers as per Annexure to Show Cause Notice appearing at page 58 to 61 of
the Paper Book filed by the appellant.<span style="mso-spacerun: yes;">
</span>But no agreement copy was available on record or Paper Book. There was
no pleading on material facts by the appellant as to how the facts in issue
suggest and support defence of appellant that income tax deducted at source
shall not form part of the gross amount of taxable service received when Rule
7(1) of Service Tax (Determination of Value) Rules, 2006 provides that actual consideration
charged for the service provided or to be provided shall be assessable value in
respect of services covered by Section 66A of the Act. Therefore, the
expression what is actual consideration charged for service provided or to be
provided shall depend on the facts and circumstances of each case. Further, in
terms of Section 66A of the Act the service covered by that section is treated
as if the recipient had himself provided the service in India. Thus by
such legal fiction the consideration inclusive of income tax deducted at source
shall be assessable value for the purpose of the Act in the hands of the
service recipient. Since the Show Cause Notice states that the agreement with
M/s.<span style="mso-spacerun: yes;"> </span>Prodirve Automation Technology
(Europe)<span style="mso-spacerun: yes;"> </span>Ltd. in terms of para 5.1 at
page 19 (Appendix 2 <span style="mso-spacerun: yes;"> </span>Terms and
Conditions) of the agreement speaks of the price of contract payable was net of
taxes and taxes if any payable<span style="mso-spacerun: yes;"> </span>in
addition to the price of contract was payable by the payer thereon as price of
the contract<span style="mso-spacerun: yes;"> </span>and such factual aspect
remaining unrebutted by appellant clearly establishes that tax payable in India
was to form part of contract price. Thus consideration charged for the service
provided shall include income tax deducted at source as per terms of contract and
is in accord with Section 66A read with Rule 7(1) of the Service Tax
(Determination of Value) Rules 2006 for the reason that net price of contract
agreed to be paid to foreign consultant was to include income deducted at
source thereon to be price also. Thus the tax demand on the assessable value
comprising the consideration inclusive of income tax deducted at source
relating to the period (9.4.2006 to September 2007) which was agreed to be
price of the contract<span style="mso-spacerun: yes;"> </span>sustains.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">19.<span style="mso-tab-count: 1;"> </span>The appellant in para 22 of appeal memorandum
stated<span style="mso-spacerun: yes;"> </span>that in reply to Show Cause
Notice dated 19.11.2007 it was pleaded that the notice was barred by limitation
upto 30.9.2006. There is no quarrel to such proposition since law was not in
force prior to 18.4.2006 to bring the appellant to the purview of service tax
on the disputed issue following apex court decision<span style="mso-spacerun: yes;"> </span>in National Ship-owners Association case
(supra). Therefore, the appellant shall be liable to tax for the normal period
covered by the Show Cause Notice and tax demand with interest if any shall be
computable for such period and the adjudication order gets suitably modified to
this extent.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">20.<span style="mso-tab-count: 1;"> </span>One of the grounds<span style="mso-spacerun: yes;"> </span>of Appeal is to grant cum-tax benefit.<span style="mso-spacerun: yes;"> </span>The Authority may consider such grounds at
the time of raising<span style="mso-spacerun: yes;"> </span>modified demand in
accordance with law.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">21.<span style="mso-tab-count: 1;"> </span>So far as levy of penalty under Section 78 is
concerned, considering the difficulty in understanding the law applicable at
inception<span style="mso-spacerun: yes;"> </span>and date of incidence
to<span style="mso-spacerun: yes;"> </span>taxability, it would be proper to
waive the penalty imposed under that Section. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">22.<span style="mso-tab-count: 1;"> </span>In the light of the aforesaid discussions it
is ordered:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(1)<span style="mso-tab-count: 1;"> </span>That there shall not be levy of service tax on
the engineering consultancy services availed from foreign consultant abroad
prior to 18.4.2006.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(2)<span style="mso-tab-count: 1;"> </span>There shall be levy of service tax at the
applicable rate for the period 19.4.2006 to 30.9.2007 on the gross amount of
consideration inclusive of income tax deducted at source involved in availing
engineering consultancy service availed under Section 66A of the Act.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(3)<span style="mso-tab-count: 1;"> </span>Adjudication order gets modified by the extent
indicated in (1) and (2) above.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(4)<span style="mso-tab-count: 1;"> </span>Cum tax benefit if any admissible shall be
granted in accordance with law.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(4)<span style="mso-tab-count: 1;"> </span>There shall not be penalty under Section 78 of
Finance Act, 1994. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">( Pronounced in open
court on<span style="mso-spacerun: yes;"> </span>13.6.2012)<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(D.N. PANDA)<span style="mso-spacerun: yes;"> </span>(DR. CHITTARANJAN<span style="mso-spacerun: yes;"> </span>SATAPATHY)<span style="mso-spacerun: yes;"> </span>JUDICIAL MEMBER<span style="mso-spacerun: yes;"> </span>TECHNICAL MEMBER<span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Swamy</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">17</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;">
</span><span style="mso-spacerun: yes;"> </span>ST/219/2009</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">ST/219/2009</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>IN THE CUSTOMS, EXCISE & SERVICE TAX </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">APPELLATE TRIBUNAL</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">SOUTH ZONAL BENCH,
CHENNAI</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">S/128/2006 </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Arising out of
Order in Appeal No. 19/2006<span style="mso-spacerun: yes;"> </span>(CE) dated
21.02.2006, passed by the Commissioner of Central Excise (Appeals), Madurai).</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">For approval and
signature<span style="mso-tab-count: 1;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Hon ble Ms. JYOTI
BALASUNDARAM, VICE PRESIDENT</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">_________________________________________________________
</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1.<span style="mso-spacerun: yes;"> </span>Whether Press Reporters may be allowed to
see the<span style="mso-tab-count: 1;"> </span>:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>order for Publication as per Rule 27 of
the</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>CESTAT (Procedure) Rules, 1982?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>2.<span style="mso-spacerun: yes;">
</span>Whether it should be released under Rule 27 of the<span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>CESTAT (Procedure) Rules, 1982 for
publication </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>in any authoritative report or not?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-spacerun: yes;"> </span>Whether <span style="mso-spacerun: yes;"> </span>the Hon ble Member wishes to see the fair<span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>:<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>copy of the<span style="mso-spacerun: yes;"> </span>Order.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-spacerun: yes;"> </span>Whether order is to be circulated to the<span style="mso-tab-count: 2;"> </span> <span style="mso-tab-count: 1;"> </span>:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Departmental Authorities?<span style="mso-spacerun: yes;">
</span>_________________________________________________________</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">M/s. Kumaravel
Packers and Movers<span style="mso-tab-count: 2;"> </span>:<span style="mso-tab-count: 1;"> </span>Appellant</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span>Vs.</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";">CCE,<span style="mso-spacerun: yes;"> </span>Madurai
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<span style="font-family: "Courier New";">Shri Joseph
Prabhakar, Adv., for the appellant</span></div>
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<span style="font-family: "Courier New";">Shri<span style="mso-spacerun: yes;"> </span>T. H. Rao, SDR,<span style="mso-spacerun: yes;"> </span>for the respondent<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">CORAM</span></div>
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<span style="font-family: "Courier New";">Ms. JYOTI
BALASUNDARAM, VICE PRESIDENT</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 4;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 2;"> </span>Date
of<span style="mso-spacerun: yes;"> </span>hearing<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;">
</span>28.01.2010<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 3;"> </span>Date of<span style="mso-spacerun: yes;"> </span>decision <span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;">
</span>28.01.2010 </span></div>
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<span style="font-family: "Courier New";">FINAL ORDER No.
_____________ </span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Heard both sides on the appeal against
the confirmation of demand of service tax on the ground that the assessees were
rendering Cargo Handling Service, and imposition of penalty under the
provisions of Section 76 & 77 of the Finance Act, 1994.<span style="mso-spacerun: yes;"> </span>I find that on merits the issue stands
against the assessees by the Tribunal s decision in the case of J.K. Transport
Vs. CCE, Raipur <span style="mso-spacerun: yes;"> </span>2006 (2) STR 3
(Tri.-Del.), wherein it has been held that a proprietary firm, cannot be said
to be an individual undertaking the activity of loading and unloading of cargo
in individual capacity and hence covered under cargo handling services.<span style="mso-spacerun: yes;"> </span>However, I find merit in the submission of
the assessees that the demand for the period from August, 2002 to 31.01.2004,
is barred by limitation for the reason that the show cause notice neither
invokes the proviso to Section 73(1)(a) nor does it spell out any ingredient of
any suppression/misdeclaration with an intention to evade payment of duty so as
to make the extended period applicable.<span style="mso-spacerun: yes;">
</span>Since the period in dispute is from August, 2002 to 12.10.04, while the
show cause notice is dated 31.1.2005, I accept the contention of the assessees
that the demand for the period up to 31.01.2004 is barred by limitation.<span style="mso-spacerun: yes;"> </span>The demand for the period from February,2004
to 12.10.2004 is upheld and required to be requantified, for which purpose the
case is remanded to the adjudicating authority.<span style="mso-spacerun: yes;">
</span>Since, part of the demand is upheld, imposition of penalty under Section
76 and Section 77 are also required to be assessed and I order
accordingly.<span style="mso-spacerun: yes;"> </span>The appeal is thus partly
allowed in the above terms.</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>(Order
dictated and pronounced in the open Court)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 6;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 5;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(JYOTI<span style="mso-spacerun: yes;">
</span>BALASUNDARAM)<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>VICE
PRESIDENT</span></div>
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<span style="font-family: "Courier New";">BB</span></div>
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<span style="font-family: "Courier New";">IN THE CUSTOMS,
EXCISE AND SERVICE TAX APPELLATE TRIBUNAL</span></div>
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<span style="font-family: "Courier New";">SOUTH ZONAL BENCH AT
CHENNAI</span></div>
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<span style="font-family: "Courier New";">Appeal No.E/161/08</span></div>
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<span style="font-family: "Courier New";">[Arising out of
Order-in-Original No.3/2007-CE dated 31.12.2007 passed by the Commissioner of
Central Excise, Madurai]</span></div>
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<span style="font-family: "Courier New";">For approval and
signature:</span></div>
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<span style="font-family: "Courier New";">Hon ble Ms.JYOTI
BALASUNDARAM, Vice-President </span></div>
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<span style="font-family: "Courier New";">1.<span style="mso-tab-count: 1;"> </span>Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT<span style="mso-tab-count: 1;"> </span> (Procedure) Rules, 1982?<span style="mso-tab-count: 1;"> </span><span style="mso-tab-count: 4;"> </span><span style="mso-spacerun: yes;"> </span>:</span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>Whether it should be released under Rule 27
of the </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>CESTAT (Procedure) Rules, 1982 for
publication in any authoritative report or not?<span style="mso-tab-count: 4;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>:</span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Whether the Member wishes to see the fair
copy of</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>the Order?<span style="mso-tab-count: 8;"> </span><span style="mso-spacerun: yes;"> </span>:</span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Whether Order is to be circulated to the
Departmental</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>Authorities?<span style="mso-tab-count: 7;"> </span><span style="mso-spacerun: yes;">
</span>:</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span></span></div>
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<span style="font-family: "Courier New";">Fenner (India)
Ltd.</span></div>
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<span style="font-family: "Courier New";">Appellants</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Versus</span></div>
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<span style="font-family: "Courier New";">Commissioner of
Central Excise,</span></div>
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<span style="font-family: "Courier New";">Madurai</span><span style="font-family: "Courier New";"></span></div>
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<span style="font-family: "Courier New";">Respondent</span></div>
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<span style="font-family: "Courier New";">Appearance:</span></div>
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<span style="font-family: "Courier New";">Shri
K.S.Venkatagiri, Advocate</span></div>
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<span style="font-family: "Courier New";">Shri C.Rangaraju,
SDR</span></div>
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<span style="font-family: "Courier New";">For the Appellants</span></div>
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<span style="font-family: "Courier New";">For the Respondent</span></div>
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<span style="font-family: "Courier New";">CORAM:</span></div>
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<span style="font-family: "Courier New";">Hon ble Ms.Jyoti
Balasundaram, Vice-President </span></div>
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<span style="font-family: "Courier New";">Date of hearing<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;">
</span>13.11.2009</span></div>
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<span style="font-family: "Courier New";">Date of decision
:<span style="mso-spacerun: yes;"> </span>13.11.2009</span></div>
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<span style="font-family: "Courier New";">Final Order
No.____________</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span>The appellants herein, inter alia,
manufacture </span></div>
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<span style="font-family: "Courier New";">V Belts of three
varieties for use in automobile industry as well as industrial V Belts. A
show-cause notice dt. 28.6.96 was issued to them alleging gross undervaluation
of V Belts sold through depots and proposing recovery of approx. Rs.6 Crores
towards differential duty short-paid between 1.6.91 to 31.12.95 and proposing
imposition of penalty on the company and its officers.<span style="mso-spacerun: yes;"> </span>Vide order dt. 30.9.97, the Commissioner
confirmed the demand and imposed a penalty of Rs.1,20,00,000/- on the
appellant-company which filed appeal before the Tribunal, along with its
officers.<span style="mso-spacerun: yes;"> </span>Vide the final order
No.1582-1592/2000 dt. 27.10.2000, the Tribunal remanded the case to the
adjudicating authority for determination of the duty for a period of six months
prior to the issue of the SCN, setting aside the demand beyond the normal
period of limitation.<span style="mso-spacerun: yes;"> </span>The Tribunal also
directed that the question of imposition of penalty and its quantum should be
re-determined in the facts of the case and hence left open the question of
penalty, including its leviability. The appeal of the Revenue against the
Tribunal s order was dismissed by the apex court vide its order dt. 31.8.06 in
Civil Appeal Nos.4103 to 4110/2001.<span style="mso-spacerun: yes;"> </span>The
Commissioner confirmed the duty demand of Rs.17,22,209/-, dropped the
proceedings for recovery of interest but imposed a penalty of Rs.1 lakh under
the provisions of Rule 173Q of the Central Excise Rules, 1944. It is the
penalty that is challenged in the present appeal.</span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 2;"> </span>We have heard both sides.<span style="mso-spacerun: yes;"> </span>While it is true that </span></div>
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<span style="font-family: "Courier New";">mens rea is not a
necessary ingredient for imposition of penalty under sub-clauses (a), (b) and
(c) of Rule 173Q(1),<span style="mso-spacerun: yes;"> </span>I agree with the
appellants that the ingredients of either Rule 173(1) (a) or (b) or (c) have
not been made out against them.<span style="mso-spacerun: yes;"> </span>Rule
173Q(1) provides that if any manufacturer, producer, registered person<span style="mso-spacerun: yes;"> </span>of a warehouse or a registered dealer (a)
removes any excisable goods in contravention of any of the provisions of
these<span style="mso-spacerun: yes;"> </span>Rules or (b) does not account for
any excisable goods manufactured, produced or stored by him or (bb) takes
credit of duty or money <span style="mso-spacerun: yes;"> </span>or (bbb) enters
wilfully any wrong or incorrect particulars <span style="mso-spacerun: yes;"> </span>or (c) engages in the manufacture, production
or storage of any excisable goods without having applied for the registration
certificate required under Section 6 of the Act <span style="mso-spacerun: yes;"> </span>then, all such goods shall be liable to
confiscation and the manufacturer . shall be liable to penalty.<span style="mso-spacerun: yes;"> </span>The adjudicating authority has not arrived at
a conclusion as to whether the provisions of Rule 173Q (1) (a) or (b) or (c)
have been made out against the appellants, although he was required to do so in
terms of the Tribunal s remand order.<span style="mso-spacerun: yes;"> </span>Ld. DR has not been
able to explain as to how the case against the appellants fits in with the
requirements of any of these sub-clauses of Rule </span></div>
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<span style="font-family: "Courier New";">173Q (1). Hence
penalty on the appellants is not sustainable.<span style="mso-spacerun: yes;">
</span>Accordingly, I set aside the same and allow the appeal. </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;">
</span>(Operative part of the order was</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>pronounced in open court on 13.11.09)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 15;"> </span><span style="mso-tab-count: 4;"> </span><span style="mso-spacerun: yes;"> </span>(JYOTI BALASUNDARAM)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 3;"> </span><span style="mso-spacerun: yes;"> </span>VICE-PRESIDENT<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">gs</span></div>
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<span style="font-family: "Courier New";">2</span></div>
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<span style="font-family: "Courier New";">CUSTOMS, EXCISE
& SERVICE TAX APPELLATE TRIBUNAL, </span></div>
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<span style="font-family: "Courier New";">WEST BLOCK NO.II,
R.K. PURAM, NEW DELHI-110066.</span></div>
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<span style="font-family: "Courier New";">DIVISION BENCH</span></div>
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<span style="font-family: "Courier New";">COURT NO.3</span></div>
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<span style="font-family: "Courier New";">Service Tax Appeal
No.531 of 2008-Cus<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">(Arising out of
Order-in-Appeal No.46/VKG/2008 dt.5.5.08<span style="mso-spacerun: yes;">
</span>passed by the Commissioner of Service Tax, New Delhi)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;">
</span>Date of Hearing/Decision: 18.10.2011</span></div>
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</span></span></div>
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<span style="font-family: "Courier New";">For approval and
signature:</span></div>
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<span style="font-family: "Courier New";">Hon ble Mrs.Archana
Wadhwa, Member (Judicial)</span></div>
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<span style="font-family: "Courier New";">Hon ble Mr.Mathew
John, Member (Technical)</span></div>
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<span style="font-family: "Courier New";">1</span></div>
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<span style="font-family: "Courier New";">Whether Press
Reporters may be allowed to see the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">2</span></div>
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<span style="font-family: "Courier New";">Whether it should be
released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in
any authoritative report or not? </span></div>
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<span style="font-family: "Courier New";">3</span></div>
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<span style="font-family: "Courier New";">Whether Their
Lordships wish to see the fair copy of the Order?</span></div>
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<span style="font-family: "Courier New";">4</span></div>
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<span style="font-family: "Courier New";">Whether Order is to
be circulated to the Departmental authorities?</span></div>
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<span style="font-family: "Courier New";">CST, New Delhi<span style="mso-tab-count: 4;"> </span> <span style="mso-tab-count: 3;"> </span><span style="mso-spacerun: yes;"> </span>Appellant</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Vs.</span></div>
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<span style="font-family: "Courier New";">M/s.J.R.C.Grid
Engineers Pvt. Ltd.<span style="mso-tab-count: 3;"> </span><span style="mso-spacerun: yes;"> </span>Respondent<span style="mso-tab-count: 2;"> </span><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">Present for the
Appellant:<span style="mso-spacerun: yes;"> </span>Shri Amrish Jain, SDR</span></div>
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<span style="font-family: "Courier New";">Present for the
Respondent: Shri A.K.Batra, Advocate</span></div>
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<span style="font-family: "Courier New";">Coram: Hon ble
Mrs.Archana Wadhwa, Member (Judicial)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Hon ble Mr.Mathew John, Member (Technical)</span></div>
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<span style="font-family: "Courier New";">ORDER
NO._______________</span></div>
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<span style="font-family: "Courier New";">PER: ARCHANA WADHWA </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>Being aggrieved with that part of<span style="mso-spacerun: yes;"> </span>order of the Commissioner of Service Tax, New
Delhi vide which while confirming the demand of service tax, he has not imposed
any penalty on the respondent by invoking section 80 of Finance Act,1994, the
Revenue has filed the present appeal. We have heard Shri Amrish Jain, learned
SDR appearing for the Revenue and Shri A.k.Batra, learned Advocate appearing for
the respondents.</span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>It is seen that the adjudicating authority
has confirmed the demand of service tax against the respondents, who are
working as contractors for the construction of residential flats of welfare
organisations. The adjudicating authority, while holding that services provided
by the respondents fall under the category of Construction of Complexes as
defined under section 65 (30a) of Finance Act, 1994 has confirmed demand of
service tax of Rs.3,65,17,896/- which stands appropriated against service tax
liability paid by the respondents subsequently. The said part of order stands
accepted by the respondents. However, the adjudicating authority has not
imposed any penalty on the respondents under sections 76, 77 & 78 of
Finance Act, 1994, which part is impugned before us by the Revenue.</span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>After hearing both sides and after going
through the impugned order, we find that the adjudicating authority has
observed that during the relevant period, there was general confusion as regard
taxability on the projects involving non-profit/welfare organisation i.e.
residential welfare housing complexes, defence housing complexes, etc. Even the
contracts entered into between the respondents and service recipients did not
include element of service tax.<span style="mso-spacerun: yes;"> </span>He has
observed that the respondents responded to the investigations by the department
and deposited all their service tax liability well before issuance of show
cause notice.<span style="mso-spacerun: yes;"> </span>He also observed that it
is also evident from record that the matter was clarified only after the start
of investigation and the respondents had immediately made prompt payment of
service tax.<span style="mso-spacerun: yes;"> </span>They also applied for
centralized service tax registration on 17.8.06 and started making voluntary
payments of service tax with effect from 25.8.06.<span style="mso-spacerun: yes;"> </span>As such, he has observed that the above
factors constitute reasonable cause in terms of the provisions of section 80,
thus calling for non imposition of penalty under various sections of Finance
Act, 1994.<span style="mso-spacerun: yes;"> </span>For the above proposition, he
relied on the various decisions of the Tribunal.<span style="mso-spacerun: yes;"> </span>As against that part of the order, the
Revenue in their memo of appeal have contended that the respondents suppressed
the material fact with intention to evade payment of service tax and as such
proviso to section 73(1) of Finance Act has been correctly invoked against
them. They have paid service tax only being pointed out by the department. As
such, they have made prayer that non imposition of penalty by the adjudicating
authority by placing reliance on the Board s Circular F.No.137/176/2006-CX.4
dated 03.10.07 was not legal and correct.</span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>After appreciating the submissions made by
both sides, we find that the Commissioner had advanced valid and sufficient
reason for invoking section 80 of Finance Act, 1994.<span style="mso-spacerun: yes;"> </span>Merely because the service tax was paid by
the respondents at the start of the investigations by the Revenue, by itself
cannot be indicative of the fact that there was malafide intention and
suppression on their part.<span style="mso-spacerun: yes;"> </span>The Revenue
in their memo of appeal have not rebutted the findings of the Commissioner
there was utter confusion in the field during the relevant period regarding the
taxability on the projects involving non profit/welfare organization i.e.
residential complexes, defence housing complexes which were constructed by the
respondents for various organisations and the same can lead to a reasonable
belief that no service tax liability arises in respect of such
construction.<span style="mso-spacerun: yes;"> </span>Further, we find that the
reliance by the Commissioner on the Board s circular dated 03.10.07 and various
clarification issued by the Ministry which are to the effect that once dues of
service tax stands paid alongwith interest by the assessee and intimated to the
department, the entire proceedings are deemed to be concluded, is legal and
proper.<span style="mso-spacerun: yes;"> </span>We find<span style="mso-spacerun: yes;"> </span>no reason to take view different than the one
taken by the Commissioner.<span style="mso-spacerun: yes;"> </span>Accordingly,
the appeal filed by the Revenue is rejected.<span style="mso-spacerun: yes;">
</span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(Pronounced in the open court) </span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(ARCHANA WADHWA)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>MEMBER (JUDICIAL)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(MATHEW JOHN)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>MEMBER (TECHNICAL)</span></div>
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<span style="font-family: "Courier New";">IN THE CUSTOMS,
EXCISE & SERVICE TAX<span style="mso-spacerun: yes;"> </span>APPELLATE
TRIBUNAL</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 2;"> </span>Date
of Hearing:29.09.2011</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Date of Decision :29.09.2011.</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Service Tax<span style="mso-spacerun: yes;"> </span>Appeal No.736 of 2007</span></div>
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<span style="font-family: "Courier New";">M/s.Sonam Regency
Inn Pvt. Ltd. <span style="mso-tab-count: 3;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>Appellant<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">Versus</span></div>
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<span style="font-family: "Courier New";">CST, Delhi<span style="mso-tab-count: 5;"> </span> <span style="mso-tab-count: 4;"> </span><span style="mso-spacerun: yes;"> </span>Respondent</span></div>
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<span style="font-family: "Courier New";">[Arising out of
Order-in-Original No.9/VKD/2007 dated 21.05.2007 passed by the Commissioner of
Service Tax, New Delhi]</span></div>
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<span style="font-family: "Courier New";">For approval and
signature: </span></div>
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<span style="font-family: "Courier New";">Hon ble Smt. Archana
Wadhwa, Member (Judicial)</span></div>
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<span style="font-family: "Courier New";">Hon ble Shri<span style="mso-spacerun: yes;"> </span>Rakesh Kumar, Member (Technical)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span></span></div>
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<span style="font-family: "Courier New";">1. <span style="mso-tab-count: 1;"> </span>Whether Press Reporters may be allowed to see<span style="mso-tab-count: 2;"> </span></span></div>
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<span style="font-family: "Courier New";">CESTAT (Procedure)
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">2. <span style="mso-tab-count: 1;"> </span>Whether it should be released under Rule 27 of
the<span style="mso-tab-count: 2;"> </span> <span style="mso-tab-count: 1;"> </span></span></div>
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<span style="font-family: "Courier New";">CESTAT (Procedure)
Rules, 1982 for publication</span></div>
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<span style="font-family: "Courier New";">in any authoritative
report or not? </span></div>
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<span style="font-family: "Courier New";">3. <span style="mso-tab-count: 1;"> </span>Whether Their Lordships wish to see the fair
copy<span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;">
</span></span></div>
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<span style="font-family: "Courier New";">of the Order?</span></div>
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<span style="font-family: "Courier New";">4. <span style="mso-tab-count: 1;"> </span>Whether Order is to be circulated to the
Departmental </span></div>
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<span style="font-family: "Courier New";">authorities?<span style="mso-tab-count: 2;"> </span></span></div>
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<span style="font-family: "Courier New";">Appearance:<span style="mso-spacerun: yes;"> </span>Rep. by Shri Tarun Chawla, Advocate for the
appellant. </span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;">
</span>Rep. by Shri Sheo Narayan Singh, Jt. SDR</span></div>
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<span style="font-family: "Courier New";">CORAM : Hon ble Smt.
Archana Wadhwa, Member (Judicial) </span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Hon ble Shri Rakesh Kumar, Member
(Technical)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Order No. ________________ Dated :
29.09.2011</span></div>
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<span style="font-family: "Courier New";">Per Rakesh Kumar:</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>The appellant are engaged in the business
of running of guest house and rent-a-cab to their various clients.<span style="mso-spacerun: yes;"> </span>The appellant company was incorporated in the
month of February, 2002. Their company have two Directors<span style="mso-spacerun: yes;"> </span>namely Shri Bharat Bhushan Suri and Smt.
Sikha Suri. The services of rent-a-cab operator as defined under Section 65(91)<span style="mso-spacerun: yes;"> </span>read with Section 65(105)(o) of Finance Act,
1994 become taxable<span style="mso-spacerun: yes;"> </span>w.e.f. 16.10.98. In
December, 2003, the appellant s activities of rent-a-cab service came to the
notice of the department and on inquiry, it was found that though they had
obtained<span style="mso-spacerun: yes;"> </span>service tax registration on
20.06.2001, they<span style="mso-spacerun: yes;"> </span>were not paying service
tax and were not filing any return to the department in this regard. It was
found that during the period 2000-2001 to 2003-2004, they had received gross
amount of Rs.8,91,80,169/-<span style="mso-spacerun: yes;"> </span>on which
service tax chargeable was Rs.55,15,317/-,<span style="mso-spacerun: yes;">
</span>which had not been paid by them. In this background, a show cause notice
dated 6.5.2005 was issued to the appellant for demand of allegedly non-payment
of service tax of Rs.55,15,370/- along with interest and also for imposition of
penalty on them under Sections 75A, 76 & 78 of Finance Act, 1994. The show
cause notice was adjudicated by the Commissioner vide order-in-original dated
21.05.2007 by which </span></div>
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<span style="font-family: "Courier New";">(a) service tax
demand of Rs.55,15,370/- was upheld against the appellant along with interest
under Section 75 of the Finance Act, 1994;</span></div>
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<span style="font-family: "Courier New";">(b) penalties of
Rs.500/-<span style="mso-spacerun: yes;"> </span>and Rs.1,000/- were imposed on
the appellant under Section 75A and 77 respectively;</span></div>
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<span style="font-family: "Courier New";">(c) penalty of
Rs.100/- per day for every day of failure<span style="mso-spacerun: yes;">
</span>to pay the tax amount<span style="mso-spacerun: yes;"> </span>due, till
the date of payment of tax,<span style="mso-spacerun: yes;"> </span>subject to
the total penalty not exceeding the amount<span style="mso-spacerun: yes;">
</span>of service tax amount i.e. R.55,15,370/- was imposed<span style="mso-spacerun: yes;"> </span>under the provisions of Section 76 of the
said Act; and </span></div>
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<span style="font-family: "Courier New";">(d) penalty of
Rs.55,15,370/- was imposed on the appellant under Section 78 of the Finance
Act, 1994.</span></div>
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<span style="font-family: "Courier New";">1.2<span style="mso-tab-count: 1;"> </span>The service tax demand was confirmed by
invoking longer limitation period under Section 73(1) by holding that
non-payment of tax was deliberate as the appellant had knowingly had not paid
the tax and filed<span style="mso-spacerun: yes;"> </span>the returns. </span></div>
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<span style="font-family: "Courier New";">1.3<span style="mso-tab-count: 1;"> </span>Against this order of the Commissioner, this
appeal has been filed. </span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Heard both the sides.</span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Shri Tarun Chawala, Advocate, ld. Counsel for
the appellant,<span style="mso-spacerun: yes;"> </span>pleaded that the impugned
order was passed behind the back of the appellant and thus, the principles of
natural justice have been violated, that there was no suppression of any facts
on the part of the appellant, and longer limitation period under Section
73(1)has been arbitrarily<span style="mso-spacerun: yes;"> </span>invoked, that
no penalty was imposable on the appellant under Section 75A, 76, 77 and 78 of
the Finance Act, 1994, and that in any case, the appellant were eligible for
60% abatement under Notification No.2/06-ST but the same has not been given.
He, therefore, pleaded that the impugned order is not correct.</span></div>
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<span style="font-family: "Courier New";">5.<span style="mso-tab-count: 1;"> </span>Shri Sheo Narayan Singh, ld. Jt. CDR defended
the impugned order by reiterating the findings of the Commissioner (Appeals) in
it and pleaded that in view of the judgment of the Punjab & Haryana High
Court in the case of CCE, Chandigarh Vs. Kuldeep Singh Gill reported in 2010
(18) STR 708 (P&H),<span style="mso-spacerun: yes;"> </span>there is no
doubt that the appellant s activities attracted service tax, that the
appellant had not disclosed their activities to the department, though the
services being provided by them were taxable since 1998, and that the extended
period under Rule 73 (1) has been rightly invoked and penalty under Section 78
and 76 has been correctly imposed. </span></div>
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<span style="font-family: "Courier New";">6.<span style="mso-tab-count: 1;"> </span>We have carefully considered the submissions
from both the sides and perused the records. We find that Shri Kulbhushan
Sinha, Accountant of the appellant in his statement recorded under Section 14
of the Central excise Act read with Section 83 of the Chapter V of<span style="mso-spacerun: yes;"> </span>Finance Act, 1994<span style="mso-spacerun: yes;"> </span>has stated that during the period of dispute,
the appellant company was providing rent-a-cab facility to their various
clients in addition to running their guest house. Shri Bharat Bhushan Suri,
Director of the appellant company in his statement dated 4.6.2004 has admitted
that they had not paid the service tax.<span style="mso-spacerun: yes;">
</span>On going through the memorandum of appeal, we find that the appellant
have not disputed that during the period of dispute, they were renting cabs to
their clients. Therefore, we hold that their activities were covered under
Section 65 (91) read with Section 65 (105)(O) of the Finance Act, 1994 and hence,
the same attracted service tax. Though the appellant in their memorandum of
appeal have pleaded that the service tax demand is not sustainable, they have
not given any reasons for the same. However, we find merit in their plea that
the adjudicating authority has confirmed the demand by calculating the service
tax at the applicable rate on the gross amount received by them without
considering the exemption under notification no.2/06-ST (predecessor
Notification No.9/04-ST), which subject to conditions as specified in it<span style="mso-spacerun: yes;"> </span>provided for exemption in relation to service
provided by rent-a-cab scheme operator for renting a cab from levy of Service
Tax under Section 66 of Finance Act, 1994, as is in excess of the service tax
calculated on the value which is equivalent to 40% of the gross amount charged
from any person by such operator for providing such taxable service. If, the
appellant satisfy the conditions for this exemption, they would be eligible for
the same. But in the impugned order, the applicability of this exemption has
not been considered at all. </span></div>
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<span style="font-family: "Courier New";">7.<span style="mso-tab-count: 1;"> </span>In view of this, the impugned order is set
aside and<span style="mso-spacerun: yes;"> </span>the matter is remanded to the
Commissioner for de novo adjudication after considering the appellant s claim
for exemption under Notification No.2/06-ST and its predecessor notification,
which were in force during the period of dispute. </span></div>
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<span style="font-family: "Courier New";">[Operative part of
the order already pronounced in open court]</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 6;"> </span>(Archana Wadhwa )</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 6;"> </span><span style="mso-spacerun: yes;"> </span>Member (Judicial)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 6;"> </span>Member (Technical)</span></div>
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<span style="font-family: "Courier New";">CUSTOMS EXCISE &
SERVICE TAX APPELLATE TRIBUNAL</span></div>
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<span style="font-family: "Courier New";">NEW DELHI</span><span style="font-family: "Courier New";"></span></div>
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<span style="font-family: "Courier New";">PRINCIPAL BENCH <span style="mso-spacerun: yes;"> </span>COURT NO.1</span></div>
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<span style="font-family: "Courier New";">For approval and
signature:</span></div>
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<span style="font-family: "Courier New";">Hon ble Justice Shri
R.M.S. Khandeparkar, President</span></div>
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<span style="font-family: "Courier New";">Hon ble Dr.
Chittaranjan Satapathy, Technical Member</span></div>
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<span style="font-family: "Courier New";">Hon ble Shri Ashok
Jindal, Judicial Member</span></div>
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<span style="font-family: "Courier New";">1.Whether Press
Reporters may be allowed to see under</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Rule 27 of the CESTAT (Procedure) Rules, 1982
for publication</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">2. Whether it should
be released under Rule 27 of the </span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>CESTAT (Procedure) Rules, 1982 for publication
in</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>any authoritative report or not?</span></div>
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<span style="font-family: "Courier New";">3. Whether Their
Lordships wish to see the fair copy</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>of the order?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4. Whether order is
to be circulated to the Departmental</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Authorities?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">ST/Appeal No.
32/2007</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Arising out of
order in appeal No.143/CE/Appl/Noida/06 dated 18.10.2006 passed by the
Commissioner (Appeals), Customs & Central Excise, Meerut-II, Noida)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">M/s Agauta Sugar & Chemicals<span style="mso-tab-count: 3;"> </span>Appellant</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;"><span style="mso-tab-count: 1;"> </span>Vs</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">CCE, Noida<span style="mso-tab-count: 7;"> </span>Respondent</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Present for the
Appellant <span style="mso-tab-count: 1;"> </span>: Shri A.R.M. Madhav Rao,
Advocate</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Present for the
Respondent<span style="mso-tab-count: 1;"> </span>: Shri R.K. Verma, DR</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 4;"> </span>.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;">
</span><span style="mso-tab-count: 2;"> </span>ST/Appeal No. 88/2007</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Arising out of
order in Appeal No. 104/GRM/ST/JPR.I/2006 dated 7.12.2006 passed by the
Commissioner (Appeals), Customs & Central Excise, Jaipur)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">M/s Jaipur Glass
& Potteries<span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;">
</span>Appellant</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>Vs</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">CCE, Jaipur-I<span style="mso-tab-count: 6;"> </span>Respondent</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Present for the
Appellant <span style="mso-tab-count: 1;"> </span>: Shri Hemant Bajaj, Advocate</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Present for the
Respondent<span style="mso-tab-count: 1;"> </span>: Shri R.K. Verma, DR<span style="mso-tab-count: 1;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 4;"> </span>..</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span><span style="mso-spacerun: yes;">
</span><span style="mso-tab-count: 2;"> </span>ST/Appeal No. 532/2006</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Arising out of
order in Appeal No. 65/GRM/CE/JPR.I/2006 dated 29.8.2006 passed by the
Commissioner (Appeals), Customs & Central Excise, Jaipur)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">M/s Guljag
Industries Ltd<span style="mso-tab-count: 4;"> </span>Appellant</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>Vs</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">CCE, Jaipur-I<span style="mso-tab-count: 6;"> </span>Respondent</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Present for the
Appellant <span style="mso-tab-count: 1;"> </span>: None</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Present for the
Respondent<span style="mso-tab-count: 1;"> </span>: Shri R.K. Verma, DR</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Coram: Hon ble
Justice Shri R.M.S. Khandeparkar, President</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Hon ble Dr. Chittaranjan Satapathy,
Technical Member</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;">
</span>Hon ble Shri Ashok Jindal, Judicial Member</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 4;"> </span>Date of Hearing: <span style="mso-tab-count: 3;"> </span>30.6.2010</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 2;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 4;"> </span>Date of Pronouncement:<span style="mso-spacerun: yes;"> </span>01.9.2010</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 3;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Misc. Order Nos.
219/2010 SM (Br.)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Per Dr. Chittaranjan
Satapathy </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>These appeals involve a common issue as to
whether service tax in relation to goods transport service received by the
appellants during the period 16.11.1997 to 1.6.1998 can be recovered by issue
of show-cause notice in the year 2004. The issue has been referred to the
Larger Bench by a Single Member Bench of the Tribunal vide Agauta Sugars Vs.
CCE <span style="mso-spacerun: yes;"> </span>2007 (8) STR 496 taking note of
difference of opinions expressed by different Benches of the Tribunal as
reflected in the cases of BPL Engineering Ltd. Vs. Commissioner of Service Tax <span style="mso-spacerun: yes;"> </span>2006 (3) STR 747 (Tri. <span style="mso-spacerun: yes;"> </span>Bang.) and R.K. Marbles Pvt. Ltd. Vs. CCE,
Jaipur <span style="mso-spacerun: yes;"> </span>II <span style="mso-spacerun: yes;"> </span>2007-TIOL-29-CESTAT-DEL on the one hand and
CCE Vs. Mangalam Cement <span style="mso-spacerun: yes;"> </span>2007 (7) STR 673
(Tri. <span style="mso-spacerun: yes;"> </span>Del.) on the other.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>In the case of R.K. Marbles (supra), it has
been held on 3.1.2006 by the Single Member Bench of the Tribunal that the issue
is squarely covered by the decision of the Tribunal in the case of L.H. Sugar
Factories Vs. CCE, Meerut <span style="mso-spacerun: yes;"> </span>2004 (165) ELT
161 on 1.1.2004 which has been upheld by the Hon ble Supreme Court in CCE,
Meerut Vs. L.H. Sugar Factories Ltd. <span style="mso-spacerun: yes;"> </span>2005 (187) ELT 5 (SC) on 27.7.2005. Hence the
demand of tax was set aside. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>In the case of BPL Engineering (supra), it
has been held on 10.5.2006 by the Division Bench that the demands cannot be
confirmed as the show-cause notice had not been issued prior to the amendment
made in the law in 2004 following the decision in L.H. Sugar (supra). </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>In the case of Mangalam Cement (supra), it
has been held in favour of the Revenue that the show-cause notice issued in
2004 is clearly within the prescribed period and therefore the demand is valid.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">STATUTATORY/ LEGAL
DEVELOPMENTS:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">5.<span style="mso-tab-count: 1;"> </span>For a better understanding of the issues
involved in these cases, we briefly indicate the statutory/ legal developments
that have taken place from time to time in respect of levy on goods transport
service:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1997</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i)<span style="mso-tab-count: 1;"> </span>Goods transport service was made taxable vide
Section 65(4)(m) by amendment of the Finance Act, 1994 by the Finance Act,
1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii)<span style="mso-tab-count: 1;"> </span>The levy was to become effective upon
notification in terms of Section 66(3) of the Act.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(iii)<span style="mso-tab-count: 1;"> </span>Under Section 68(1A), service tax was to be
collected from such person and in such manner as was to be prescribed and such
person was to be treated as the person responsible for collecting the service
tax.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(iv)<span style="mso-tab-count: 1;"> </span>By notification bearing No. 41/97-ST dated
November 5, 1997, the levy was made effective from November 16, 1997.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(v)<span style="mso-tab-count: 1;"> </span>By Notification bearing No. 42/97-ST dated
November 5, 1997,<span style="mso-spacerun: yes;"> </span>Rule 2(1)(d)(xvii) of
the Service Tax Rules, 1944 ( the Rules ) was made treating the customer of the
goods transport operator as the person responsible for collecting the service
tax.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1998</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i)<span style="mso-tab-count: 1;"> </span>By notification bearing No. 49/98-ST dated
June 2, 1998, exemption was granted in respect of goods transport service.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii)<span style="mso-tab-count: 1;"> </span>By the Finance (No.2) Act 1998, the provisions
in the Act relating to levy of service tax on goods transport service were done
away with.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">July 27, 1999</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>The Hon ble Supreme Court in Laghu Udyog
Bharati v. Union of India - 2006 (2) S.T.R. 276 (S.C.) = 1999 (112) E.L.T. 365
(S.C.) held, inter alia, that Rule 2(1)(d)(xvii) making the customer of the
goods transport operator as responsible for collecting the service tax was
ultra vires the Act. It was held that Section 68(1A) did not make the customer
the assessee and Section 70 providing for filing of return was not applicable
in the customer s case.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2000</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i)<span style="mso-tab-count: 1;"> </span>By Section 16 of the Finance Act, 2000, the
provisions of the Act were amended to provide for levy of service tax on goods
transport service for the period July, 16, 1997 to August 1, 1998. The
definitions of assessee and taxable service and the charging and valuation Sections
66 and 67 were amended and definitions of goods carriage and goods transport
operator were inserted.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii)?Section 117 of
the Finance Act, 2000 validated Rule 2(1)(d)(xvii) and previous actions on the
basis thereof.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2003</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i)<span style="mso-tab-count: 1;"> </span>By Section 158 of the Finance Act, 2003, the
provisions of the Act was modified with effect from July 16, 1997. A proviso
was inserted below Section 68(1) making the customer of the goods transport
operator as the person liable to pay service tax to the credit of the Central
Government. Section 71A was inserted making the customer liable to furnish
service tax return within six months from the date on which the Finance Bill,
2003 received the assent of the President. The rule-making power under Section
94 was amended to include the making of rule for furnishing the return under
Section 71A.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii)<span style="mso-tab-count: 1;"> </span>Rule 7A was inserted in the Rules with effect
from May 14, 2003 providing for furnishing of return by the customer of a goods
transport operator for the period November 16, 1997 to June 2, 1998 within a
period of six months from May 13, 2003 failing which the interest and penal
consequences as provided in the Act were to follow.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2004</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>Section 73 was substituted by the Finance
(No.2) Act, 2004 with effect from September 10, 2004. Prior to the said
substitution, it applied to a case where return was to be filed under Section
70 but not where it was to be filed under Section 71A. The substituted section
sought to cover a Section 71A read with Rule 7A situation.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">March 17, 2005</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>The
Hon ble Supreme Court upheld the amendments made by Finance Acts, 2000 and 2003
in the case of Gujarat Ambuja Cements Ltd. v. Union of India, 2006 (3) S.T.R.
608 (S.C.) = 2005 (182) E.L.T. 33 (S.C.).</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">SUBMISSIONS BY THE
APPELLANTS:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">6 (a) The issue that
no show cause notice can be issued even after 10.9.2004 is already settled by
the Tribunal in R. K. Marble (supra) and in B.P.L.Engineering (supra). In the
present cases, the show cause notices have been issued after that date and
hence, they require to be set aside.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b)<span style="mso-tab-count: 1;"> </span>The relevant period is 16.11.1997 to 1.6.1998.
No demand could have been raised prior to amendments made in Section 73 with
effect from 10.9.2004. As such the demand is time-barred by the time amendment
is made and therefore the show-cause notice issued in the year 2004 is invalid.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(c)<span style="mso-tab-count: 1;"> </span>Even under the amended Section 73, the present
demand is time-barred. The appellants were required to file a single return
under Rule 7A and not a periodical return under Rule 7. As such, Section
73(6)(i)(c) was applicable in respect of the appellants and therefore, the
relevant date was the date when service tax was required to be paid by the
appellants. As per Rule 6(1), the service tax for the period 16.11.1997 to
1.6.1998 was required to be paid by 15th day of the following month i.e., by
15th December, 1997 for the first period and by 15th July 1998 for the last
period. As such, the demands raised in the year 2004 are time-barred. The
Tribunal has erred in Mangalam Cement (supra) by ignoring Rule 6 of the Service
Tax Rules. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(d)<span style="mso-tab-count: 1;"> </span>A demand which is time-barred under an
existing provision of law cannot be revived by an amendment made to the said
provisions as held by the Hon ble Supreme Court in the case of S.S. Gadgil Vs.
Lal & Co. <span style="mso-spacerun: yes;"> </span>(1964) 53 ITR 231 (SC).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">SUBMISSIONS ON
BEHALF OF THE DEPARTMENT:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">7 (a)<span style="mso-tab-count: 1;"> </span>The legislative intent must be the
foundation of the interpretation of the statute. As has been held by the
Hon ble Supreme Court in the case of British Airways PLC Vs. Union of India <span style="mso-spacerun: yes;"> </span>2002 (139) ELT 6 (SC), it is the duty of the
Court to make such construction of a statute which shall suppress the mischief
and advance the remedy. He also cites the decision of the Hon ble Supreme Court
in the case of Directorate of Enforcement Vs. Deepak Mahajan <span style="mso-spacerun: yes;"> </span>1994 (70) ELT 12 (SC) which has held that
every law is designed to further the ends of justice and not to frustrate the
same on the mere technicalities. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b)<span style="mso-tab-count: 1;"> </span>After the Hon ble Supreme Court rendered the
decision in the case of Laghu Udyog Bharati (supra), the necessary amendments
have been made in the law to make clear the Legislative intent and to enable
the Department to collect the tax levied on recipients of transport service. No
interpretation should be placed on the law which would defeat the legislative
intent. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(c)<span style="mso-tab-count: 1;"> </span>In the case of L.H. Sugars (supra), show-cause
notices were issued in 2002 prior to the amendments made in 2003 and 2004 and
the said decision is not applicable to the present cases where the show-cause
notices have been validly issued in 2004. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(d)<span style="mso-tab-count: 1;"> </span>Mangalam Cement (supra) has adequately dealt
with the issue relating to show-cause notices issued in the year 2004 and the
ratio of the same is applicable to the present cases.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(e)<span style="mso-tab-count: 1;"> </span>In the case of S.S. Gadgil (supra), time limit
was sought to be extended after the expiry of the prescribed period and in that
context the said judgment was delivered by the Hon ble Supreme Court, but in
the instant cases, the time limit was prescribed under Section 71A which was
inserted by the Finance Act, 2003 and hence the ratio of S.S. Gadgil (supra) is
not applicable to the present cases. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">FINDINGS</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">8.<span style="mso-tab-count: 1;"> </span>We have considered the arguments from both
sides as well as the case records and the cited decisions. First, we examine
the applicability of the decision in L. H. Sugar (supra) to the cases under
reference.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">APPLICABILITY OF
L.H. SUGAR DECISION:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">9.<span style="mso-tab-count: 1;"> </span>In the case of L.H. Sugar (supra), the
Tribunal took note of the fact that the show-cause notices were issued to the
appellants on different dates in 2002 demanding service tax from them for the
services received from the goods transport operators. In para 8, the Tribunal
held that the appellants are deemed to be persons liable to pay service tax but
went on to hold that appellants were required to file returns only under
Section 71A and since Section 73 applied only to assessees who are liable to
file return under Section 70, the show-cause notices issued to the appellants
under Section 73 as it stood on the date of issue of show-cause notice and also
under the provisions as amended by Finance Act, 2003 were not sustainable and
hence the order demanding service tax was also set aside. On appeal from the
Department, the Hon ble Supreme Court held as follows:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> <span style="mso-tab-count: 1;"> </span>We have heard counsel for the parties.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>Learned Counsel for the parties have drawn
our notice to the relevant provisions of the Finance Act as it stood in the
year 1994 and thereafter as it stood after the various amendments to the Act in
subsequent years. Having considered the relevant provisions of the Act, the
Tribunal has, inter alia, recorded the following conclusion.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> The above would
show that even the amended Section 73 takes in only the case of assessees who
are liable to file return under Section 70. Admittedly, the liability to file
return is cast on the appellants only under Section 71A. The class of persons
who come under Section 71A is not brought under the net of Section 73. The
above being the position show cause notices issued to the appellants invoking
Section 73 are not maintainable. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>We entirely agree with the conclusion arrived
at by the Tribunal. We find no merit in these appeals and the same are
accordingly dismissed. No order as to costs. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10. The L.H. Sugar
(supra) decision, as stated earlier, has been applied by the Tribunal to the
cases of BPL Engineering (supra) and R.K. Marbles (supra) though in those cases
the show-cause notices were issued in the year 2004 and hence those cases were
different from that of L.H. Sugars (supra) in which the show-cause notices were
issued in 2002. In the case of BPL Engineering (supra) the date of the
show-cause notice is not mentioned but it is stated by the Tribunal therein
that the show-cause notice had been issued only after the amendment in 2004. In
the case of R.K. Marbles (supra), the Tribunal has noted that the show-cause
notice was issued on 5.11.2004. Both the Tribunal Benches have granted relief
in BPL Engineering (supra) and R.K. Marbles (supra) applying the decision of
the L.H. Sugars (supra) but without taking into account the fact that Section
73 was amended with effect from 10.9.2004. On the other hand, the effect of the
amendment has been taken into consideration by the Tribunal in the case of
Mangalam Cement (supra) as is evident from the following findings: -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> 10.The relevant?
provisions of Sections 68(1), 71A and 73 as amended by Finance Act, 2004, with
effect from 10-9-2004 read as under :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">68. Payment of
service tax. - Every person providing taxable service to any person shall
pay?(1) service tax at the rate specified in Section 66 in such manner and
within such period as may be prescribed. Provided that -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>xxx???xxx???xxx<span style="mso-tab-count: 1;"> </span>xxx<span style="mso-tab-count: 1;"> </span>xxx<span style="mso-tab-count: 1;"> </span>xxx<span style="mso-tab-count: 1;"> </span>xxx</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii)<span style="mso-tab-count: 1;"> </span>in relation to services provided by goods
transport operator, every person who pays or is liable to pay the freight
either himself or through his agent for the transportation of goods by road in
a goods carriage for the period commencing on and from the 16th day of
November, 1997 and ending with 2nd day of June, 1998,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">shall be deemed
always to have been a person liable to pay service tax, for such services provided
to him, to the credit of the Central Government. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Filing of
return?71A. by certain customers. - Notwithstanding anything contained in the
provisions of Sections 69 and 70, the provisions thereof shall not apply to a
person referred to in the proviso to sub-section (1) of Section 68 for the
filing of return in respect of service tax for the respective period and
service specified therein and such person shall furnish return to the Central
Excise Officer within six months from the day on which the Finance Bill, 2003
receives the assent of the President in the prescribed manner on the basis of
the self-assessment of the service tax and the provisions of Section 71 shall
apply accordingly. (emphasis added). </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">73.?Recovery of
service tax not levied or paid or short-levied or short-paid or erroneously
refunded. - (1) Where any service tax has not been levied or paid or has been
short-levied or short-paid or erroneously refunded, the Central Excise Officer
may, within one year from the relevant date, serve notice on the person
chargeable with the service tax which has not been levied or paid or which has
been short levied or short-paid or the person to whom such tax refund has
erroneously been made, requiring him to show cause why he should not pay the
amount specified in the notice.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">xxx???xxx???xxx<span style="mso-tab-count: 1;"> </span>xxx<span style="mso-tab-count: 1;"> </span>xxx<span style="mso-tab-count: 1;"> </span>xxx<span style="mso-tab-count: 1;"> </span>xxx</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.The provisions of
Rule 6 and Rule 7A of the Service Tax Rules, 1994 read as under :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">6.?Payment of
service tax. - (1) The service tax on the value of taxable services received
during any calendar month shall be paid to the credit of the Central Government
by the 25th of the month immediately following the said calendar month.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Provided further
that where the assessee is an individual or proprietary firm or partnership
firm, the service tax on the value of taxable services received during any
quarter shall be paid to the credit of the Central Government by the 25th of
the month immediately following the said quarter.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">The assessee shall
deposit the service tax liable to be paid?(2) by him with the bank designated
by the Central Board of Excise and Customs for this purpose in Form TR-6 or in
any other manner prescribed by the Central Board of Excise and Customs.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>xxx <span style="mso-tab-count: 1;"> </span>xxx
<span style="mso-tab-count: 1;"> </span>xxx <span style="mso-tab-count: 1;"> </span>xxx</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">7A.?Returns in case
of taxable service provided by goods transport operators and clearing and
forwarding agents. - Notwithstanding anything contained in Rule 7, an assessee,
in case of service provided by -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(a)<span style="mso-tab-count: 1;"> </span>goods transport operator for the period
commencing on and from the 16th day of November, 1997 to 2nd day of June, 1998;
and</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b)<span style="mso-tab-count: 1;"> </span>clearing and forwarding agents for the period
commencing on and from the 16th day of July, 1997 to 16th day of October, 1998,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">shall furnish a
return within a period of six months from the 13th day of May, 2003, in Form
ST-3B along with copy of Form TR-6 in triplicate, failing which the interest
and penal consequences as provided in the Act shall follow. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">12.Relevant Form?
ST-3B in which returns of service tax for the period in question were to be
filed required the mode of payment, challan Nos. and date of challans to be
mentioned. The amount of service tax payable was also required to be mentioned
against item No. 7. A declaration in the self-assessment memorandum included in
the said Form to the effect that the particulars were in accordance with the
records and books maintained and were correctly stated, was to be made and it
was also to be stated that the assessee had assessed and paid the service tax
correctly in terms of the provisions of the Act and the Rules made thereunder.
The contents of the said form clearly indicate that it required the tax to be
paid with particulars of challans of payments to be shown therein. This form
indicates that it was prescribed for a specific situation arising by virtue of
the validating provisions that necessitated insertion of Rule 7A for filing of
the returns by the recipient of services provided by goods transport operators
for the specific period from 16th day of November 1997 to 2nd day of June 1998.
The returns were to be furnished within a period of six months from 13-5-2003
in the said form, along with copy of TR-6 in triplicate, which is a challan
showing payment of tax. If the return was filed within the time prescribed, no
interest or penalty was to be paid. Rule 7A was inserted in the context of Section
71A, which was inserted on or before 16-7-1997. The said provision of Section
71A reproduced hereinabove, inter alia, provided that any person referred to in
the proviso to sub-section (1) of Section 68 shall furnish return within six
months from the date on which the Finance Bill, 2003 received the assent of the
President, in the prescribed manner on the basis of the self-assessment of the
service tax and provisions of Section 71 shall apply accordingly. The
provisions of Section 71A and Rule 7A were necessitated because the liability
arising due to the validating provisions, which were upheld by the Apex Court,
required making of special provisions of fixing a date for filing of the
returns and payment of the tax dues. Such returns required to be filed by
virtue of the validating provisions, which made the liability survive in
respect of the period in question, could not have obviously been filed
periodically, as contemplated by Section 70. Section 70 was not applicable to
such special contingency and the provision applied to the normal situation,
which required that the person liable to pay service tax shall himself assess
and furnish a return in the prescribed form and in the prescribed manner. Such
returns were to be filed under Rule 7 under which every assessee was required
to submit half yearly returns in ST-3 Form or ST-3A by 25th of the month by
following the particular half-year. Therefore, the scheme of Section 70 read
with Rule 7 read with prescribed Forms ST-3 and ST-3A was wholly inapplicable to
the situation, which arose by virtue of service tax liability of the receiver
of GTO services, which arose by virtue of the validating laws at the much later
but with effect from 16-11-1997. The special provisions enacted under Sections
71A and Rule 7A were designed to give effect to and realize the purpose
underlying the validating provisions. It can be seen from the proviso to
sub-section (1) of Section 68, which was inserted with effect from 16-7-1997,
in relation to the services provided by goods transporter operator, that every
person who was liable to pay the freight for the transportation of goods for
the period commencing from 16th November, 1997 and ending with 2nd June, 1998,
shall be deemed always to have been a person liable to pay service tax for such
services provided to him, to the credit of the Central Government. This
provision made the respondents-assessees liable to pay the service tax in
respect of the services provided by the goods transport operators to them
during the said period and the respondents-assessees having failed in their
attempt to challenge the constitutionality of Section 116, which inserted the
said proviso in Section 68(1) and their petition along with writ petitions of
Gujarat Ambuja Cement Ltd. having been dismissed by Hon ble the Supreme Court,
they were liable to pay service tax by the time extended by Hon ble the Supreme
Court as per the directions contained in the order, which was passed in a group
of petitions including that of the present respondents. The contention that the
service tax was payable by the respondent-assessees on 25th of the next
calendar month as contemplated by Rule 6, which should be treated as the
relevant date , is, therefore, wholly misconceived and if accepted, will make
the validating provisions redundant though upheld by Hon ble the Apex Court.
Rule 6 relating to payment of service tax on the value of taxable services
received during any calendar month by 25th of the month immediately following
the calendar month has obvious reference to the periodic returns and payment of
tax contemplated by Section 70 read with Rule 7 and the prescribed Forms ST-3
and ST-3A. Sub-rule (5) of Rule 6 refers to Form ST-3A, and Explanation to
sub-rule (6) of Rule 6 refers to Form TR-6. In the very scheme of things, the
provisions of Rule 6 cannot apply to the specific liability arising to pay
service tax on the basis of validating provisions for which special provisions
were required to be made under Section 71A and Rule 7A and a special Form ST-3B
was required to be prescribed. Since the date of filing of returns was
specially prescribed for cases where the recipients of services of GTO for the
said period were made liable, only the special provisions of Rule 7A could be
applicable, which required the return to be filed and service tax paid by such
assessees within the outer date of six months from 13-5-2003, and such payment
was to be evidenced by furnishing TR-6 challans and indicating their
particulars as well as the particulars of the tax paid in the ST-3B Form
itself.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">?13.The reliance of
the respondents-assessees on the ratio of the decision in L.H. Sugar Factory
(supra), which is affirmed by Hon ble the Supreme Court by its order reported
in 2006 (3) S.T.R. 715 (S.C.) = 2005 (187) E.L.T. 5 (S.C.) is wholly misconceived
in view of the amendments in the law, particularly, by insertion of the proviso
to Section 68(1) and Section 71A which created enforceable liability of the
recipients of services from GTOs during the period from 16-11-1997 to 1-6-1998.
As held in J.K. Industries Ltd. v. CCE, Indore
reported in 2006 (3) S.T.R. 14 (Tri.-Del.), such assessees were bound to file
returns as mandatorily required by Section 7A. In the present case, the returns
were filed by the respondents as per the said machinery provisions of Section
71A read with Rule 7A, though the service tax was paid by them subsequently,
having lost on their writ petitions being dismissed by Hon ble the Supreme
Court. The respondents paid up the service tax in consonance with the outcome
of their petitions by the decision of Hon ble the Supreme Court, in a group of
petitions in Gujarat Ambuja Cement Ltd. (supra). The service tax liability was
assessed by the respondents-assessees in their ST-3B Form and was declared to
be a correct self-assessment, as required by that Form. They have asserted that
they had filed the ST-3B Form required to be filed under Rule 7A read with
Section 71A within the time prescribed which was extended by Hon ble the
Supreme Court by fifteen days from 14-11-2003. Under Section 71A, it was
provided that notwithstanding anything contained in the provisions of Sections
69 and 70, the provisions thereof shall not apply to a person referred to in
the proviso to sub-section (1) of Section 68 for the filing of return in
respect of service tax for the respective period and service specified therein,
and such person shall furnish return in the prescribed manner on the basis of
the self-assessment of the Service tax, and the provisions of Section 71 shall
apply accordingly. Even in cases where returns were furnished under Section 70
they were required to be taken up for verification under Section 71. Under
Section 72, which provided for best judgment assessment also, there was
reference to both the returns filed under Section 70 as well as cases where any
person having made a return failed to comply with the provisions of Section, as
also the cases where the proper officer was not satisfied with the correctness
or the completeness of the accounts of the assessee. Under Section 73(1)(a) as
it existed at the relevant time, there was reference not only to return made
under Section 70, but also to cases where the proper officer had reason to
believe that by reason of omission or failure, on the part of the assessee, to
disclose wholly or truly all material facts required for verification of the
assessment under Section 71, the value of taxable service had escaped
assessment or had been under-assessed, the requisite show cause notice would be
issued. If action of recovery was not contemplated in accordance with Section
73, there was no sense in enacting the provisions of Section 71A. The
interpretation of these provisions in the context of the decisions relied upon
by the learned Counsel had come up for consideration before the Hon ble Supreme
Court in Gujarat Ambuja Cement Ltd. v. Union of India reported in 2006 (3)
S.T.R. 608 (S.C.) = 2005 (182) E.L.T. 33 (S.C.), in which Hon ble Supreme Court
held that the law must be taken as having always been as was now brought about
by the Finance Act, 2000 and that the statutory foundation for the decision in
Laghu Udyog Bharati - 2006 (2) S.T.R. 276 (S.C.) = 1999 (112) E.L.T. 365 (S.C.)
was replaced and the said decision had ceased to be relevant for the purposes
of construing the provisions of the Act, as amended by the Finance Act, 2000.
Therefore, reliance placed on behalf of the respondents on the earlier decision
of the Hon ble Supreme Court in Laghu Udyog Bharati and the decision of the
Tribunal in L.H. Sugar Factories Ltd. case in which the ratio of the Laghu
Udyog Bharati was followed, is misplaced.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">?14.It will be
noticed from the decision in L.H. Sugar Factories Ltd. (supra) that the show
cause notice was issued in that case in the year 2002 and it is in that context
the Tribunal concluded in Para 9 that the show cause notice issued to those
appellants was not sustainable because under the provisions of Section 73, as
it stood on the date of issue of the show cause notice and also under the
provisions as amended by Finance Act, 2003 were not sustainable. Affirmation of
that decision by Hon ble the Supreme Court by order dated 27-7-2005 cannot be
construed as nullifying the effect of the ratio of the decision of the Apex
Court in Gujarat Ambuja Cement Ltd., (supra), in which it was categorically held,
in the context of the said provisions, that the law must be taken as having
always been as is now brought about by the Finance Act, 2000, and that the
statutory foundation for the decision in Laghu Udyog Bharati (which was
followed in L.H. Sugar Factories Ltd. by the Tribunal) had been replaced and
the decision has thereby ceased to be relevant for the purposes of construing
the amended provisions. The Hon ble the Supreme Court in the context of the
provisions of Section 71A held as under :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">In addition, Section
71 which provides for the filing of?returns was amended to provide, with
retrospective effect, for the insertion of Section 71 A. Under the newly
inserted section, the provisions of Sections 69 and 70 do not apply to a person
referred to in the proviso to sub-section (1) of Section 68 as far as the
filing of returns in respect of service tax for the period commencing from 16th
July 1997 was concerned. It seeks to provide that such persons shall furnish
return to the Central Excise Officer within six months from the day on which
the Finance Bill, 2003 receives the assent of the President in the prescribed
manner on the basis of the self-assessment of the service tax and the
provisions of Section 71 shall apply accordingly. This period was extended by this
Court by order dated 17-11-2003 for a period of two weeks with effect from the
date of the order. Section 94 as originally enacted for the rule making power
of the Central Government was amended to read with effect from 16th July 1997,
that the Central Government would also have the power to frame rules relating
to the manner of furnishing returns under Section 71A.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">There cannot be any
doubt that the object of these sections?20. is to nullify the effect of this
Court s decision in Laghu Udhdyog Bharati by retrospectively amending and
validating provisions held to be illegal. It is a well settled principle that
validation of a tax declared illegal may be done only if the grounds of
illegality or invalidity are capable of being removed and are in fact removed
and the tax thus made legal (vide Prithvi Cotton Mills Ltd. v. Broach Borough
Municipality, 2000 (123) E.L.T. 3 (S.C.) = (1970) 1 SCR 388; Indian Aluminium
Co. & Ors. v. State of Kerala, (1996) 7 SCC 637; K. Sankaran Nair v.
Devaki, (1996) 11 SCC 428; B. Krishna Bhat v. State of Karnataka, (2001) 4 SCC
227; N.A. Co-operative Mfg. Federation v. Union of India, AIR 2003 SC 1329). As
a proposition of law this cannot be and is not disputed. The question is
whether by enacting Sections 116 and 117 of the Finance Act, 2000 and Section
158 of the Finance Act, 2003, the bases on which this Court struck down Rule
2(1)(d), (xii) and (xvii) of the Service Tax Rules, 1994 had been displaced or
removed.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">?15.Relying on the
decision of the ratio in Gujarat Ambuja Cement Ltd. this Tribunal in J.K.
Industries Ltd. v. CCE, Indore (supra) held as under :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">It is a settled
legal position that a statutory Act may be?enacted prospectively or
retrospectively. The retrospective effect can be given in case of curative and
validating statutes. The curative statutes by their very nature are intended to
operate upon and affect past transactions having regard to the fact that they
operate on conditions already existing [See, ITW Signode India Ltd. v.
Collector of Central Excise reported in 2002 (158) E.L.T. 403 (S.C.)]. In the
present case, as already held by the Hon ble Supreme Court in Gujarat Ambuja
Cement Ltd. (supra), the law must be taken as having always been as was brought
out by Finance Act, 2000 and that the statutory foundation for the decision of
the Supreme Court in Laghu Udyog Bharati has been replaced and that decision
has ceased to be relevant for the purposes of construing the provisions of the
Act as amended by the Finance Act, 2000 and 2003. Therefore, the reliance on
behalf the appellant on the earlier decision of the Supreme Court in Laghu
Udyog Bharati case (supra) and on the decision of this Tribunal in L.H. Sugar
Factories Ltd. case (supra) in which relying upon, the decision in Laghu Udyog
Bharati, it was held that the show cause notices issued in that case by
invoking Section 73 of the goods were not maintainable, is misconceived, as
their ratio will now be applicable and the matter has to be viewed in the
context of the amended provisions, the constitutionality of which has been
upheld by the Apex Court in Gujarat Ambuja Cement case (supra).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">The earlier position
under which the recipient of service? provided by goods transport operator
could not have been liable was drastically altered by the amended provisions. By
Section 116 of the Finance Act, 2000 it was provided that during the period
commencing on and from 16th day of July 1997 and ending with the 16th day of
October 1998, the provisions of Chapter V of Finance Act 1994 (i.e. relating to
service tax) shall be deemed to have effect subject to the modifications made
thereunder. Section 65 of the Finance Act, 1994 was modified by substituting
clause (6) thereof, as a result of which definition of assessee was altered
so as to, inter alia, include in relation to services provided by a goods
transport operator, every person who pays or is liable to pay the freight
either himself or through his agent for the transportation of goods by road in
a goods carriage. Thus, in respect of the services provided to the appellant
for the said period in question the appellant, by virtue of the said amendment,
became assessee who was liable for collecting the service tax under the
amended definition clause.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">The provisions of
Section 71A which were inserted by the Finance?8. Act, 2003 retrospectively
w.e.f. 16th July 1997 were enacted to enable such persons falling under the
proviso of sub-section (1) of Section 68 like the appellant to file the returns
in respect of service tax for the said period within six months from the day on
which the Finance Act, 2003 received the assent of the President in the
prescribed manner, on the basis of the self-assessment of the service tax, as
provided therein. It was also provided in Section 71A that the provision 71
shall apply accordingly, to such returns. Rule 7A thereupon came to be inserted
by the Service Tax (Amendment) Rules, 2003 w.e.f. 14-5-2003 in which it was
provided that, notwithstanding anything contained in Rule 7 which related to
half-yearly return, an assessee in case of service provided by goods transport
operator for the period from 16th day of November 1998 to 2nd day of June, 1998
shall furnish a return within a period of six months from the 13th day of May,
2003, in Form ST-3B along with copy of Form TR-6 in triplicate, failing which
the interest and penal consequences as provided in the Act shall follow. It is,
therefore, clear to us that not only the past recoveries were validated by
Section 117, the amendment also provided for continuance of the liability of
persons falling in the proviso of Section 68(1) who were to be deemed always to
have been liable to pay service tax, for such services provided, to the credit
of the Central Government. In such cases there was no scope for the
applicability of Section 70 of the said Act and, therefore, the special
provision for filing of returns was necessarily required to be made as per
Section 71A, because, they could not have filed return earlier. Validating of
legislation retrospectively curing defects in a taxing statute is a well recognized
course, and the appellant did not acquire any vested right from the earlier
defect in the statute and cannot seek a wind fall from the legislatures
mistakes. The Parliament has enacted a valid law with retrospective effect and
therefore the earlier judgments become irrelevant and the matter has to be
viewed only in the context of the provisions now existing, which clearly
provided for the liability of the appellant in respect of the services provided
by the goods transport operators for which the appellant paid the freight and
was deemed always to have been liable to pay service tax for the period in
question from 16th July, 1997. The appellant was bound to file the returns as
mandatorily required by Section 71A and accordingly the return was filed as per
this machinery provision, with the payment of service tax as per the challan. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">15.1?It was further
held :</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> The service tax
paid on the basis of self-assessment as per the statutory provision was a valid
collection of tax by the government and therefore, it was in no way refundable
to the appellant who was liable to pay the same under the amended provisions.
The period for filing of the returns was provided in Section 71A, which was six
months from the date on which the Finance Act, 2003 received the assent of the
President, and the appellant filed the return within the period so prescribed.
In a case which was covered by Section 71A read with Rule 7A, the date of
filing of return cannot be drawn from the provisions of Section 70. In fact
Section 71A clearly specified that the provision of Section 70 did not apply to
persons referred to in the proviso to sub-section (1) of Section 68 for the
filing of return. It cannot, therefore, be accepted that the time limit for
filing of return by the appellant should be computed on the basis of the
provision of Sections 70 and 73 as from the date on which the half-yearly
return could have been filed under Section 70 read with Rule 7 which were
wholly inapplicable in case of the appellant when specific provision of Section
71A was made in the context of the persons like the appellant for filing of the
return and period within which the return was to be furnished was also
provided. The contention that the appellant was not liable to pay the service
tax since the recovery would have been time-barred on the basis of the deemed
liability having been arisen earlier on the expiry of the relevant period in
1998, is, therefore, wholly misconceived . </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">16.In view of the?
clear ratio of the decision of the Hon ble the Supreme Court in Gujarat Ambuja
Cement Ltd. (supra), which was followed by this Tribunal in J.K. Industries
Ltd. (supra), any contrary decisions simply giving directions without dealing
with or showing dissent from the ratio laid down in these decisions or attempting
to distinguish them, cannot be considered to be laying down any precedent on
the doctrine of ratio decidendi. Mere directions, issued contrary to the
settled legal position, cannot be said to be laying down any contrary ratio, so
as to constitute an opposite precedent or laying down a contrary proposition.
We are of the opinion that the ratio of the decision of Hon ble the Supreme
Court in Gujarat Ambuja Cement Ltd. (supra), cannot be overlooked on the
spacious plea of a learned Authorized Representative of the
respondents-assessees that later is better . It is obvious that while
affirming the decision of the Tribunal in L.H. Sugar Factories Ltd. (supra),
the Hon ble the Supreme Court was not concerned with the validating provisions
which prompted the decision in Gujarat Ambuja Cement Ltd. (supra). In fact,
there could be no conflict between the two decisions, which dealt with
different situations, one dealing with challenge against a show cause notice in
a situation prevailing before the validating law and the other dealing with the
effect of the validating provisions. Therefore, even if the decision of the
L.H. Sugar Factories Ltd. rendered by the Tribunal came to be affirmed later
on, that is, after the decision in Gujarat Ambuja Cement Ltd., the subsequent
decision was relevant only in the context of the law, as stood prior to the
validating provisions, the constitutionality of which came to be upheld by the
Hon ble the Supreme Court in Gujarat Ambuja Cement Limited. For the same reason
any contrary decision rendered by this Tribunal cannot be followed, because
that would be defying the law laid down by the Hon ble the Supreme Court in
Gujarat Ambuja Cement Limited.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">?17.The contention
that the notices were barred by limitation is wholly misconceived in view of
the fact that the revised show cause notices were issued as per the amended
provisions of Section 73 which came into force from 10-9-2004 within one year
from the relevant date which was defined in sub-section (6) of Section 73 as
under :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Section 73(6). - For
the purposes of this section, relevant date means, -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(h)<span style="mso-tab-count: 1;"> </span>in the case of taxable service in respect
which service tax has not been levied or paid or has been short-levied or
short-paid -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(a)<span style="mso-tab-count: 1;"> </span>where under the rules made under this Chapter,
a periodical return, showing particulars of service tax paid during the period
to which the said return relates, is to be filed by an assessee, the date on
which such return is so filed;</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b)<span style="mso-tab-count: 1;"> </span>where no periodical return as aforesaid is
filed, the last date on which such return is to be filed under the said rules;</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(c)<span style="mso-tab-count: 1;"> </span>in any other case, the date on which the
service tax is to be paid under this Chapter or the rules made thereunder;</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">17.1It will be? seen
from the above provisions that the show cause notice was required to be served
within one year from the relevant date in cases where there was no fraud,
collusion etc. The relevant date in cases where periodic return is filed and
in cases where periodic return is not filed was governed by clauses (a) and (b)
of sub-section (6)(i) of Section 73. In the present case, there is no dispute
that the return which was filed as per the prescribed Form ST-3B under Rule 7A
was not a periodic return, but a return which was required to be filed by the
specified date, as contemplated by Section 71A read with Rule 7A. In sub-clause
(c) of clause (i) of Section 73(6)(c) all other cases where no periodic return
was involved, the date on which the service tax was to be paid was to be
considered as the relevant date . In the present case, the service tax was to
be paid within six months from 13-11-2003 by filing the return in the
prescribed Form ST-3B under Section 71A read with Rule 7A. The relevant date,
therefore, in the present case for filing such return was 14-11-2003. Therefore,
even if 14-11-2003 is considered and not 30-11-2003, which was the date
extended by the Supreme Court, the show cause notices issued on 4-11-2004 were
clearly within the prescribed period of one year. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.<span style="mso-tab-count: 1;"> </span>We thus find that in these two cases of BPL Engineering
(supra) and R.K. Marbles (supra), the Division Bench of the Tribunal and the
Single Member Bench of the Tribunal which respectively decided these two cases
did take note of the fact that the show-cause notices in both the cases were
issued after the amendment made in the year 2004. Yet they applied the ratio of
the decision of L.H. Sugar (supra) which dealt with cases where show-cause
notices were issued on different dates in 2002 i.e. prior to the 2004
Amendment. Therefore, with great respect, we are of the considered view that
these two decisions have been rendered by wrong application of the ratio of the
decision in the case of L.H. Sugar (supra) which dealt with a totally different
fact situation. Hence, these two decisions cannot have any precedential value.
On the other hand, in the case of Mangalam Cement (supra), the Division Bench
has duly taken note of the amendment made in the year 2004 and has rightly
distinguished the earlier decision in the case of L.H. Sugar (supra).
Interestingly, Shri A.R.M. Rao, the learned counsel for one the appellants, in
his written submission dated 22.6.2010, does not rely on the ratio of the L.H.
Sugars (supra) nor any argument has been made before us in regard though
reliance has been placed on both BPL Engineering (supra) and R.K. Marbles
(supra). In view of the fact that the learned Single Member who heard the case
of Agauta Sugar & Chemicals (supra) had three decisions before him, two of
which [BPL Engineering (supra) and R.K. Marbles (supra)] were rendered by wrong
application of the ratio of the decision in the case of L. H. Sugar (supra), he
had no choice but to follow the third decision of the Division Bench in the
case of Mangalam Cement (supra). </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">12.<span style="mso-tab-count: 1;"> </span>However, the learned counsel for the
appellants has raised a new argument which was not taken up before the Division
Bench in the case of Mangalam Cement (supra) as stated in his written
submission, we proceed to deal with the submissions made in this regard by both
sides. The main challenge by the appellants is against the action taken by the
department to recover the service tax remaining unpaid by the appellants.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">13. Article 265 of
the Constitution of India stipulates that no tax shall be levied or collected
except by authority of law. It has been held in the case of Mafatlal Industries
Ltd. Vs. Union of India <span style="mso-spacerun: yes;"> </span>1997 (5) SCC 536
that law means valid law and tax levied or collected contrary to law is to be
refunded provided it has not been passed on to the consumer. It is not in
dispute that the goods transport service was made taxable by the Finance Act,
1997 and that the levy of service tax on such service was made effective from
16th November 1997 and was leviable till issue of the exemption notification
dated 2.6.1998. In Laghu Udyog Bharati (supra), the levy of the tax was not
under challenge but its collection from the customers was challenged. The
retrospective amendments made subsequently in the year 2000 and 2003 have been
upheld by the Hon ble Supreme Court in the case of Gujarat Ambuja Cements (supra).
It was specifically held by the Hon ble Supreme Court in that case that a
legislature is competent to remove infirmities retrospectively and make any
imposition of tax declared invalid, valid.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">14.<span style="mso-tab-count: 1;"> </span>Once a valid levy is authorized under the law
which meets the constitutional mandate, the tax becomes payable by the
taxpayers. It is well recognized that taxes are required to be paid so that the
Governments can run and provide essential amenities to the citizens. In the
words of Chief Justice Oliver Wendell Holmes, Taxes are what we pay for a
civilized society . It is also well recognized in all civilized countries that
large proportion of the taxes are paid voluntarily by the taxpayers and the tax
administration has to collect only the amounts which are not voluntarily paid.
The degree of voluntary compliance with tax laws is usually high in most
developed countries and the tax administrations have to collect only a small
percentage of tax by their own efforts.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">15.<span style="mso-tab-count: 1;"> </span>In the case of service tax on transport service,
we find that the levy is authorized by the statute, its collection from the
recipients of the service is also authorized by the statute even for the past
period, by way of retrospective amendment, the validity of which has also been
upheld by the Hon ble Supreme Court. Many of the taxpayers have paid the taxes
as per such levy and no refund of such tax paid is required to be made to such
taxpayers in terms of the retrospective amendment made. The tax administrators
are required to recover the tax from the remaining taxpayers, who have not
voluntarily come forward to comply with the tax laws and pay up the tax levied,
such as the appellants in these cases. The tax officials are not only mandated
to recover the taxes not paid, it is their solemn duty to ensure legally levied
taxes are paid to the public exchequer. A three Judges Bench of the Hon ble
Supreme Court in the case of Commissioner of Customs, Mumbai Vs. Virgo Steels <span style="mso-spacerun: yes;"> </span>2002 (141) ELT 598 (SC) has held as follows:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span> While the absence of notice may invalidate
the procedure adopted by the proper officer under the Act, it will not take
away the jurisdiction of the Officer to initiate action for the recovery of
duty escaped. This is because of the fact that the proper Officer does not
derive his power to initiate proceedings for recovery of escaped duty from
Section 28 of the Act. Such power is conferred on him by other provisions of
the Act which mandate the proper Officer to collect the duty
leviable................ A cumulative reading of these provisions found in the
Act clearly shows that the jurisdiction of a proper Officer to initiate
proceedings for recovery of duty which has escaped collection is not traceable
to Section 28. The power to recover duty which has escaped collection is a
concomitant power arising out of the levy of customs duty under Section 12 of
the Act. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">This judgment of the
Hon ble Supreme Court makes it very clear that the jurisdiction of a tax
collector to initiate proceedings for recovery of tax which has escaped collection,
is not traceable to the legal provision which provides for issue of notice
(e.g. Section 28 of the Customs Act, 1962). Rather, the power to recover tax
which has escaped collection is a concomitant power arising out of the legal
provision levying the tax (e.g. Section 12 of the Customs Act, 1962). The ratio
of this judgment was relied upon by the Larger Bench of the Tribunal in Bombay
Hospital Trust Vs. Commissioner of Customs, Sahar, Mumbai <span style="mso-spacerun: yes;"> </span>2005 (188) ELT 374 (Tri. <span style="mso-spacerun: yes;"> </span>LB) to repel the argument that duty cannot be
demanded in the absence of a specific legal provision for issuing a notice. The
said Larger Bench order has since been affirmed by the Hon ble Bombay High
Court vide Bombay Hospital Trust Vs. CC (ACC), Mumbai <span style="mso-spacerun: yes;"> </span>2006 (201) ELT 555 (Bom.).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">16.<span style="mso-tab-count: 1;"> </span>As regards issue of the demand notice, the
Hon ble Supreme Court has also time and again held that citing a wrong
provision of law in the demand notice will not vitiate a demand. For example,
in the case of J.K. Steel Ltd. Vs. Union of India <span style="mso-spacerun: yes;"> </span>(1969) 2 SCR 418 = (AIR 1970 SC 1173) = 1978
(2) ELT J355 (SC), it was held as follows:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> If the exercise of
a power can be traced to a legitimate source, the fact that the same was
purported to have been exercised under different power does not vitiate the
exercise of the power in question. This is a well settled proposition of law.
In this connection, reference may usefully be made to the decisions of this
court in B. Balakotaiah v. Union of India, (1958) SCR 1052 = (AIR 1958 SC 232);
and Afzal Ullah v State of U.P.,
(1964) 4 SCR 1991 = (AIR 1964 SC 264). </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">The same principle
was reiterated in the case of N.B. Sanjana, ACCE, Bombay Vs. The Elphinstone
Spinning and Weaving Mills Co. Ltd. <span style="mso-spacerun: yes;"> </span>1978
(2) ELT (J 399) (SC). Several High Courts and the Tribunal have followed this
principle without exception and in the case of CCE, Calcutta Vs. Pradyumna
Steel Ltd. <span style="mso-spacerun: yes;"> </span>1996 (82) ELT 441 (SC) it has
been reiterated, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> It is settled that
mere mention of a wrong provision of law when the power exercised is available
even though under a different provision, is by itself not sufficient to
invalidate the exercise of that power .</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>This decision was rendered while overruling
the Tribunal s order which had held that since the provision mentioned in the
show-cause notice was inapplicable, the show-cause notice was invalid.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">17. The Hon ble
Supreme Court in the case of Assistant Director of Mines & Geology v.
Deeccan Cements Ltd. - 2008 (9) S.T.R. 449 (S.C.) = 2008 (222) E.L.T. 321
(S.C.) has observed in para 7 that :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> 7.?The matter can
be looked from another angle. Supposing somebody has paid the taxes and in
other words there has been collection of the amount levied. There may be
another person who may not have paid it. The latter person cannot be placed at
a better footing than the former one. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">As mentioned
earlier, some assesses have paid the tax and they can not be refunded the
amount in view of the levy validated retrospectively. The retrospective
legislation also contained a provision in Section 117 of the Finance Act, 2000
to recover any refund of service tax granted:- </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii) ?any service
tax refunded in pursuance of any judgment, decree or order of any court
striking down sub-clauses (xii) and (xvii) of clause (d) of sub-rule (1) of
rule 2 of the Service Tax Rules, 1994 before the date on which the Finance Act,
2000 receives the assent of the President shall be recoverable within a period
of thirty days from the date on which the Finance Act, 2000 receives the assent
of the President, and in the event of non-payment of such service tax refunded
within this period, in addition to the amount of service tax recoverable,
interest at the rate of twenty-four per cent. per annum shall be payable, from
the date immediately after the expiry of the said period of thirty days, till
the date of payment.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Interpreting a
similar retrospective law, the Hon ble Supreme Court had held in the case of
R.C. Tobacco Pvt. Ltd. Vs. U.O.I. - 2005 (188) E.L.T. 129 (S.C.) that the
retrospective legislation did not provide for issue of any notice and it
provided a special time limit for tax recovery. The Hon ble Supreme Court also
observed that having upheld the constitutional validity of the retrospective
legislation, it would be a pyrrhic victory for the Union of India if they could
not in fact recover the tax.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">18. In the light of
the foregoing, when we consider the submissions made on behalf of the
appellants, we arrive at the following inescapable conclusions: -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i) The decision in
Mangalam Cement (supra) lays down the correct proposition in law holding that
the relevant date has to be determined with reference to Section 71A of the
Finance Act, 1994 read with Rule 7A and that the time period for issue of a
valid demand has to be calculated with reference to such relevant date under
the amended Section 73. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii) The appellants
can not now take a stand that the tax was payable during November 16, 1997 to
June 1, 1998 when in fact no tax could be successfully demanded and recovered
from them earlier in view of Hon ble Supreme Court s decisions in the case of
Laghu Udyog Bharati (supra) and L. H. Sugar (supra). Having laid a successful
challenge against the demand during the earlier period, now they can not turn
around and say that the department should have raised the demand during that
period itself. Such arguments are in the nature of Heads I win, tails you
lose logic designed to deprive the public revenue its legitimate dues even
after the levy has been declared valid by the highest Court of the land.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(iii) As rightly
pointed out by the ld D.R, in the case of S.S. Gadgil (supra), time limit was
sought to be extended after the expiry of the prescribed period and in that
context the said judgment was delivered by the Hon ble Supreme Court, but in
the instant cases, a special time limit has been prescribed under Section 71A
which was inserted by the Finance Act, 2003 to operationalise the
retrospectively validated levy and hence the ratio of S.S. Gadgil (supra) is
not applicable to the present cases. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(iv) The decisions
given in R. K. Marbles (supra) and in B.P.L. Engineering (supra) do not lay
down the correct proposition of law having been rendered by wrong application
of the decision in L.H. Sugar and hence those have no precedential value.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">19. As the issue
involved in these appeals relate to demand of tax and hence to determination of
the rate of tax applicable, after answering the reference as above, we direct
the Registry to list the appeals before the concerned Division Bench for final
orders. </span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Pronounced in open
court on 1.09.2010)</span></div>
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<span style="font-family: "Courier New";">(Mr. Justice R.M.S.
Khandeparkar)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>President</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(Dr. Chittaranjan Satapathy) <span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Technical Member</span></div>
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<br /></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 6;"> </span></span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 8;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>(Ashok
Jindal)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 8;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>Judicial
Member</span></div>
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<span style="font-family: "Courier New";">Rex </span></div>
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<span style="font-family: "Courier New";">??</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">??</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">??</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">??</span></div>
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<span style="font-family: "Courier New";">- 2 -</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">IN THE CUSTOMS,
EXCISE AND SERVICE TAX APPELLATE TRIBUNAL</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">WEST ZONAL BENCH AT
MUMBAI</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">APPEAL NO. ST/6/08</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Arising out of
Order-in- Original No.18/P-III/STC/COMMR/2007 dtd. 22/11/2007<span style="mso-spacerun: yes;"> </span>passed by the Commissioner of Central
Excise, Pune.III )</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";">For approval and
signature:</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Hon ble<span style="mso-spacerun: yes;"> </span>Mr. Ashok Jindal, Member(Judicial)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Hon ble Mr.Sahab Singh, Member(Technical) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">============================================================</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1.<span style="mso-tab-count: 1;"> </span>Whether Press Reporters may be allowed to see<span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>:<span style="mso-spacerun: yes;"> </span>No</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>the Order for publication as per Rule 27 of
the</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>CESTAT (Procedure) Rules, 1982?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>Whether it should be released under Rule 27
of the<span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span>Yes</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>CESTAT (Procedure) Rules, 1982 for
publication </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>in any authoritative report or not?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Whether Their Lordships wish to see the fair
copy<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span>seen</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>of the Order?</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Whether Order is to be circulated to the
Departmental<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span>Yes</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span></span><span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">authorities?</span></div>
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<br /></div>
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<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">=============================================================</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">M/s. Suzlon Infrastructure</span></div>
<div class="MsoNormal">
<span lang="FR" style="font-family: "Courier New"; mso-ansi-language: FR;">:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Appellants</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">VS</span></div>
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<br /></div>
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<br /></div>
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<br /></div>
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<br /></div>
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<span style="font-family: "Courier New";">Commissioner of
Central Excise, Pune.III</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Respondent</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Appearance</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Shri V.Sridharan,
Advocate for Appellants</span></div>
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<span style="font-family: "Courier New";">Shri K.M.Mondal,
Spl.counsel for Respondent</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">CORAM:</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Mr.Ashok Jindal,
Member(Judicial)</span></div>
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<span style="font-family: "Courier New";">Mr.Sahab Singh,
Member(Technical)</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Date
of hearing:<span style="mso-spacerun: yes;"> </span>17/08/2011</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Date of
decision:14/02/2012</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">ORDER NO.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Per : Sahab Singh</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>This appeal has come up before this
Bench for hearing and disposal pursuant to CESTAT Misc. Order No.
M/434/CSTB/WZB/ 2009/C.II dated 7.10.2009.<span style="mso-spacerun: yes;">
</span>This appeal arises out of the Order-in-Original
No.18/P-III/STC/COMMR/2007 dtd. 22/11/2007 passed by the Commissioner of
Central Excise, Pune.III.<span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.<span style="mso-spacerun: yes;"> </span>Background of the case.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Briefly stated, the facts of the case
are that the appellant, M/s. Suzlon Infrastructure Limited (in short M/s. SIL)
formerly known as M/s. Suzlon Developers Limited is an associate company of
M/s. Suzlon Energy Limited (in short M/s. SEL). It is engaged,<span style="mso-spacerun: yes;"> </span>interalia, in erection, commissioning<span style="mso-spacerun: yes;"> </span>or installation of windmills or wind turbine
generators for its customers on contract basis.<span style="mso-spacerun: yes;">
</span>The Wind Turbine Generators (in short WTG) are manufactured and supplied
by M/s. SEL.<span style="mso-spacerun: yes;"> </span>It had taken Service Tax
Registration for installation & commissioning services on 18.7.2003 which
was subsequently amended to endorse other services also. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.1<span style="mso-spacerun: yes;"> </span>Based on intelligence that M/s. SIL was
indulging in evasion of service tax<span style="mso-spacerun: yes;">
</span>under the category of Erection, Commissioning or Installation service
as defined in Sec,65(39a) of the Finance Act, 1994, the officers<span style="mso-spacerun: yes;"> </span>of Directorate General of Central Excise
Intelligence (DGCEI), New Delhi<span style="mso-spacerun: yes;">
</span>conducted investigation into the matter.<span style="mso-spacerun: yes;">
</span>In the course of investigation,<span style="mso-spacerun: yes;">
</span>the officers examined the relevant records and recorded statements of
some of the functionaries of the appellant company.<span style="mso-spacerun: yes;"> </span>In his statement dated 27.10.2005, Shri Bipin
Shah, General Manager had, interalia,<span style="mso-spacerun: yes;">
</span>stated that their company is engaged in project execution work<span style="mso-spacerun: yes;"> </span>comprising civil construction work, erection
installation and commissioning of WTG on exclusive basis to the customers of
M/s. SEL<span style="mso-spacerun: yes;"> </span>as per Agreement dated
11.6.2005 entered into between M/s. SEL and the appellant company. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.2<span style="mso-spacerun: yes;"> </span>Similarly, in his statement dated 7.11.05
Shri Harish H.Mehta, Director of the appellant company had, interalia, stated
that M/s. SIL<span style="mso-spacerun: yes;"> </span>is engaged in developing
wind farm related infrastructure, project execution covering civil work,
electrical work, assembly /erection and commissioning of the windmill
exclusively for M/s. SEL or its clients.<span style="mso-spacerun: yes;">
</span>As soon as a client is identified by M/s. SEL and order is confirmed for
sale of WTG, the customer is introduced to their company and thereafter, they
finalise the contract for erection, installation and commissioning of the WTG
with the customer as per mutually agreed terms and conditions.<span style="mso-spacerun: yes;"> </span>He also stated that the complete plant,
machinery and equipment of the WTG are supplied by M/s. SEL and M/s. SIL is not
supplying<span style="mso-spacerun: yes;"> </span>plant, machinery and equipment
except<span style="mso-spacerun: yes;"> </span>electricals required for the
project.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.3<span style="mso-spacerun: yes;"> </span>On examination of the Agreement dated
11.6.2005, between M/s. SEL and M/s. SIL, the officers found that M/s. SIL was
required to provide services of erection, commissioning or installation of WTG
and establishment<span style="mso-spacerun: yes;"> </span>of Wind Farm
Project<span style="mso-spacerun: yes;"> </span>exclusively for customers of
M/s. SEL.<span style="mso-spacerun: yes;"> </span>It was also found that M/s.
SIL was entered into the contract with its customers for services of erection,
commissioning or<span style="mso-spacerun: yes;"> </span>installation of
WTG<span style="mso-spacerun: yes;"> </span>and for this purpose, it was issuing
four types of invoices to its customers relating to :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i)<span style="mso-spacerun: yes;"> </span>Construction of civil foundation, control
room, transformer plinth,<span style="mso-spacerun: yes;"> </span>crane
platform, road for crane movement, electrical yarn fencing etc. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii)<span style="mso-spacerun: yes;"> </span>Supply and installation of HT Electrical yard
with VCB, outdoor type CT/PT and HT Transmission line from windmill to grid
interconnection and related facilities. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(iii)<span style="mso-spacerun: yes;"> </span>Erection and installation of windmill
consisting of unloading and safe-keeping of windmill equipment, assembly,
erection and installation of windmill tower and Wind Turbine Generator.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(iv)<span style="mso-spacerun: yes;"> </span>Charges towards final testing and
commissioning of the wind mills. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.4.<span style="mso-spacerun: yes;"> </span>It appeared that civil foundation is an
integral part of erection and installation of the wind mill and the control
room and electrical yard etc. also form an integral part for commissioning of
the wind mill without which the commissioning of wind mill or WTG is not
complete. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.5<span style="mso-spacerun: yes;"> </span>It was also found that M/s. SIL was
discharging its service tax liability on the full value realized by it from its
customers in respect of invoices mentioned at Sr.No.(iii) and (iv) above.<span style="mso-spacerun: yes;"> </span>However, in respect of invoices mentioned at
Sr.No.(i) and (ii) above, it was availing the benefit under Notification No.19/2003-ST
dated 21/8/2003 which provides that in case of a contract involving
erection,<span style="mso-spacerun: yes;"> </span>commissioning or installation
services along with the supply of plant, machinery or equipment, service tax
will be payable only on 33% of the gross amount charged by the service provider
from its customers for<span style="mso-spacerun: yes;"> </span>erection,<span style="mso-spacerun: yes;"> </span>commissioning or installation<span style="mso-spacerun: yes;"> </span>and<span style="mso-spacerun: yes;">
</span>supply of plant, machinery and<span style="mso-spacerun: yes;">
</span>equipment,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>2.6<span style="mso-spacerun: yes;">
</span>Since M/s. SIL was providing only the services of erection,
commissioning or installation of WTGs, it appeared that it was not eligible to
the benefit of Notification No.19/2003-ST dated 21.8.2003.<span style="mso-spacerun: yes;"> </span>M/s. SIL, was, therefore, served with a
show-cause notice dated 28.8.2006<span style="mso-spacerun: yes;">
</span>demanding service tax of Rs. 22,04,53,114/-<span style="mso-spacerun: yes;"> </span>and Education Cess of Rs. 44,09,131/- for the
period 10.9.04 to 30.9.2005.<span style="mso-spacerun: yes;"> </span>The notice
also proposed to impose penalty on it under Sec.76 for contravention of
provisions of Section 68 and penalty under Section 78 of<span style="mso-spacerun: yes;"> </span>Chapter V of the Finance Act, 1994<span style="mso-spacerun: yes;"> </span>for evasion of service tax by wilful
suppression of facts.<span style="mso-spacerun: yes;"> </span>The notice also
demanded interest on the service tax not paid during the period 10.9.2004 to
30.9.2005 under the provisions of Section 75 of the Finance Act, 1994. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.7.<span style="mso-spacerun: yes;"> </span>M/s. SIL contested the notice by its reply
dated 24.11.2006, inter alia, contending that the contract of electrical
work<span style="mso-spacerun: yes;"> </span>is distinct and separate from the
contract of erection of tower and<span style="mso-spacerun: yes;"> </span>civil
work.<span style="mso-spacerun: yes;"> </span>Hence it is entitled to the
benefit of Notification No.19/2003 dated 21.8.2003. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.8.<span style="mso-spacerun: yes;"> </span>After hearing the appellant and
considering the submissions, both written and oral,<span style="mso-spacerun: yes;"> </span>the Commissioner vide his order dated<span style="mso-spacerun: yes;"> </span>22.11.2007, confirmed the service tax
including Education Cess amounting to Rs. 22,48,62,245/- under the category of
erection, installation and commissioning service .<span style="mso-spacerun: yes;"> </span>The Commissioner also ordered adjustment of
Rs. 8,55,15,594/- already paid against its service tax liability.<span style="mso-spacerun: yes;"> </span>The Commissioner also ordered<span style="mso-spacerun: yes;"> </span>adjustment of Rs. 2,90,480/-<span style="mso-spacerun: yes;"> </span>already paid by M/s. SIL towards
interest.<span style="mso-spacerun: yes;"> </span>In addition, the Commissioner
also imposed a penalty @ of Rs. 100/- per day from the date it is payable till
the date it is paid under Section 76 of the Act.<span style="mso-spacerun: yes;"> </span>The Commissioner also imposed a penalty of
Rs. 22,48,62,245/- under Section 78 of the Finance Act, 1994.<span style="mso-spacerun: yes;"> </span>Aggrieved by this order, the appellant has
filed this appeal. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-spacerun: yes;"> </span>We have heard Shri V.Sridharan,
Sr.Advocate for the appellant and Shri K.M.Mondal, ld.Consultant for the
respondent.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-spacerun: yes;"> </span>Referring to a Work Order , placed on the
appellant by its customer, Sr.Advocate contended that the Work Order would show
that the appellant had four separate contracts embodied in a single work order.
According to the appellants, it carried out 4 types of activities namely. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i) civil work<span style="mso-spacerun: yes;"> </span>including<span style="mso-spacerun: yes;">
</span>foundation and allied activities of Wind Farm Project, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(ii) supply and installation of electrical
equipments; </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(iii) erection and installation of
windmill and </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(iv) final testing and commissioning of
windmill.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.1<span style="mso-spacerun: yes;"> </span>He submitted that the disputes are limited
to two activities namely</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(i) civil work including foundation and allied
activities of Wind Farm Project and<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(ii) supply and installation of electrical
equipments.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.2<span style="mso-spacerun: yes;"> </span>Elaborating his submission, the
Ld.Sr.Advocate submitted that each of the four types of activities carried out
by the appellant is distinct and separate.<span style="mso-spacerun: yes;">
</span>Civil work has been done by a sub-contractor who is registered under the
category of commercial or<span style="mso-spacerun: yes;"> </span>industrial
construction service and that the sub-contractor has paid service tax of 33%
of the gross amount charged from the appellant by availing the benefit of
Notification No.15/2004-ST dated 10.9.2004 as amended.<span style="mso-spacerun: yes;"> </span>Similarly, electrical work has been done by a
sub-contractor who is registered under the category of Erection, Commissioning
or Installation service and has discharged service tax on the entire gross
amount charged from the appellant without claiming any abatement under Notification No.19/2003ST
dated 21.8.2003 as amended.<span style="mso-spacerun: yes;"> </span>Hence the
appellant has claimed benefit of Notification
No.19/2003 ST dated 21.8.2003 as amended.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.3<span style="mso-spacerun: yes;"> </span>The Ld.Sr.Advocate finally limited his
submission to supply and installation of electrical equipments.<span style="mso-spacerun: yes;"> </span>He contented that erection, commissioning or
installation of electrical equipments is a separate activity having no relation
to erection, commissioning or installation of windmill or WTGs.<span style="mso-spacerun: yes;"> </span>In this connection, he relied upon the
decisions of the Hon ble Supreme Court in the case of Nicco Corporation Ltd.
vs. CCE, Kolkotta -2006(203)ELT 362 (S.C.), Skytone Electricals (India) Ltd. <span style="mso-spacerun: yes;"> </span>vs. Commissioner -2008(225)ELT A 97(S.C)<span style="mso-spacerun: yes;"> </span>holding that<span style="mso-spacerun: yes;">
</span>wires and cables are not parts of windmill. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.4<span style="mso-spacerun: yes;"> </span>On limitation, he submitted that the
present case involves a pure question of interpretation of law and that the
appellant was under bona fide belief that the activity of civil work and
electrical work are distinct and separate from the activity of erection,
commissioning or installation of windmill.<span style="mso-spacerun: yes;">
</span>Hence, in the facts of the case, the extended period of limitation could
not be invoked. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">5.<span style="mso-spacerun: yes;"> </span>Supporting the contention of the
Commissioner, the Ld.Consultant for the Revenue, submitted that it is a case of
composite contract for erection, commissioning and installation of Wind Farm
Project, in terms of the Agreement dated 11.6.2005 between M/s. SEL and the appellant
and in terms of various work orders placed on the appellant by its customers,
it is quite clear that the appellant has provided composite service of
erection, commissioning or installation of windmills or WTGs.<span style="mso-spacerun: yes;"> </span>He submitted that it is a common knowledge
that without civil foundation,<span style="mso-spacerun: yes;"> </span>erection
of tower is not possible.<span style="mso-spacerun: yes;"> </span>It is an
integral part of erection and installation of the windmill.<span style="mso-spacerun: yes;"> </span>Similarly,<span style="mso-spacerun: yes;">
</span>without electrical installation, commissioning of windmill is not
possible inasmuch as electricity generated by the WTGs cannot be evacuated from
the windmill to the Electricity Board grid.<span style="mso-spacerun: yes;">
</span>Electrical installation is, therefore, an integral part of the
Windmill.<span style="mso-spacerun: yes;"> </span>Therefore, the appellant s
claim that civil foundation and electrical installation are separate activities
is not acceptable.<span style="mso-spacerun: yes;"> </span>Consequently, the
appellant s claim for the benefit of Notification
No.19/2003 ST dated 21.8.2003 as amended is not
available to it.<span style="mso-spacerun: yes;"> </span>He also submitted that
the appellant s contracts with its sub-contractors are not relevant as the same
are not under dispute. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">5.1<span style="mso-spacerun: yes;"> </span>In regard to the case laws cited by the
Sr.Advocate, the Ld.Consultant submitted that the case laws cited have no
application to the facts of this case.<span style="mso-spacerun: yes;">
</span>He submitted that the Ld.Sr.Advocate overlooked the fact that the
appellant had undertaken the entire services of erection, commissioning or
installation of wind farm project<span style="mso-spacerun: yes;"> </span>of
which electrical installation is a part.<span style="mso-spacerun: yes;">
</span>In his submission, wind farm project is not complete without electrical
installation.<span style="mso-spacerun: yes;"> </span>In the context of service
under the Finance Act, 1994, the case laws cited are totally misplaced. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">5.2.<span style="mso-spacerun: yes;"> </span>On limitation, the Ld.Consultant submitted
that it is not at all a case of bona fide belief.<span style="mso-spacerun: yes;"> </span>The appellant is guilty of suppression of
facts.<span style="mso-spacerun: yes;"> </span>It had not declared the correct
value of taxable services in ST.3 returns filed with the department.<span style="mso-spacerun: yes;"> </span>It had suppressed the fact from the
department that it had availed the benefit of Notification No.19/03 ST dated
21.8.03 although it did not supply WTGs to its customers.<span style="mso-spacerun: yes;"> </span>Therefore, the extended period of limitation
has been correctly invoked in this case.<span style="mso-spacerun: yes;">
</span>In his submission, the appellant has no case both on merit as well as on
limitation.<span style="mso-spacerun: yes;"> </span>He, therefore prayed for
dismissal of the appeal. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">6.<span style="mso-spacerun: yes;"> </span>We have carefully considered the
submissions of both sides.<span style="mso-spacerun: yes;"> </span>We have also
examined the relevant records including the impugned order and the written
submission filed earlier by both sides.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">7.<span style="mso-spacerun: yes;"> </span>We find that the following issues arise for
our consideration:- </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>I)<span style="mso-spacerun: yes;"> </span>Whether
the appellant s contracts with its customers are composite contract for
erection, commissioning or installation of Wind<span style="mso-spacerun: yes;"> </span>Farm Project<span style="mso-spacerun: yes;">
</span>of which electrical installation is a part, as contended by the Revenue
or<span style="mso-spacerun: yes;"> </span>the electrical<span style="mso-spacerun: yes;"> </span>work is a separate activity distinct<span style="mso-spacerun: yes;"> </span>from Wind Farm Project, as contended by the
appellant ; </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(II)<span style="mso-spacerun: yes;"> </span>Whether the appellant is eligible for the
benefit of Notification No.19/2003 ST dated 21.8.2003 as amended ;<span style="mso-spacerun: yes;"> </span>and </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(III)<span style="mso-spacerun: yes;"> </span>Whether the extended period of limitation
under the provisions of Sec.73(1) of the Finance Act, 1994 is applicable to the
facts of this case. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">8.<span style="mso-spacerun: yes;"> </span>We record our findings issue-wise herein
below:- </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">9.<span style="mso-spacerun: yes;"> </span>Issue No.(I) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>According to the appellant, it had
received from each of its customers four separate contract embodied in a single
document viz. the Work Order.<span style="mso-spacerun: yes;"> </span>It would,
therefore, be necessary to see the work orders placed on the appellant by<span style="mso-spacerun: yes;"> </span>its customers.<span style="mso-spacerun: yes;"> </span>We find that one of the work orders relied
upon in the show-cause notice is in respect of M/s. Hercules Hoists Limited
dated 18.11.2004 (available at Page No.331-333 of Paper Book.I Vol.III).<span style="mso-spacerun: yes;"> </span>For the sake of convenience and ready
reference we reproduce the entire Work Orders herein below:</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">9.1<span style="mso-spacerun: yes;"> </span>On perusing the Work Order,<span style="mso-spacerun: yes;"> </span>we find that it is for erection and
installation of 2 Nos. of WTGS (1250 KW each)<span style="mso-spacerun: yes;">
</span>at Dhulia Site in Maharashtra.<span style="mso-spacerun: yes;"> </span>We also find that in the Work Order indicates
Scope of Work which includes the following under the<span style="mso-spacerun: yes;"> </span>broad heading of </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>A) Civil, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>B) Electrical, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>C)
Erection & Commissioning, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>D) Loading & Unloading, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">E) Temporary road
for movement of crane and preparation of crane platform.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>9.2<span style="mso-spacerun: yes;"> </span>At
page 2 of the Work Order, the price per WTG is shown as Rs. 75 lakhs<span style="mso-spacerun: yes;"> </span>and then price break-up is shown in the
tabular form under the<span style="mso-spacerun: yes;"> </span>Column
Description <span style="mso-spacerun: yes;"> </span>in respect of each item of
work.<span style="mso-spacerun: yes;"> </span>At page 3 of the Work order, we
also find that payment schedule had been indicated as follows:-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>* Rs. 82.50 lakhs with order<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>* Rs. 40 lakhs on 15.12.2004 (PDC) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>*
Rs. 27.50 lakhs on 15.01.2005 (PDC).</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">9.3<span style="mso-spacerun: yes;"> </span>We have also perused 4 types of related
invoices raised by the appellant on its customers ( available at page 335-338
of Paper Book Vol.III).<span style="mso-spacerun: yes;"> </span>It is seen that
description of items of work is same as<span style="mso-spacerun: yes;">
</span>shown in the price break up at page 2 of the Work Order. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">9.4<span style="mso-spacerun: yes;"> </span>In view of the factual position, as seen
from the Work Order, we are unable to appreciate that the appellant had
received 4 separate contracts embodied in a single document.<span style="mso-spacerun: yes;"> </span>From the Work Order, it is clear that it is a
composite contract for erection, commissioning or installation of WTGs.<span style="mso-spacerun: yes;"> </span>We, therefore, agree with the Revenue s
contention that by showing 4 separate invoices, it cannot be contended that appellant
had executed 4 separate and distinct contracts with its customers.<span style="mso-spacerun: yes;"> </span>It is clearly a composite contract and the
intention of the appellant is quite obvious from the Work Order.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10.<span style="mso-spacerun: yes;"> </span>According to the Revenue, in terms of
Agreement for Services dated 11.6.2005, between M/s. SEL and the appellant,
the appellant is required to provide services<span style="mso-spacerun: yes;">
</span>to M/s. SEL or its customers on an exclusive basis for the purpose of
setting up<span style="mso-spacerun: yes;"> </span>Wind Farm Project. It is,
therefore, necessary to examine the said Agreement for Services.<span style="mso-spacerun: yes;"> </span>We reproduce below some of the clauses
relevant for the present purpose:-<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span> A.<span style="mso-spacerun: yes;">
</span>The company is a public limited company incorporated in India and is a
leading manufacturer of Wind Turbine Generators ( WTGs )<span style="mso-spacerun: yes;"> </span>in India and in addition to supply of WTGs,
offers total solutions <span style="mso-spacerun: yes;"> </span>in wind power
generation comprising wind resource mapping, identification of suitable sites,
establishment of wind farm project including civil work and installation and
commissioning of WTGs and provision of operations and maintenance services to its
customers in conjunction with its subsidiaries and associate companies.
(underlined and emphasis supplied).<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">B.<span style="mso-spacerun: yes;"> </span>SDL, a limited company incorporated in India
and owned by the promoters of the Company, is primarily engaged in the business
of providing Services ( as hereinafter defined)<span style="mso-spacerun: yes;">
</span>for the establishment<span style="mso-spacerun: yes;"> </span>of windfarm
projects for<span style="mso-spacerun: yes;"> </span>the<span style="mso-spacerun: yes;"> </span>customers<span style="mso-spacerun: yes;">
</span>of<span style="mso-spacerun: yes;"> </span>the<span style="mso-spacerun: yes;"> </span>company ( the Customers ).<span style="mso-spacerun: yes;"> </span>SDL is also engaged in the business of
generating and selling electricity through the ownership of WTGs.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">C.<span style="mso-spacerun: yes;"> </span>The Services are provided to the Company or
to the customers of the Company, on an exclusive basis, for the purposes of
setting up windfarm projects.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>The agreement defines Services as
follows -<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> Services mean all
of the services required for the erection, installation and commissioning of
the windfarm project including, without limitation, the following services: </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">a.<span style="mso-spacerun: yes;"> </span>development of infrastructure<span style="mso-spacerun: yes;"> </span>for setting up of wind farm project including
construction of evacuation facilities and construction of approach roads; and </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>b.<span style="mso-spacerun: yes;">
</span>laying of foundation and erection, installation and commissioning of
WTG, construction of control rooms, construction for the transformers,
construction of evacuation facilities, construction of approach roads; and<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">c.<span style="mso-spacerun: yes;"> </span>all related electrical work including
material.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>3.<span style="mso-spacerun: yes;">
</span>Agreement for Services<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.1.<span style="mso-spacerun: yes;"> </span>SDL shall provide the Company with such
information as it requests from time to time in order to submit proposals to
Customers for setting up WTGs. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.2<span style="mso-spacerun: yes;"> </span>SDL hereby undertakes that it shall offer
to provide all or any of the Services to Customers, at the instance of the
Company.<span style="mso-spacerun: yes;"> </span>The procedure for which shall
be as follows:- </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(a)<span style="mso-spacerun: yes;"> </span>The
Company may at any time at its discretion instruct SDL to perform the services
for its customers; </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b)<span style="mso-spacerun: yes;"> </span>The Company shall specify the location, the
date by which the services have to be provided to the customer as well as the
terms and conditions on which such services shall be provided to the customer
in accordance with Clause 4 below;<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(c) SDL shall
provide such services as specified by the company to the customer(s) on the
terms and conditions specified by the Company;<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(d)<span style="mso-spacerun: yes;"> </span>SDL shall provide the services to the
customers at the consideration as determined in accordance with Clause 5 below.
</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.4<span style="mso-spacerun: yes;"> </span>SDL undertakes that it shall at all times
ensure that the terms and conditions specified in this Agreement shall be
strictly adhered<span style="mso-spacerun: yes;"> </span>to and shall not be
varied or amended in the agreements for services with the customer except with
the prior written consent of the company. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-spacerun: yes;"> </span>Provision of Services.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.1<span style="mso-spacerun: yes;"> </span>The provision of services to the customer
shall be completed by SDL in a timely manner in accordance with the schedules
as agreed to by the customer with the company.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.2 SDL hereby undertakes
and covenants that it shall not provide services to the customer(s) or any
other entity, other than as required by the company or without the prior
written consent of the company.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">7. Undertakings</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>SDL undertakes that:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(a) It shall not in any manner
whatsoever impose or seek to impose any onerous term or condition in any
agreement for the provision of services with any customer which may (i) be
inconsistent with the terms and conditions agreed to between the company and
the customer; or (ii) prevent the customer from entering into such agreement
with SDL; (iii) result in company being unable to provide integrated
solutions in wind power generation to such customer;<span style="mso-spacerun: yes;"> </span>(underlined and emphasis supplied) and </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(b) It shall not
commence or carry on any other business other than presently carried on without
the prior written consent of the company </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(c)<span style="mso-spacerun: yes;"> </span>It shall obtain all government and regulatory
approvals, and registrations, necessary for the carrying on of the business of
providing the services to the customers; </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(d)<span style="mso-spacerun: yes;"> </span>It shall ensure that the provision of
services does not in any way contravene any Applicable Laws;<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(e)<span style="mso-spacerun: yes;"> </span>It shall ensure that it complies with
Applicable Laws in the conduct of its business.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">The Company
undertakes that </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>a.<span style="mso-spacerun: yes;"> </span>It
shall notify SDL about the terms of the arrangement with the customer in
relation to the integrated solutions <span style="mso-spacerun: yes;">
</span>offered to the customer. (underlined and emphasis supplied) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10.1<span style="mso-spacerun: yes;"> </span>On a careful examination of the various
clauses of the<span style="mso-spacerun: yes;"> </span> Agreement for
Services <span style="mso-spacerun: yes;"> </span>reproduced<span style="mso-spacerun: yes;"> </span>above,<span style="mso-spacerun: yes;">
</span>we find that the company (M/s. SEL) offers total solutions <span style="mso-spacerun: yes;"> </span>to its customers in establishment of windfarm
project including civil work and installation and commissioning of WTGs and in
this endeavour the appellant (M/s. SIL) provides the required services ( as
defined in the Agreement ) to the customers of the company.<span style="mso-spacerun: yes;"> </span>It is quite obvious from Agreement of
Services <span style="mso-spacerun: yes;"> </span>that the appellant has to
provide integrated solutions to the customers in wind power generation. <span style="mso-spacerun: yes;"> </span>From the definition of Services <span style="mso-spacerun: yes;"> </span>as reproduced above, we note that the
services required for the erection, installation and commissioning of the
windfarm project , inter alia, include all related electrical work including
material.<span style="mso-spacerun: yes;"> </span>Reading the definition of
Services together with the various clauses reproduced above, we have no doubt
in our minds that the main object of the Agreement, in so far as the appellant
is concerned, is to provide all of the services required for the erection,
installation and commissioning of the Windfarm project (WTGs) to the
customers.<span style="mso-spacerun: yes;"> </span>In that process, while
carrying out related electrical work, the appellant will also provide material
in relation to the electrical work.<span style="mso-spacerun: yes;"> </span>In
our view, the material provided by the appellant in relation to the electrical
work is only incidental to the services for erection, installation and
commissioning of the Windfarm Project.<span style="mso-spacerun: yes;">
</span>The contention of the appellant that the electrical work is separate
activity distinct from Windfarm Project cannot be accepted as correct.<span style="mso-spacerun: yes;"> </span>We hold that the electrical installation is a
part of Windfarm Project (WTG) inasmuch as without electrical installation,
evacuation of electricity<span style="mso-spacerun: yes;"> </span>from WTG to
the State Electricity<span style="mso-spacerun: yes;"> </span>grid is not
possible.<span style="mso-spacerun: yes;"> </span>It is needless to mention that
the establishment of Windfarm Project becomes complete only after commissioning
of the WTGs.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10.2<span style="mso-spacerun: yes;"> </span>In support of its contention that the
electrical installation is distinct and separate from WTGs, the applicant has
relied upon two judgments of the Hon ble Apex Court in the case of </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(1) Nicco
Corporation Ltd.<span style="mso-spacerun: yes;"> </span>vs. CCE, Calcutta <span style="mso-spacerun: yes;"> </span>2006(203)ELT 362(S.C) and </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(2) Skytone
Electricals (India)
Ltd. vs. Commissioner <span style="mso-spacerun: yes;"> </span>2008 (225) ELT A
97 (S.C) .</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10.3<span style="mso-spacerun: yes;"> </span>We have gone through the judgments.<span style="mso-spacerun: yes;"> </span>In both the judgments, the Hon ble Apex Court has held
that wires and cables cannot be considered as parts of Windmill and hence the
benefit of Notification No.205/88 C E dated 25.5.88 as amended cannot be
extended to the assessee.<span style="mso-spacerun: yes;"> </span>In our
considered view, these judgments have no application to the facts of this
case.<span style="mso-spacerun: yes;"> </span>We are not concerned with the
classification of Windmill or its part under Central Excise Tariff Act
1985.<span style="mso-spacerun: yes;"> </span>We are concerned herewith the
classification of<span style="mso-spacerun: yes;"> </span>services of erection,
commissioning or installation of Windfarm Project (WTGs) under the Finance
Act, 1994.<span style="mso-spacerun: yes;"> </span>Undisputedly, the appellant
is providing integrated services of erection, commissioning or installation of
Windfarm Project (WTGs) of which electrical installation is a<span style="mso-spacerun: yes;"> </span>part.<span style="mso-spacerun: yes;">
</span>It is needles to say that<span style="mso-spacerun: yes;"> </span>without
electrical installation, Winfdarm Project will remain incomplete.<span style="mso-spacerun: yes;"> </span>We therefore, hold that the appellant s
contracts with its customers are composite contracts for erection,
commissioning or installation of Windfarm Project of which electrical
installation is a part.<span style="mso-spacerun: yes;"> </span>Consequently, we
hold that electrical installation is not a separate activity distinct from
Windfarm Project. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.<span style="mso-spacerun: yes;"> </span>Issue<span style="mso-spacerun: yes;">
</span>No.II .<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>We shall now examine the issue No.(II)<span style="mso-spacerun: yes;"> </span>that is,<span style="mso-spacerun: yes;">
</span>whether the appellant is eligible for the benefit of Notification No.19/03 ST dated 21.8.2003
in respect of electrical installation.<span style="mso-spacerun: yes;">
</span>It is the contention of the appellant that while providing the service
of erection, commissioning or installation of electrical installation to its
customers, it has also supplied the material including wires and cables
required for the same.<span style="mso-spacerun: yes;"> </span>Hence it is
eligible for the abatement under the aforesaid Notification.<span style="mso-spacerun: yes;"> </span>For the sake of convenience, we reproduce
the Notification itself inserted by Notification<span style="mso-spacerun: yes;"> </span>No.12/2004 ST dated 10.9.2004.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> NOTIFICATION No.
19/2003-S.T., DATED 21-8-2003</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">In exercise of the
powers conferred by section 93 of the Finance act, 1994(32 of 1994), the
Central Government, being satisfied that it is necessary in the public interest
so to do, hereby exempts the taxable service provided to a customer in relation
to erection 1 commissioning or installation by a commissioning and installation
agency, form so much of the service tax leviable thereon under Section 66 of
the said Act, as is in excess of the amount of service tax calculated on a
value which is equivalent to thirty-three per cent. of the gross amount charged
from the customer under a contract for supplying a plant, machinery or
equipment and erection 1 commissioning or installation of the said plant,
machinery or equipment, subject to the following conditions, namely:-</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(i) the exemption
contained in this notification is optional to the commissioning and
installation agency; and </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(ii) the benefit
under this notification shall be allowed only if the commissioning and
installation agency has not availed the benefit under the notification of the
Government of India, in the Ministry of Finance (Department of Revenue), No.
12/2003-Service Tax dated the 20th June, 2003, [G.S.R. 503 (E), dated the 20th
June, 2003], for the said contract; and </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1 [(iii) The benefit
under this notification shall be allowed only if no credit of duty paid on
capital goods has been taken under the provisions of the Cenvat Credit Rules,
2004]</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Explanation. <span style="mso-spacerun: yes;"> </span>For the purposes of this notification, the
gross amount charged shall include the value of the plant, machinery,
equipment, parts and any other material sold by the commissioning and
installation agency, during the course of providing erection 1 commissioning or
installation service. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1<span style="mso-spacerun: yes;"> </span>(Inserted by Notification NO. 12/2004-ST
dated 10.09.2004) </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.1<span style="mso-spacerun: yes;"> </span>On a plain reading of the Notification
including the explanation appended to it, we find that its benefit could be
available only where the service provider i.e a<span style="mso-spacerun: yes;">
</span>commissioning and installation agency also supplies under a contract a
plant, machinery or equipment, parts and any other material during the course
of providing erection, commissioning or installation of services.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.2<span style="mso-spacerun: yes;"> </span>As per the Revenue, the benefit of the
Notification was not available to the appellant, because they hand not supplied
the WTGs to its customers.<span style="mso-spacerun: yes;"> </span>They had only
provided the services of erection, commissioning or installation of WTGs
supplied by M/s. SEL, which is altogether an independent entity.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.3<span style="mso-spacerun: yes;"> </span>We find that M/s. SEL are manufacturers of
WTG. They had supplied WTGs and parts thereof and also electrical items to the
customers under separate invoices.<span style="mso-spacerun: yes;"> </span>One
such invoice dated 7.2.2005 issued by M/s. SEL to M/s. Hercules Hoists
Limited<span style="mso-spacerun: yes;"> </span>is found at page 17 of the
Revenue s written submission.<span style="mso-spacerun: yes;"> </span>The
relevant portion of the invoice is reproduced below for better understanding
and appreciation.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"> SUZLON ENERGY LTD,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Plot No. H-24/25 M.G
Udhyog Nagar,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">OlDC Industrial
Estate, Near Water Tank, </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Dabhel, Daman 396
210 (U.T.) India
</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">ST.</span><span style="font-family: "Courier New";"> No. DI-600 dt.26.09.1996<span style="mso-tab-count: 1;"> </span> C.S.T. No. DI/CST/371 DT. 26.09.1996</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">INVOICE</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">To,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">M/s. Hercules Hoists
Limited</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">110, Minerva
Industrial Estate</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Mulund (West)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Mumbai 400080</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Delivery Address:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">M/s. Hercules Hoists
Limited</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Village : Petle</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Taluka : Sakri</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">District: Dhule</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Maharashtra</span><span style="font-family: "Courier New";"></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">P.O. No.:<span style="mso-spacerun: yes;"> </span>PO45-00221-A</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Date<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;">
</span>18/11/2004</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Invoice No:
SEL/DAMAN/SUPPLY/2004-2005/055</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Date: 28.02.2005
Reference No. 7444000055</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Sr. No.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Description</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Qty.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Rate Per Unit (Rs.)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Value in Rupees</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">00020</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Supply of SUZLON WTG
1.25MW S66 TubTcwr72M Ht {Ex works Daman) Wind
Turbine Generator comprising mainly of :</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">* Nacelle</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">* Hub and Set of 3
Blades</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">* Controller (Micro
Processor) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">* Tower and
Hardware<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">47,30,000</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">47,30,000</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Packing, Handling,
Loading, Insurance and Transportation Charges for Delivery at your site</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">825,000</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">825,000</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Supply of Electrical
Items Including Transformers up to D.P. structure internal line up to Metering</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1,500,000</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1,500,000</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Total</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">49,625,000</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">AGAINST C FORM</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Amount in Words:
RUPEES FOUR CRORS NINETY-SIX LAC TWENTY-FIVE THOUSAND ONLY</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Mode of
Dispatch:<span style="mso-spacerun: yes;"> </span>By Road</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Dispatch
Particulars<span style="mso-spacerun: yes;"> </span>From Daman
factory lo your sits</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Insurance<span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;">
</span>:<span style="mso-spacerun: yes;"> </span>Arranged by us up to site<span style="mso-tab-count: 1;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Customer's L.S.T.
No.<span style="mso-spacerun: yes;"> </span>: 400021/S/3293 DTD 21 -08-1998</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Customer's C.S.T.
No.<span style="mso-spacerun: yes;"> </span>: 400080/C DTD 01-APR-95</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Central Excise
Exempted under G.E. (Notification) No. 6/2002-CE did. 01-3-2002 Sr. No. 237.
List No<span style="mso-spacerun: yes;"> </span>9, Hem No<span style="mso-spacerun: yes;"> </span>13 - Wind Operated Electricity Generators
and pans thereof, as amended by Notification No<span style="mso-spacerun: yes;">
</span>23/2004-CE did. 09-07-2004.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Subject to Daman Jurisdiction only</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">For SUZLON<span style="mso-spacerun: yes;"> </span>ENERGY LTD.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Authorised
Signatory </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.4<span style="mso-spacerun: yes;"> </span>Perusing the above invoice, we find that
M/s. SEL have not only supplied WTG and its parts, but also electrical items of
substantial value.<span style="mso-spacerun: yes;"> </span>We find that the
Commissioner has<span style="mso-spacerun: yes;"> </span>rejected the
appellant s claim for the benefit of Notification No.19/2003 dated 21.8.2003 on
the ground that the benefit of Notification is applicable only to those cases
where under a contract the services provider<span style="mso-spacerun: yes;">
</span>not only supplies a plant, machinery or equipments but also provides the
service of commissioning or installation of the said plant, machinery or
equipment. Since the appellant had not supplied WTGs to its customers and
provided only the service of erection, commissioning or installation of WTGs
supplied by M/s. SEL, they were not eligible for the benefit of the
Notification.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.5<span style="mso-spacerun: yes;"> </span>It is claimed by the appellant that under
separate contract with their customers, they had not only supplied electrical components
but also carried out the work of electrical installation and hence they were
eligible for the benefit of Notification.<span style="mso-spacerun: yes;">
</span>This claim merits to be rejected for the reason more than one.<span style="mso-spacerun: yes;"> </span>Firstly, we have already held herein-before
that as far as the appellant is concerned, supply of some material including
some electrical items was only<span style="mso-spacerun: yes;">
</span>incidental to the services of erection, commissioning or installation
of WTGs.<span style="mso-spacerun: yes;"> </span>Secondly, in terms of the
Agreement for the Services dated 11.6.2005 between M/s. SEL and the appellant
as also in terms of various Work Orders placed on the appellant by its
customers, there cannot be any doubt that the contracts were composite
contracts for providing services of erection, commissioning or installation of
WTGs.<span style="mso-spacerun: yes;"> </span>Thirdly, civil works and
electrical works are inseparable parts of Wind Farm Project.<span style="mso-spacerun: yes;"> </span>It is needless to say that without civil
foundation, erection of tower is not possible.<span style="mso-spacerun: yes;">
</span>Similarly, without electrical installation, commissioning of Wind Mill
is not possible inasmuch as electricity generated by WTGs cannot be evacuated
from the Wind Mill to the Electricity Board.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>11.6<span style="mso-spacerun: yes;">
</span>We find that<span style="mso-spacerun: yes;"> </span>in his findings the
Commissioner has observed that the mere issue of 4 different invoices would not
make the activities independent of each other.<span style="mso-spacerun: yes;">
</span>The Agreement for Services<span style="mso-spacerun: yes;">
</span>specifies the service as services required for erection, installation
and commissioning of Windfarm Project.<span style="mso-spacerun: yes;">
</span>In his findings, he has observed that the entire gamut of the
installation commences<span style="mso-spacerun: yes;"> </span>with construction
of the civil foundation and progresses into installation of electrical yard and
transmission line for grid connectivity to erection of the windmill to testing
and commissioning of the windmills.<span style="mso-spacerun: yes;"> </span>Thus,
each process is dependant on every subsequent process and thus are inherent and
inseparable parts of the work of the entire agreement relating to complete
erection, installation and commissioning of the WTGs.<span style="mso-spacerun: yes;"> </span>In short, civil foundation and electrical installation
are inseparate part of windfarm project. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">11.7<span style="mso-spacerun: yes;"> </span>Once it is held that electrical installation
is a part of the composite contract for erection, commissioning or installation
of WTGs, the appellant s claim<span style="mso-spacerun: yes;"> </span>for the
benefit of<span style="mso-spacerun: yes;"> </span>Notification No.19/2003 ST for electrical
installation<span style="mso-spacerun: yes;"> </span>cannot be accepted only on
the basis that it had supplied some electrical materials for electrical
installation.<span style="mso-spacerun: yes;"> </span>We, therefore, hold that
the benefit of Notification
No.19/2003 ST is not available to the appellant. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">12.<span style="mso-spacerun: yes;"> </span>Issue No.III. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>It is contended by the appellant<span style="mso-spacerun: yes;"> </span>that the show-cause notice dated 2.8.2006
demanded service tax for the period<span style="mso-spacerun: yes;">
</span>10.9.2004 to 30.9.2005.<span style="mso-spacerun: yes;">
</span>Therefore,<span style="mso-spacerun: yes;"> </span>the period of
10.9.2004 to 31.3.2005 is beyond the normal period of limitation.<span style="mso-spacerun: yes;"> </span>It is also contended that the appellant was
under the bona fide belief that the activities of civil work and electrical
work are distinct and separate from the activity of erection, commissioning or
installation of wind mills.<span style="mso-spacerun: yes;"> </span>Hence, the
extended period of limitation could not be invoked in this case.<span style="mso-spacerun: yes;"> </span>The contention of the appellant was contested
by the ld.Consultant for the Revenue.<span style="mso-spacerun: yes;"> </span>He
stated that the assessee is working under self-assessment scheme.<span style="mso-spacerun: yes;"> </span>As per provisions of Section 70 of the
Finance Act, 1994, the assessee is required to make self-assessment of service
tax due on the services provided by it and file ST 3 Returns with the
jurisdictional Supdt. of Central Excise.<span style="mso-spacerun: yes;">
</span>Examination of ST 3 returns shows<span style="mso-spacerun: yes;">
</span>that the assessee has incorrectly assessed the service tax payable and
has suppressed the correct value of taxable services provided by it.<span style="mso-spacerun: yes;"> </span>Further, the assessee has also suppressed
the fact from the department<span style="mso-spacerun: yes;"> </span>that it has
availed benefit of Notification No.19/2003 ST dated 21.8.2003 although it did
not supply WTGs to its customers. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">12.1<span style="mso-spacerun: yes;"> </span>We have given careful consideration to the
above submissions of both the sides.<span style="mso-spacerun: yes;"> </span>We
do not find any basis or foundation established<span style="mso-spacerun: yes;">
</span>of bona fide belief.<span style="mso-spacerun: yes;"> </span>We do not
find anything on record to suggest that the appellant had ever approached the Service
Tax authorities to ascertain the details of their liability to pay service
tax.<span style="mso-spacerun: yes;"> </span>It is needless to say that the
belief can be said to be bona fide only when it is formed after all the
reasonable consideration are taken into account.<span style="mso-spacerun: yes;"> </span>In the present case, we do not find any such
consideration having been taken by the appellant.<span style="mso-spacerun: yes;"> </span>We are, therefore, of the view that the
department has rightly invoked the extended period of limitation. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">13.<span style="mso-spacerun: yes;"> </span>In view of our foregoing findings, we find
no merit in the appeal.<span style="mso-spacerun: yes;"> </span>We, therefore,
reject the appeal and confirm the order of the Commissioner.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">14.<span style="mso-spacerun: yes;"> </span>Appeal rejected. </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>(Pronounced in Court on 14th
Feb.,2012)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Ashok Jindal</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Member(Judicial)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Sahab Singh</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Member(Technical)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">pv</span></div>
<div class="MsoNormal">
<br /></div>
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<br /></div>
<div class="MsoNormal">
<br /></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">33</span></div>
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<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Courier New";">IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI</span></b></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">COURT<span style="mso-spacerun: yes;"> </span>NO. II</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">APPLICATION NO.<span style="mso-spacerun: yes;"> </span>E/S/351, 352 and 357/10</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>IN APPEAL NO. E/277, 278 and 288/10 Mum</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">(Arising out of
Order-in-Appeal No. SB (83-84)83-84/MV/2009 dated 20.11.09 passed by the
Commissioner of Central Excise Customs (Appeals)<span style="mso-spacerun: yes;"> </span>Mumbai and<span style="mso-spacerun: yes;">
</span>arising out of Order-in-Original No. 18/ANS/09-10 dated 20.11.09 passed
by the Commissioner of Central Excise, Mumbai III).</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">For approval and signature:</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Shri. Ashok Jindal,
Member (Judicial) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Shri. P.R.
Chandrasekharan, Member (Technical)</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">1.<span style="mso-tab-count: 1;"> </span>Whether Press Reporters may be allowed to see<span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-tab-count: 1;"> </span>:<span style="mso-spacerun: yes;"> </span>No</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>the Order for publication as per Rule 27 of
the</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>CESTAT (Procedure) Rules, 1982?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>Whether it should be released under Rule 27
of the<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>CESTAT (Procedure) Rules, 1982 for
publication </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>in any authoritative report or not?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Whether Their Lordships wish to see the fair
copy<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span>Seen</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>of the Order?</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Whether Order is to be circulated to the
Departmental<span style="mso-spacerun: yes;"> </span>:<span style="mso-spacerun: yes;"> </span>Yes</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>authorities?</span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Monginis Foods Pvt.
Ltd.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Hindustan</span><span style="font-family: "Courier New";"> Forging and Steel Industries</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">:</span></div>
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<span style="font-family: "Courier New";">Appellant</span></div>
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<br /></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Versus</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Commissioners of
Central Excise,</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Mumbai III and V</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";">Respondent</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Appearance</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Shri Vinod Awtani, C.A.<span style="mso-spacerun: yes;"> </span>and<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>for appellants</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Shri Vishal Agarwal,
Advocate</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";">Shri H.B. Negi, SDR
and</span></div>
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<span style="font-family: "Courier New";">Shri Kishori Lal,
SDR</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">For Respondent</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">CORAM:</span></div>
<div class="MsoNormal">
<br /></div>
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<span style="font-family: "Courier New";">Shri. Ashok Jindal,
Member (Judicial) </span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Shri. P.R.
Chandrasekharan, Member (Technical)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Date of Hearing :
28.01.11</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>Date of Decision : 28.01.11</span></div>
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<span style="font-family: "Courier New";">ORDER NO.</span></div>
<div class="MsoNormal">
<br /></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Per : Ashok Jindal</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>By the impugned order the appellants were
directed to reverse 8% or 10% as per Rule 6(3) of CENVAT Credit Rules, 2004 on
the clearance of the exempted goods as the appellants are not maintaining
separate account of inputs / input service which have gone to manufacture of
dutiable as well as non-dutiable final products.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>After hearing both sides for some time on the
stay applications, it is seen that the issue involved is in narrow
compass.<span style="mso-spacerun: yes;"> </span>Hence, the applications for
waiver of pre-deposit of the amounts are allowed and the appeals are taken up
for disposal with the consent of both the sides.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>We find that by an amendment inserted through
Section 73 of the Finance Act, 2010 the CENVAT Credit Rules, 2004 are being
amended such as :-</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>Amendment of rule?6 of CENVAT Credit Rules,
2004. <span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">73. (1) In the
CENVAT Credit Rules, 2004, made by the Central Government in exercise of the
powers conferred by section 37 of the Central Excise Act, as published in the
Official Gazette vide notification of the Government of India in the Ministry
of Finance (Department of Revenue) number G.S.R. 600(E), dated the 10th
September, 2004, rule 6 shall stand amended and shall be deemed to have been
amended retrospectively, in the manner specified in column (3) of the Eighth
Schedule, on and from and up to the corresponding date specified in column (4)
of that Schedule against the rule specified in column (2) of that Schedule.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Where a person opts
to pay the amount in accordance with?(2) the provisions as amended by
sub-section (1), he shall pay the amount along with interest specified
thereunder and make an application to the Commissioner of Central Excise along
with documentary evidence and a certificate from a Chartered Accountant or a
Cost Accountant, certifying the amount of input credit attributable to the
inputs used in or in relation to the manufacture of exempted goods, within a
period of six months from the date on which the Finance Bill, 2010 receives the
assent of the President.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">The Commissioner of
Central Excise shall, on receipt of an?(3) application under sub-section (2),
verify the correctness of the amount paid within a period of two months from
the date of receipt of the application and in case the amount so paid is found
to be less than the amount payable, he shall call upon the applicant to pay the
differential amount along with interest, which shall be paid within a period of
ten days from the date of receipt of the communication from the Commissioner in
this regard.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Notwithstanding
anything contained in any judgment, decree?(4) or order of any court, tribunal
or other authority, any action taken or anything done or purported to have been
taken or done, at any time during the period commencing on and from the 10th
day of September, 2004 and ending with the 31st day of March, 2008, relating to
the provisions as amended by sub-section (1), shall be deemed to be and deemed
always to have been, for all purposes, as validly and effectively taken or done
as if the amendment made by sub-section (1) had been in force at all material
times.</span></div>
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<span style="font-family: "Courier New";">For the purposes of
sub-section (1), the Central?(5) Government shall have and shall be deemed to
have the power to make rules with retrospective effect as if the Central
Government had the power to make rules under section 37 of the Central Excise
Act, retrospectively, at all material times.</span></div>
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<span style="font-family: "Courier New";">Explanation. <span style="mso-spacerun: yes;"> </span>For the removal of doubts, it is hereby
declared that no act or omission on the part of any person shall be punishable
as an offence which would not have been so punishable had this section not come
into force.</span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>THE EIGHTH SCHEDULE </span></div>
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<span style="font-family: "Courier New";"><span style="mso-spacerun: yes;"> </span>[See section 73(1)]</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Sl. No.</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Provisions of CENVAT
Credit<span style="mso-spacerun: yes;"> </span>Rules, 2004 to be amended</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Amendment</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Period of effect of
amendment</span></div>
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<span style="font-family: "Courier New";">(1)</span></div>
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<span style="font-family: "Courier New";">(2)</span></div>
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<span style="font-family: "Courier New";">(3)</span></div>
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<span style="font-family: "Courier New";">(4)</span></div>
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<span style="font-family: "Courier New";">Rule 6 of the CENVAT
Credit Rules, 2004 as published vide notification<span style="mso-spacerun: yes;"> </span>number G.S.R. 600(E), dated the 10th
September, 2004 [23/2004-CENTRAL<span style="mso-spacerun: yes;">
</span>EXCISE (N.T.) dated the 10th September, 2004].</span></div>
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<span style="font-family: "Courier New";">In the CENVAT Credit
Rules, 2004, in rule 6, after sub-rule (6), the following sub-rule shall be
inserted, namely :</span></div>
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<span style="font-family: "Courier New";"> (7) Where a dispute
relating to adjustment of credit on inputs or input services used in or in
relation to exempted final products relating to the period beginning on the
10th day of September, 2004 and ending with the 31st day of March, 2008 (both
days inclusive) is pending on the date on which the Finance Bill, 2010 receives
the assent of the President, then, notwithstanding anything contained in
sub-rules (1) and (2), and clauses (a) and (b) of sub-rule (3), a manufacturer
availing CENVAT credit in respect of any inputs or input services and
manufacturing final products which are chargeable to duty and also other final
products which are exempted goods, may pay an amount equivalent to CENVAT
credit attributable to the inputs or input services used in, or in relation to
the manufacture of, exempted goods before or after the clearance of such goods
:</span></div>
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<span style="font-family: "Courier New";">Provided that the
manufacturer shall pay interest at the rate of twenty-four per cent. per annum
from the due date till the date of payment of the said amount.</span></div>
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<span style="font-family: "Courier New";">Explanation. <span style="mso-spacerun: yes;"> </span>For the purpose of this sub-rule, due date
means the 5th day of the month following the month in which goods have been
cleared from the factory. .</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">10th<span style="mso-spacerun: yes;"> </span>day of September, 2004 to the<span style="mso-spacerun: yes;"> </span>31st<span style="mso-spacerun: yes;">
</span>day<span style="mso-spacerun: yes;"> </span>of March, 2008 (both days
inclusive).</span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>On going through the above provisions we find
that now the appellants are required to reverse only the amount of inputs /
input service availed by them which has gone in manufacturing of the exempted
goods.<span style="mso-spacerun: yes;"> </span>In view of the above
observations, we find that it would be in the interest of justice to remand the
matters back to the original adjudicating authority to requantify the demand
accordingly, and to give the benefit of the amendment made in the Finance Act,
2010 to the appellants.<span style="mso-spacerun: yes;"> </span>Hence, the
matters are remanded to the original adjudicating authority to reexamine the
issue in the light of the above observations and to pass an appropriate order
after giving a reasonable opportunity to the appellants to present their
case.<span style="mso-spacerun: yes;"> </span>Appeals are allowed by way of
remand and the stay applications are disposed of in the above manner.</span></div>
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<span style="font-family: "Courier New";">(Pronounced in open
Court)</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span></span></div>
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<span style="font-family: "Courier New";">(P.R.
Chandrasekharan)</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Member
(Technical)<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span></span></div>
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<br /></div>
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<span style="font-family: "Courier New";">(Ashok Jindal)</span></div>
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<span style="font-family: "Courier New";">Member
(Judicial)<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">nsk</span></div>
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<span style="font-family: "Courier New";">3</span></div>
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<span style="font-family: "Courier New";">IN THE CUSTOMS,
EXCISE & SERVICE TAX APPELLATE TRIBUNAL</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">WEST ZONAL BENCH AT
MUMBAI</span></div>
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<span style="font-family: "Courier New";">COURT NO. IV</span></div>
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<span style="font-family: "Courier New";">Appeal No. ST/83/09</span></div>
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<span style="font-family: "Courier New";">(Arising out of
Order-in-Appeal No. JAK (271-272) 111 & 112/08 dated 14.11.2008<span style="mso-spacerun: yes;"> </span>passed by the Commissioner of Central Excise
& Customs<span style="mso-spacerun: yes;"> </span>(Appeals), Aurangabad).</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">For approval and
signature:</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Hon ble Shri Ashok
Jindal, Member (Judicial)</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">======================================================</span></div>
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<span style="font-family: "Courier New";">1. Whether Press
Reporters may be allowed to see<span style="mso-tab-count: 2;"> </span>:<span style="mso-spacerun: yes;"> </span>No</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">the Order for
publication as per Rule 27 of the</span></div>
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<span style="font-family: "Courier New";">CESTAT (Procedure)
Rules, 1982?</span></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>Whether it should be released under Rule 27
of the<span style="mso-tab-count: 1;"> </span>:<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Yes<span style="mso-tab-count: 1;"> </span>CESTAT (Procedure) Rules, 1982 for publication</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>in any authoritative report or not?</span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>Whether their Lordships wish to see the fair
copy<span style="mso-tab-count: 1;"> </span>:<span style="mso-spacerun: yes;"> </span>Seen</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>of the order?</span></div>
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<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>Whether order is to be circulated to the
Departmental<span style="mso-tab-count: 1;"> </span>:<span style="mso-spacerun: yes;"> </span>Yes</span></div>
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<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span>authorities?</span></div>
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<span style="font-family: "Courier New";">======================================================</span></div>
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<span style="font-family: "Courier New";">M/s Nath Cold
Retreads</span></div>
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<span style="font-family: "Courier New";">Appellant</span></div>
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<span style="font-family: "Courier New";">Vs.</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Commissioner of
Central Excise, Aurangabad</span></div>
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<span style="font-family: "Courier New";">Respondent</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Appearance:</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Shri D.R. Gadekar</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Consultant</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">for Appellant</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Shri Kishori Lal</span></div>
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<span style="font-family: "Courier New";">SDR</span></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">for Respondent</span></div>
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<span style="font-family: "Courier New";">CORAM:</span></div>
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<span style="font-family: "Courier New";">SHRI ASHOK JINDAL,
MEMBER (JUDICIAL) </span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Date of Hearing:
16.06.2010<span style="mso-spacerun: yes;"> </span></span></div>
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<br /></div>
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<span style="font-family: "Courier New";">Date of Decision:
02.07.2010<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: "Courier New";">ORDER NO.<span style="mso-spacerun: yes;">
</span>WZB/MUM/2010</span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">Per: Shri Ashok
Jindal, Member (Judicial)</span></div>
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<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";"><span style="mso-tab-count: 1;"> </span><span style="mso-spacerun: yes;"> </span>In
this appeal, the appellants are seeking setting aside of the impugned order,
wherein the penalties under Sections 76, 77 & 78 of the Finance Act, 1994
have been confirmed against the appellants.</span></div>
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<br /></div>
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<span style="font-family: "Courier New";">2.<span style="mso-tab-count: 1;"> </span>The brief facts of the case are that a
show-cause notice was issued to the appellants alleging that the appellants
have undervalued the taxable service and have made short payment of Service Tax
amounting to Rs.3,70,492/- for the period 16.06.2005 to 31.03.2007. It was
alleged that the appellants were providing the service of Retreading of Tyres
covered under the category of Management, Maintenance or Repair Service and
paying Service Tax only on the 30% of the Labour charges element charged to the
customer instead of gross bill amount by excluding the cost of materials used
in the service from taxable value by wrongly availing the exemption under
Notification No. 12/2003-ST dated 20.6.2003. The said Notification is available
only in cases where the sale of goods is evidenced and the sale value is
quantified separately in the invoice/bills as per the conditions contained in
the Notification. Two show-cause notices were issued for demand of
Rs.3,70,492/- under Section 73(1) of the Finance Act, 1994. Interest under
Section 75 of the Finance Act, 1994 and penalty under the provisions of Section
76, 77 & 78 of Finance Act, 1994 was also proposed. The same was
adjudicated by the adjudicating authority and he confirmed the demand, interest
and penalties. On an appeal preferred before the Commissioner (Appeals) by the
appellant, the Commissioner (Appeals) dropped the demand against the appellant
in the impugned order<span style="mso-spacerun: yes;"> </span>and the Service
Tax demand was re-quantified, which was reduced to Rs.23,075/- for the period
16.6.2005 to 30.9.2006 and there was an excess deposit of Service Tax of
Rs.1757/- during the period 1.10.2006 to 31.3.2007, but the penalties of
Rs.1,95,863/- was confirmed under Section 76 and 78. Aggrieved from the same,
the appellants are before me.</span></div>
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<span style="font-family: "Courier New";">3.<span style="mso-tab-count: 1;"> </span>The learned Consultant appearing on behalf of
the appellants submits that the appellants are engaged in retreading of old
tyres and they were under the impression that retreading of old tyres is not
covered under category of taxable service of Management, Maintenance &
Repair . When they realized that this activity falls under the category of
Management, Maintenance & Repair Service they obtained the Service Tax
registration, paid the service tax on labour charges by reducing the cost of
materials and filed returns to the department. The Commissioner (Appeals)<span style="mso-spacerun: yes;"> </span>has rightly held in his order that the
appellants are entitled for cum duty price following the judgment of Hon ble
Supreme Court in the case of Maruti Udyog Ltd. <span style="mso-spacerun: yes;"> </span>2002 (141) ELT 3 (SC). But, while
re-quantifying the Service Tax demand, the Assistant Commissioner made an error
by raising a demand of Rs.23,075/-. In fact nothing is payable by the
appellants. Moreover, in the impugned order<span style="mso-spacerun: yes;">
</span>there is no finding given by the Commissioner (Appeals)<span style="mso-spacerun: yes;"> </span>while confirming the penalties against the
appellant mere saying that as regards to imposition of penalties , I find that
the appellants were registered under Service Tax on 25.10.2005, but they paid
the service tax alongwith interest only on 13.10.2006. Therefore, I find that
the imposition of penalties under Section 76, 77 & 78is justified. Without
coming out the decision of suppression, the penalties are not warranted in this
case.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">4.<span style="mso-tab-count: 1;"> </span>On the other hand, the learned SDR submitted
that in this case, the appellant was registered on 25.10.2005 but did not pay
the Service Tax on time. Hence, the penalty under Section 76 is rightly
imposed. But, he fairly agreed that no intention to evade Service Tax has been
established, for which penalty can be imposed under Section 78 of the Finance
Act, 1994. But, he reiterated the impugned order<span style="mso-spacerun: yes;"> </span>for imposition of penalties. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">5.<span style="mso-tab-count: 1;"> </span>Heard both sides. </span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Courier New";">6.<span style="mso-tab-count: 1;"> </span>On careful consideration of the submissions
made by both sides in this case, I find that the show-cause notice was issued
to the appellant for undervaluation of the taxable service and short payment of
Service Tax. There is no allegation against the appellant for late payment of
Service Tax or there was any intention to evade Service Tax by the appellants.
The appellants have not challenged the quantification of the Service Tax demand
of Rs.23,075/- as confirmed by the Assistant Commissioner in consequence to the
impugned order<span style="mso-spacerun: yes;"> </span>in the appeal but the
Consultant argued the quantification. As the quantification has not been
challenged, I need not to consider the claim of the appellant on that aspect.
Further, the penalties confirmed against the appellants without any coercive
finding against the appellants are not sustainable in this case as held by the
Tribunal in the case of Rajarani Exports reported in 2010 (18) STR 77
(Chennai), wherein it was held that the burden on revenue to establish
suppression on the part of assessee with intent to evade payment of Service Tax
has not been discharged and no penalty is leviable under Sections 76, 77 &
78 of the Finance Act, 1994. Accordingly, in the facts and circumstances of
this case, the Revenue has not discharged the burden of proof that the
appellant has suppressed the facts with intent to evade payment of Service Tax.
There is no allegation of suppression in the show-cause notice also. Hence, I
do not find that any penalty is warranted in this case against the appellants.
Accordingly, the impugned order to the extent of imposition of penalties is set
aside. With the above directions, the appeal is disposed of.<span style="mso-spacerun: yes;"> </span></span></div>
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(Pronounced in Court on)</div>
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<span style="mso-spacerun: yes;"> </span>(Ashok Jindal)<span style="mso-tab-count: 1;"> </span></div>
<div class="MsoNormal">
Member (Judicial)<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">LIMITATION FOR DEMAND OF SERVICE TAX</span></b></div>
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<br /></div>
<div align="center" class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">M. Govindarajan</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">SYNOPSIS</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">Service tax is remitted to the credit of
Central Government on receipt basis.<span style="mso-spacerun: yes;">
</span>The provisions of service tax make the service tax providers to levy
service tax, collect service and remit service tax.<span style="mso-spacerun: yes;"> </span>The non levy or short levy or non payment of
service tax would attract interest as well as penalty.<span style="mso-spacerun: yes;"> </span>In such cases the Central Excise Officers
are given power to raise demand for the payment of service tax within one year
from the relevant date.<span style="mso-spacerun: yes;"> </span>The Department
may invoke the extended period of limitation if the non payment or non levy or
short levy or short payment of service tax by reason of fraud or collusion; or
willful misstatement; or suppression of facts; or contravention of any of the
provisions or the rules with intent to evade the payment of service tax.<span style="mso-spacerun: yes;"> </span>This articles discusses the same in details
with reference to recent decided case laws.</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">INTRODUCTION:</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">1.<span style="mso-tab-count: 2;"> </span></span></b><span lang="EN-GB" style="mso-ansi-language: EN-GB;">Sec. 66 of the Finance Act, 1994
(‘Act’ for short) provides that the service tax shall be levied by the service
providers who are coming the net of service tax.<span style="mso-spacerun: yes;"> </span>Sec. 66A of the Act provides for the charging
of service tax on services received from outside India.<span style="mso-spacerun: yes;"> </span>Sec. 68 of the Act provides for the payment
of service tax by the service providers within the time stipulated and in the
manner prescribed.<span style="mso-spacerun: yes;"> </span>The service tax is
remitted to the credit of the Central Government on receipt basis.<span style="mso-spacerun: yes;"> </span>The service tax is paid by the service
provider on self assessment basis.<span style="mso-spacerun: yes;">
</span>Demand of service tax by the department arises when the service provider
fails to pay service tax.<span style="mso-spacerun: yes;"> </span>Sec. 73A provides
that service tax collected from any person is also to be deposited with Central
Government.<span style="mso-spacerun: yes;"> </span>Sec. 75 provides that
interest is payable on delayed payment of service tax.<span style="mso-spacerun: yes;"> </span>The Act gives power to the Central Excise
Officers to recover the service tax and time limit is also prescribed for such
demand of service tax.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">LIMITATION:</span></b></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">2.<span style="mso-tab-count: 2;"> </span></span></b><span lang="EN-GB" style="mso-ansi-language: EN-GB;">Sec.73 provides that where any
service tax-</span></div>
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<ul type="square">
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">has not been levied; or</span></li>
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">has not been paid; or</span></li>
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">has been short levied; or</span></li>
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">has been short paid; or</span></li>
<li class="MsoNormal" style="mso-list: l0 level1 lfo1; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">has been erroneously refunded</span></li>
</ul>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;">the
Central Excise Officer may, <b style="mso-bidi-font-weight: normal;">within one
year from the relevant date</b>, serve notice on the person chargeable with the
service tax which has not been levied or paid or which has been short levied or
short paid or the person to whom such tax refund has erroneously been made,
requiring him to show cause why he should not pay the amount specified in the
notice.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">2.1.<span style="mso-tab-count: 1;"> </span></span></b><span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="mso-tab-count: 1;"> </span>Sec.73
(6) defines the terms ‘relevant date’ as-</span></div>
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<span lang="EN-GB" style="mso-ansi-language: EN-GB;">(i) in the
case taxable service in respect of which service tax has not been levied or paid
or has been short levied or short paid- </span></div>
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<ul type="square">
<li class="MsoNormal" style="mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">where under the rules made the
provisions of service tax, a periodical return showing particulars of
service tax paid during the period to which the said return relates, is to
be filed by an assessee, the date on which such return is so filed;</span></li>
<li class="MsoNormal" style="mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">where no periodical return as
aforesaid is filed, the last date on which such return is to be filed
under the said rules;</span></li>
<li class="MsoNormal" style="mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">in any other case, the date on
which the service tax is to be paid under the provisions of service tax or
the rules made there under;</span></li>
<li class="MsoNormal" style="mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">in a case where the service</span></li>
</ul>
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<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">(ii) in a
case where the service tax is provisionally assessed the date of adjustment of
the service tax after the final adjustment;</span></div>
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<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">(iii) in a
case where any return relating to service tax, has erroneously been refunded,
the date of such refund.</span></div>
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<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">2.2.<span style="mso-tab-count: 1;"> </span></span></b><span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="mso-tab-count: 1;"> </span>The
said limitation of one year will be extended <b style="mso-bidi-font-weight: normal;">to five years</b> to the department where any service tax has not been
paid or has been short paid or short levied or erroneously refunded by reason
of –</span></div>
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<ul type="square">
<li class="MsoNormal" style="mso-list: l1 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">fraud; or</span></li>
<li class="MsoNormal" style="mso-list: l1 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">collusion; or</span></li>
<li class="MsoNormal" style="mso-list: l1 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">willful misstatement; or</span></li>
<li class="MsoNormal" style="mso-list: l1 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">suppression of facts; or</span></li>
<li class="MsoNormal" style="mso-list: l1 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list .5in; text-align: justify;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">contravention of any of the
provisions or the rules with intent to evade payment of service.</span></li>
</ul>
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<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">Where the
service of the notice is stayed by an order of a Court, the period of such stay
shall be excluded in computing the aforesaid period of one year or five years
as the case may be.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">2.3.<span style="mso-tab-count: 1;"> </span></span></b><span lang="EN-GB" style="mso-ansi-language: EN-GB;"><span style="mso-tab-count: 1;"> </span>Errors
and omissions are common.<span style="mso-spacerun: yes;"> </span>The service
provider is to be more vigilant in service tax matters.<span style="mso-spacerun: yes;"> </span>Regarding the limitation of demand of
service tax nearly fifteen case laws are discussed in this article of various
types.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">3. Relevant case laws:</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">1. Nirav Industries V. Commissioner of Central
Excise & Customs, Rajkot
– 2009 (16) STR 69 (Tri. Ahmd)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">It is well
settled law that, when there are favorable or contradictory decisions holding
the field, entertaining bona fide belief by an assessee cannot be faulted
upon.<span style="mso-spacerun: yes;"> </span>The Tribunal held that the demand
of tax beyond the normal period of limitation is not justified.<span style="mso-spacerun: yes;"> </span>The Tribunal set aside the impugned order.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">2. Aditya College of competitive Examinations
V. Commissioner of Central Excise, Vishakapatnam – 2009 (16) STR 154 (Tri.
Bang)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">A part of
demand of service tax relates to inclusion of mess charges.<span style="mso-spacerun: yes;"> </span>The Tribunal held that by no stretch of
imagination, the mess charges collected can be considered as receipt for
rendering the services of ‘commercial training and coaching’.<span style="mso-spacerun: yes;"> </span>There should always be a nexus between the
amount collected and service rendered.<span style="mso-spacerun: yes;">
</span>The mess charges have been collected for availing the facility of the
mess which is meant for providing food to trainees.<span style="mso-spacerun: yes;"> </span>It cannot be brought under the category of
receipt for ‘Commercial Training or Coaching’ and subject to service tax.<span style="mso-spacerun: yes;"> </span>The show cause notice was issued on some
audit objection.<span style="mso-spacerun: yes;"> </span>There is no
justification for invoking the longer period.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">3. Ridhi Sidhi Transport V. Commissioner of
Central Excise, Belgaum
– 2009 (16) STR 271 (Tri. Bang)</span></b></div>
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<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
appellants contended that non application of extended period has not been
discussed and no finding has been given by the Tribunal.<span style="mso-spacerun: yes;"> </span>The Tribunal accepted the contention of the
appellant.<span style="mso-spacerun: yes;"> </span>The Tribunal held that in
the interest of principles of natural justice, the final order was recalled and
matter would be reheard.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">4. Commissioner of Central Excise, Kanpur V. Taj Tours &
Travels – 2009 (16) STR 273</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
respondent is rendering Tour Operator Service.<span style="mso-spacerun: yes;">
</span>In the ST-3 returns filed by the respondent, the Tribunal found that
clear remarks had been made for exclusion of certain amount from the value of
taxable service on the ground that the tax on this amount was to be paid by the
Principal Tour Operators.<span style="mso-spacerun: yes;"> </span>Therefore, in
respect of this amount the respondent cannot be accused of suppression of
facts.<span style="mso-spacerun: yes;"> </span>When all the records, as
required by the Department had been produced by the respondent for scrutiny
their ST-3 returns, it would not be correct to accuse the respondent of willful
misstatement, suppression of facts etc.,<span style="mso-spacerun: yes;">
</span>The Tribunal upheld the order of the Commissioner (Appeals) holding that
the demand is time barred and that there was absolutely no suppression of any
fact or information on the part of the respondent.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">5. Korpan Ltd., V. Commissioner of Central
Excise, Raigad – 2009 (16) STR 279 (Tri. Mumbai)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">It is now
well settled that once suppression or mis-declaration is established, the time
limit available to the Department for raising the demand is five years from the
relevant date.<span style="mso-spacerun: yes;"> </span>The present show cause
notice invoking the extended period has been issued in October 2006, whereas
the earlier show cause notice dated 16.04.2003 was dropped on 28.12.2006.<span style="mso-spacerun: yes;"> </span>Further earlier show cause notice was
dropped not on the ground of time bar but on the ground that the demand was not
sustainable under the category of ‘consulting engineer’<span style="mso-spacerun: yes;"> </span>The position would be different had the
present demand related to a period after 28.12.2006, i.e., the date of decision
in the show cause notice dated 16.4.2003.<span style="mso-spacerun: yes;">
</span>In other words, the department forms a final view on a matter, it cannot
involve extended time limit for the subsequent period.<span style="mso-spacerun: yes;"> </span>This is not a case here.<span style="mso-spacerun: yes;"> </span>Hence prima facie extended period of
limitation seems to be invocable.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">6.<span style="mso-spacerun: yes;">
</span>Mahaveer Generics V. Commissioner of Central Excise, Bangalore – 2009 (16) STR 289 (Tri. Chennai)</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
application is for waiver of pre-deposit of service tax confirmed under the
proviso to Sec. 73(1) together with interest and penalty.<span style="mso-spacerun: yes;"> </span>The appellant, carrying on Consignment
Agency Services is liable to pay the service tax under the heading ‘Business
Auxiliary Service’.<span style="mso-spacerun: yes;"> </span>M/s Cipla has been
penalized because it is the Principal whose products were being promoted by the
appellants. </span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
Tribunal found that a strong prima<span style="mso-spacerun: yes;"> </span>facie
case for total waiver has been made out on the ground that the entire demand
covers the period from 01.07.2003 to 08.07.2004 and raised in the show cause
notice dated 13.06.2006 is barred by limitation as the activity of the
appellant was very well within the knowledge of the department and service tax
was demanded on it under the category of ‘Clearing and Forwarding Agent’ which
demand was set aside by the Tribunal, rejecting the interpretation of the
Revenue.<span style="mso-spacerun: yes;"> </span>The agreement entered into by
the appellant with M/s Cipla was the subject matter of earlier show cause
notice and the subject matter before the Tribunal also.<span style="mso-spacerun: yes;"> </span>The Tribunal, therefore, held that prima
facie, the applicant cannot be held to be guilty of suppression of facts with
intent to evade payment of duty so as to attract the extended period of
limitation.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">7. Essvee Express Logistics Private Ltd., V.
Commissioner of Service Tax, Bangalore
– 2009 (16) STR 317 (Tri. Bg)</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">As regards
the extended period of time, the Tribunal found that the appellants have field
Service tax returns on 01.12.2003 for the entire period i.e., from 30.09.2000
to 30.09.2003 which is totally incorrect as the appellant is mandated to file
the return half yearly.<span style="mso-spacerun: yes;"> </span>Hence having
filed the returns belatedly the extended period is correctly invoked by authorities.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">8. Saurin Investments Pvt. Ltd., V.
Commissioner of Service Tax, Ahamedabad – 2009 (16) STR 446 (Tri. Ahmd)</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The demand
is barred by limitation, having been raised beyond the normal period.<span style="mso-spacerun: yes;"> </span>The appellants were filing regular ST-3
returns.<span style="mso-spacerun: yes;"> </span>No suppression or misstatement
can be attributed to the appellant in which case, the demand would be barred by
limitation.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">9. Yadav Security & Crime Investigation V.
Commissioner of Central Excise, Ahamedabad – I – 2009 (16) STR 510 (Tri. Ahmd)</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
service tax was confirmed against the appellant for providing security services
for the period from April 2001 to September 2005.<span style="mso-spacerun: yes;"> </span>The first show cause notice was issued
on19.10.2004 which is within the normal period of limitation.<span style="mso-spacerun: yes;"> </span>The Officers searched the premises on
07.10.2005.<span style="mso-spacerun: yes;"> </span>Thereafter the second show
cause notice was issued on 13.10.2006 invoking longer period of
limitation.<span style="mso-spacerun: yes;"> </span>The appellants contended
that at the time of issuance of second show cause notice, all the facts were
within the knowledge of the Revenue, inasmuch as they had issued the first show
cause notice on 19.10.2004.<span style="mso-spacerun: yes;"> </span>As such
second show cause notice is barred by limitation.<span style="mso-spacerun: yes;"> </span>The Tribunal, prima facie, found force in
the contention of the appellant on the point of limitation.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">10. Commissioner of Service Tax<span style="mso-spacerun: yes;"> </span>V. Kothari Products Ltd., - 2009 (16) STR 657
(SC)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">In the
present case the Tribunal has set aside the order-in-original passed by the
Commissioner and held that in view of the earlier decision given by the
Tribunal revenue was not justified in issuing a fresh show cause notice and the
same was barred by limitation as well as by the principles of res judicata.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">11. Idea Cellular Ltd., V. Commissioner of
Central Excise, Rohtak – 2009 (16) STR 712 (Tri. Del)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">ST-3
return provides the details of service tax paid through CENVAT credit and
cash.<span style="mso-spacerun: yes;"> </span>The allegation of utilization of
credit in excess of 20% is not sustainable.<span style="mso-spacerun: yes;">
</span>Demand is beyond normal period of one year is not maintainable.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">12. Padam Chand Mutha & Co., V.
Commissioner of Central Excise, Jaipur – II – 2009 (16) STR 721 (Tri. Del)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">It was
contended by the Revenue that the appellants failed to submit the return and to
observe the procedure.<span style="mso-spacerun: yes;"> </span>In our view,
the Tribunal held that the procedural failure on the part of the appellant was
a result of bona fide belief.<span style="mso-spacerun: yes;"> </span>As such
demand of tax is barred by limitation and the impugned order is liable to be
set aside.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">13. Nizam Sugar Ltd., V. Commissioner of
Central Excise – 2006 (197) ELT 465 (SC)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
Supreme Court held that the extended period is not available to the department
for the subsequent show cause notice which was issued based on the same set of
facts of the earlier show cause notice.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">14. In re – Emerson Climate Technologies (India) Ltd., -
2009 (16) STR 783 (Commr. Appeals)</span></b></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">As regards
the grounds of limitation, the lower authority has held that non payment of
service tax was pointed out by the Audit Party and the assessee did not
disclose the same to the Department till the audit party pointed out the
irregularities and accordingly the assessee is found to be guilty of
suppression of facts with intend to evade payment of service tax.<span style="mso-spacerun: yes;"> </span>Whereas the appellant claims that the
extended period of limitation is not available to the department since for the
earlier period on the same issue the department had issued show cause
notice-cum demand notice and when the department was already aware of the
relevant facts in view of the show cause notice it was obligatory on the part
of the department to issue show cause notice-cum demand notice for the
subsequent period within the limitation period and accordingly the show cause
notice-cum-demand notice is time barred.<span style="mso-spacerun: yes;">
</span>The Commissioner (Appeals) held that the extended period is not
available to the Department.</span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">15. In Re. Makjai Laboratories – 2009 (16) STR
788 (Commr. Appeals)</span></b></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<span lang="EN-GB" style="mso-ansi-language: EN-GB;">The
appellant willfully failed to take registration, failed to pay service tax and
failed to file the returns which amount to contravention of the Act and
Rules.<span style="mso-spacerun: yes;"> </span>The extended period is rightly
available to the Department.</span></div>
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<br /></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">CONCLUSION:</span></b></div>
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<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: justify;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="mso-ansi-language: EN-GB;">4. <span style="mso-tab-count: 2;"> </span></span></b><span lang="EN-GB" style="mso-ansi-language: EN-GB;">The Department in many a case
invoked the larger period for the demand of service tax.<span style="mso-spacerun: yes;"> </span>The provisions are interpreted to the
convenience of the Department.<span style="mso-spacerun: yes;">
</span>Therefore the service tax provider is compelled to agitate before the
Tribunals which give rescue to the assessee in many cases.<span style="mso-spacerun: yes;"> </span>If there is a fault or delay on the part of
the assessee the Tribunals do not show mercy on the service providers by paving
way to the Department to proceed to take action according to the provisions of
Service tax and rules made there under.</span></div>
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<b style="mso-bidi-font-weight: normal;"><u><span style="color: red; font-family: "Courier New";">Extended period not invokable</span></u></b></div>
<div align="center" style="text-align: center;">
<strong><u><span style="color: #006600; font-family: Verdana; font-size: 10.0pt;">2010-TIOL-765-CESTAT-MUM</span></u></strong></div>
<div align="center" style="text-align: center;">
<strong><span style="font-family: Verdana; font-size: 10.0pt;">IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL</span></strong><span style="font-family: Verdana; font-size: 10.0pt;"><br />
<strong><span style="font-family: Verdana;">WEST ZONAL BENCH, MUMBAI</span></strong>
</span></div>
<div align="center" style="text-align: center;">
<strong><span style="font-family: Verdana; font-size: 10.0pt;">APPEAL No.E/1248/2008</span></strong></div>
<div align="center" style="text-align: center;">
<span style="font-family: Verdana; font-size: 10.0pt;">Arising out of Order-in-Appeal no. JAK(244)133/08 Dated :
17.9.2008 <br />
Passed by the Commissioner (Appeals) of Central Excise & Customs, Aurangabad </span></div>
<div align="right" style="text-align: right;">
<strong><span style="font-family: Verdana; font-size: 10.0pt;">Date of Decision: 11.5.2010</span></strong></div>
<div align="center" style="text-align: center;">
<strong><span style="color: #006600; font-family: Verdana; font-size: 10.0pt;">CCE, AURANGABAD
</span></strong></div>
<div align="center" style="text-align: center;">
<strong><span style="color: #006600; font-family: Verdana; font-size: 10.0pt;">Vs </span></strong></div>
<div align="center" style="text-align: center;">
<strong><span style="color: #006600; font-family: Verdana; font-size: 10.0pt;">TRANS DELTA ELECTRICALS </span></strong></div>
<strong><span style="font-family: Verdana; font-size: 10.0pt;">Appellant Rep by:
</span></strong><span style="font-family: Verdana; font-size: 10.0pt;">Shri S M
Vaidya, JDR </span><br />
<strong><span style="font-family: Verdana; font-size: 10.0pt;">CORAM:</span></strong><span style="font-family: Verdana; font-size: 10.0pt;"> Ashok Jindal, Member (J)</span><br />
<strong><span style="color: #ff6633; font-family: Verdana; font-size: 10.0pt;">It
is the duty of the department to verify the exemption sought by the appellant
as mentioned in the ER-1 returns to the extent why the exemption has been
claimed and whether the credit has been reversed or not - Department having
failed in its duty, </span></strong><strong><span style="background: blue; color: white; font-family: Verdana; font-size: 10.0pt;">extended period not invokable</span></strong><br />
<div align="center" style="text-align: center;">
<strong><span style="font-family: Verdana; font-size: 10.0pt;">ORDER NO.A/213/10/SMB/CIV</span></strong></div>
<strong><span style="font-family: Verdana; font-size: 10.0pt;">Per: Ashok
Jindal: </span></strong><br />
<span style="font-family: Verdana; font-size: 10.0pt;">Revenue has filed this
appeal.</span><br />
<span style="font-family: Verdana; font-size: 10.0pt;">2. The facts of the case
are that the respondents are engaged in the manufacture of Electrical
Transformers. A show cause notice was issued on 17.1.2008 asking to the
respondent as to why 10% of the price of exempted goods cleared during the
period from August 2006 to May 2007 amounting to Rs.4,37,100/- should not be
demanded and recovered under Rule 14 of the CENVAT Credit Rules read with
proviso to Section 11A(1) of the Central Excise Act, 1944 with interest.
A proposal of penalty under Rule 15 of the Cenvat Credit Rules, 2004 was also
made. It was alleged in the show cause notice that the respondent has
cleared their finished product i.e Electrical Transformer on payment of Central
Excise duty as well as at the rate of nil rate of duty by availing the benefit
of exemption vide notification no. 6/2006-CE dated 01.03.2006 and availing the
facility of <em><span style="font-family: Verdana;">CENVAT credit</span></em> as
well. However, they have intentionally not paid 10% price of the exempted
goods as required under Rule 6(3)(b) of the <em><span style="font-family: Verdana;">CENVAT
Credit</span></em> Rules, 2004, as no separate accounts were maintained by
them. The extended period was invoked and the adjudicating authority
confirmed the duty demand along with interest and penalties. On appeal,
the Commissioner(Appeals) dropped the demand for the extended period.
Aggrieved from the same the Revenue is before me.</span><br />
<span style="font-family: Verdana; font-size: 10.0pt;">3. The learned DR
submitted that the respondent is clearing their final product which is exempt
and are not maintaining separate account on the duty payable goods as well as
exempted goods are liable to reverse the 10% value of the exempted goods
availed as <em><span style="font-family: Verdana;">CENVAT credit</span></em>.
He further submitted that in the ER-1, the respondent has mentioned goods are
exempted but did not give any details to the department and it is the duty of
the respondent to furnish each and every detail to the department for the
exempted goods. Accordingly, the extended period is invokable and
impugned order is to be set aside.</span><br />
<span style="font-family: Verdana; font-size: 10.0pt;">4. No one appeared on
behalf of the respondent but respondent opted to file written submissions which
are taken on record and considered.</span><br />
<span style="font-family: Verdana; font-size: 10.0pt;">5. Heard the Ld. JDR.</span><br />
<span style="font-family: Verdana; font-size: 10.0pt;">6. I have careful
examination of the records before me. I find that the respondent has
mentioned in the ER-1 returns about the clearance of the exempted goods,
although the department has not verified the entry claiming exemption. It
is the duty of the department to verify the exemption sought by the appellant
to the extent why the exemption has been claimed and whether the credit has
been reversed or not?, which the department has failed to do. It was well
within the knowledge of the department that the goods have been cleared as
exempted goods, the said fact has been confirmed by the Superintendent of
Central Excise in his report to invoke extended period. Department was
having the knowledge as it is clear that the respondent is clearing their goods
as an exempted goods shown in the ER-1 returns, which were being filed
periodically by the respondent. As the show cause issued on 17.1.2008 for
the period 1.8.2006 to 10.5.2007, the period prior to 18.1.2007 is barred by
limitation. The Commissioner(Appeals) has rightly held in the impugned
order. The Commissioner(Appeals) also has held that there is no
suppression of the facts and when there is no suppression of the extended
period is not invokable and no penalty under section 11AC can be imposed.
I am also having the same view.</span><br />
<span style="font-family: Verdana; font-size: 10.0pt;">7. With these
observations, I do not find any reason to interfere with the impugned order,
the same is upheld. Appeal filed by the Revenue is rejected.<br />
<br />
(Pronounced in Court)</span><br />
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<b><u><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">2008-TIOL-2308-CESTAT-BANG</span></u></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">IN THE
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL </span></b><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"><br />
</span></b><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">SOUTH ZONAL BENCH
AT BANGALORE </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Appeal No.
Service Tax/339/2007 </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Arising out of Adjudication Order
No.15/2007 (VR) Dated :17.05.2007 <br />
Passed by the Commissioner of Central Excise & Customs, Visakhapatnam-II
Commissionerate </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">M/s
CHANDRA SHIPPING AND TRADING SERVICES, KAKINADA
</span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Vs </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">COMMISSIONER
OF CENTRAL EXCISE & CUSTOMS, </span></b><b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"><br />
</span></b><b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">VISAKHAPATNAM-II
COMMISSIONERATE </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Date of
Hearing: 25.08.2008 </span></b><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"><br />
</span></b><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Date of Decision:
25.08.2008 </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Appellant Rep by: </span></b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Mr MSV Prasad, Adv.<br />
</span><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Respondent Rep by: </span></b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Ms Sudha Koka, SDR </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">CORAM:</span></b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"> S L Peeran, Member (J) <br />
T K Jayaraman, Member (T) </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #ff6633; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Service Tax – When ST3 returns and
CENVAT Credit returns are filed regularly </span></b><b><span style="color: red; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">extended period not invokable</span></b><b><span style="color: #ff6633; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;"> – Board Circular allows deduction of reimbursable expenses and
85% abatement for lump sum payment to CHA – Service Tax not leviable on
reimbursed expenses like statutory levies and chares paid to various agencies –
Benefit of doubt given to appellant in the absence of rebuttal evidence by
Revenue </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><i><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Appeal
allowed with consequential relief </span></i></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Case laws referred </span></b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">: </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">R</span><i><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">anadey
Micronutrients vs. CCE [1996 (87) ELT 19 (SC)] = </span></i><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">[<a href="http://www.blogger.com/blogger.g?blogID=5497481255385309799"><span style="font-family: Arial;">2002-TIOL-184-SC-CX</span></a>] </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">FINAL ORDER
No. 1108/2008 </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Per: T K Jayaraman: </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">This appeal has been filed against the Adjudication Order
No.15/2007 (VR) dated 17.05.2007 passed by the Commissioner of Central Excise
& Customs, Visakhapatnam-II Commissionerate. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">2. Shri MSV Prasad, the learned Advocate, appeared on behalf of
the appellants and Ms Sudha Koka, the learned SDR for the Revenue. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">3. We heard both sides. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">4. The appellants M/s. Chandra Shipping and Trading Services are
registered as “Custom House Agent”. They also have registration as GTA. Revenue
proceeded against the appellants on the ground that they had not paid the
proper amount of service tax for the period from 2001, 2002 to 2004, 2005.
There was also an allegation of wrongful availment of input credit. The
Adjudicating Authority after adjudication passed the impugned order. In the
impugned order, the Commissioner confirmed the following amounts: </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">a) An amount of Rs.16,86,640/- on the amount received by the
appellant during the period from 2001, 2002-2004, 2005 and also Rs.51,384/-
towards Service Tax on the extra amounts received during 2001, 2002 under
proviso to Section 73 (1) read with Section 66 and Section 68 of the Finance
Act, 1994. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">b) the following amounts alleged to have been taken as input
credit irregularly. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">(i) Rs.9,56,600/- during the year 2003-2004 from May 2003 to March
</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">2004. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">(ii) An amount of Rs.16,33,840/- during the year 2004-2005 from April
2004 to December 2004. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">(iii) An amount of Rs.26,66,213/- during the year 2005-2006 from
January 2005 to December 2005. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">(iv) Totally an amount of Rs.52,56,653/- under Proviso to section
73 (1) of the Finance Act as amended read with Rule 6 of the Service Tax Credit
Rules, 2002 and Rule 14 of the Cenvat Credit Rules, 2004. Interest was
demanded. Penalties were demanded under Section 76 & 78 of the Act. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">5. The learned Advocate urged the point that the demand is hit by
time bar. It was stated that the Commissioner has given a finding at para 31 in
page 50 that the assessee had shown certain nominal amount as service charges
as value of taxable service in their ST-3 returns and that they had suppressed
details of credits taken/utilized in respect of inputs services in their ST-3
returns filed and that the facts of actual value of taxable service provided
and credit taken/utilized in respect of input services have come to light only
during the course of audit by the audit party. It was stressed by the learned
Consultant that this finding is factually incorrect, since the assessee had
been filing ST-3 returns in the prescribed format showing the taxable value in
terms of Board's circular and had been filing Cenvat credit returns indicating
the credits taken and utilized. Our attention was invited to page 73-76 and 104
and 91 of the paper book Volume-II wherein they enclosed the copies of the ST-3
returns and the Cenvat credit returns submitted by them to the department. It
was urged that the department was fully aware as to how the appellant is
calculating the taxable value and using the input service credit. The detailed
work sheets are available in the paper book Volume-II. It was also stated that
the appellant was under the bonafide belief in view of the Board's circular
that reimbursable amounts need not be included in the value of service tax for
purposes of service tax calculation. This is the understanding of the appellant
and when they are not by law needed to pay tax on the reimbursable amounts, it
was not necessary to show them. Therefore, it was strongly pleaded that the
demand is time barred except for the month of December 2005. On merits also,
the learned Consultant argued both the points. The Commissioner has not allowed
the reimbursements. Our attention was invited to Board's circular dated
06.06.1997 wherein it has been clearly stated that the reimbursable charges are
not to be included in the taxable value of the CHA services and where there is
a lump sum amount charged 85% abatement is permissible. However, the
Commissioner has not allowed the re-imbursement and also the 85%. The learned
Consultant pleaded that the Board's circular cannot be brushed away by the
Commissioner and it is binding on all filed formations. He relied on the
decision of Supreme Court in </span><i><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Ranadey Micronutrients reported in 1996 (87) ELT 19 (SC) = </span></i><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">[<a href="http://www.blogger.com/blogger.g?blogID=5497481255385309799"><span style="font-family: Arial;">2002-TIOL-184-SC-CX</span></a>]</span></b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"> . It was also pleaded that the Board's circular does not mention
about requirement of any evidence to show to the department regarding the
reimbursements. It was stated that if they are not reimbursable amounts why
should the importer pay them to the CHA. There is no evidence that the
reimbursements had not been received by the appellant. Moreover, the assessee
had maintained detailed accounts of these expenses which were categorized and
given to the audit party besides evidences of invoice raised and payments
raised. The audit never questioned the correctness of the expenses shown or the
records where they are entered. In respect of an amount of Rs.9,61,335/- it
represents abatement of 85% from lump sum service charges claimed in terms of
para 2.5 of the Board's Circular. This also the Commissioner has disallowed on
the ground that the bills raised show separate breakup of expenses. It was
pleaded that apart from the lump sum fee several activities were undertaken for
discharge and clearance of cargo and whatever activity is not covered in the
lumpsum fee was charged separately and this should not be included in the value
for service tax purposes. This was ignored by the learned Adjudicating
Authority. As regards the denial of the credit of input services for the period
from December 2004, it was stated that the Commissioner denied these credits on
the following grounds: </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">i. The credit was taken on the services not used. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">ii. Payments for the input service as well as the service tax,
there are not </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">to be paid by the importers/exporters. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">iii. Invoice issued by the service provider contains the names of
concerned importer as well as the appellants and the appellants have not
produced any evidence to prove that these importers/exporters have not availed
the service tax credit. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">6. The learned Consultant stated that in terms of Rule 3(1) of
Service Tax Credit Rules 2002 and Rule 3(1) of Cenvat Credit Rules 2004, an
output service provided shall be allowed to take credit of the service tax paid
on input service. The grounds on which the credit was denied are extraneous to
these rules which have to be interpret strictly as they are. Whether the
importer has taken the credit or not is required to be verified by the
department and the credit cannot be denied to the appellant who had actually
paid the service tax on input services from out of their account current
maintained with the input service provider. Credit cannot be denied on
suspicion. It was also pleaded that in view of their two issues covered by
merit in favour of the appellants, the penalty cannot be imposed. However, the
learned Consultant stated that they are prepared to pay an amount of
Rs.51,384/- on extra amounts collected along with interest voluntarily. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">7. The learned Departmental Representative reiterated impugned
order. She stated that the Commissioner has given a very detailed finding
regarding the suppression of facts and justification for invoking the longer
period. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">8. On a very careful consideration of the issue, we find that the
Service Tax-3 returns and also the Cenvat credit returns have been filed
regularly by the appellant. In view of this, the larger period cannot be
invoked. Therefore, we are inclined to give the benefit of time bar to the
appellants. Hence, all demands excepting for December 2005 are not sustainable.
As for December 2005, demands are confirmed and the appellant has to pay them.
As regards the merits of the case, we find that the Board's circular allows
deduction on account of reimbursable expenses and where lumpsum amount is
charged 85% deduction can be claimed on account of reimbursable account. The
CHA apart for (from) taking his commission spends money on account of several
statutory levies and charges which have to be paid to various other agencies.
It would not be correct to charge service tax on these amounts. There is no
evidence with department that the appellant had not spent these amounts. When
the returns are filed, if there is any doubt the department has to verify the
correctness of the particulars given in the returns, both ST-3 returns and also
the Cenvat credit returns. The department has not done that. Therefore, the
allegations that the appellants have spent these amounts on reimbursement and
have not made payment towards tax on input service are not sustainable. The
appellants have stated that the service tax on input services have been paid
from out of their own account maintained with the input service providers.
These facts could have been verified by the Revenue. In the absence of
verification, we have to give the benefit of doubt to the appellant. It is for
the department to prove the allegations with solid evidence. The burden of
proof is always on the department. In view of this above findings, we do not
find that there is any suppression of facts, especially when the appellants had
filed service tax returns and Cenvat tax returns regularly. Hence, we allow the
appeal with consequential relief. The penalties are set aside. Only the demand
for December 2005 is to be paid along with interest. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">[Operative portion of this Order was pronounced in open court on conclusion
of hearing] </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><u><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">2006-TIOL-1930-CESTAT-BANG</span></u></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">IN THE
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL</span></b><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"><br />
</span></b><b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">SOUTH ZONAL BENCH, BANGALORE </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Appeal No:
E/251 to 252/2003</span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Arising out of Order-in-Appeal No.
725/2002 CE dated 16.11.2002 <br />
Passed by the Commissioner of Customs& Central Excise (Appeals) Bangalore. </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Date of
decision : 16.10.2006</span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">(i) M/s
SLM GLASS WORKS </span></b><b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;"><br />
</span></b><b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">(ii) SRI B L
NARAYANASWAMY </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Vs</span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: #006600; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">COMMISSIONER
OF CENTRAL EXCISE, BANGALORE
</span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="font-family: Verdana; font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Appellant Rep. by :</span></b><span style="font-family: Verdana; font-size: 10.0pt;"> Sh. M.G. Varadarajan<br />
</span><b><span style="font-family: Verdana; font-size: 10.0pt; mso-bidi-font-size: 12.0pt;">Respondent Rep. by : </span></b><span style="font-family: Verdana; font-size: 10.0pt;">Sh. Anil Kumar</span> </div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">CORAM : </span></b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Dr.S.L.Peeran, Member (Judicial)<br />
Shri.T.K. Jayaraman, Member (Technical)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: #ff6666; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Central Excise – SSI – Brand name – Demands for Longer period
set aside – The benefit of cum duty and modvat has to be granted</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Final Order
No. 1757 & 1758/2006</span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<b><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt;">Per : Dr. S.L. Peeran : </span></b><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">This appeals arises from Order-in-Appeal No. 725/2002 dated
15.11.2002 by which Two appeals were disposed of by the Commissioner (A),
Bangalore upholding the allegation for by the revenue and confirming in
Order-in-Original No. 20/99 dated 24.08.1999 by which demands have been
confirmed on 55 Nos. of “SAFEX” brand, Automobile Safety Glass by extending
larger period.<br />
<br />
2. The learned Counsel submits that the reason for denying the benefit of SSI
Notification is that the brand “SAFEX” was being used by M/s. Hidustan Safey
Glasses Limited, Calcutta.
He submits that they had also filed an application for registration of the said
brand name. They held a bonafide belief that in the light of several judgments
of the Tribunal affirmed by the Apex
Court that the benefit of Notification cannot be
denied merely because that the brand name used and affixed by them happen to be
the brand name of another person. However, he points out that the latest
judgments of the apex court in the case of CCE Vs. Grasim Industries – 2005
(183) ELT 123 is against the party. It has been held therein that use of brand
or trade name of another person will disentitle the party from the benefit of
SSI Notification. however, he points out that in the present case, the demands
pertain to the period 1996-1998, the department had drawn Mahazar on 13.02.1998
and the show cause notice was issued on 09.08.1998 invoking larger period. He
submits that the appellants were under bonafide belief that their application
for registration of the said brand name would be accepted and even otherwise
there were several judgments during the period in assessee’s favour granting
the benefit of SSI Notification. He relies on the following judgment wherein
the benefit of time bar has been granted. He also pleads that they are entitled
for the benefit of cum duty and modvat credit. The written submissions made
with regard to time bar, cum duty and imposition of penalty and interest are
given herein below.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Time Bar </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Assuming but not admitting that the duty demand is sustainable the
demand is clearly barred by limitation for the following reasons and grounds.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">1. The appellant had no intention to evade duty.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">2. They have not suppressed any information with willful intention
to evade duty.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">3. The records enclosed and the investigation undertaken by the
appellant clearly prove that they have not affixed the brand name on the same
products on which M/s Hindustan Safety Glass have obtained the registration.
The search report clearly indicate that the SAFEX brand can be registered by
the appellant in their own name for their products. The search report itself
clearly shows that the brand SAFEX has been pending for registration of the
sane brand name for different class of goods. In view of this it cannot be
alleged that the appellant had intention to evade duty. In these circumstances
larger time limit cannot be invoked.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">1. Champhor Drugs & linaments - 1989 (40) ELT 276 (SC)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">2. Cosmic Dye Chem - 1995 (75) ELT 721 SC</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">3. Pushpam Pharmaceuticals - 1995 (78) ELT 401 SC</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">4. Singareni Colleries - 1998 (37) ELT 361 SRB</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">5. Padmini Products - 1989 (43) ELT 195 SC</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">6. Cadilla Lab Pvt. Ltd., - 2003 (55) RLT 1 SC</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">7. Ambika Steel Rolling Mills - 1991 (52) ELT 15 (DEL)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">8. Thermo Electrics - 1991 (54) ELT 92 (T)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">9. Applied Industrial Products - 1992 (62) ELT 364 (kar)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">10. Raymond Cement Works - 1995 (76) ELT 346 (T)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">11. Tamilnadu Housing Board - 1994 (74) ELT 9 (SC)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">12. Ellora Mechanical - 1998 (98) ELT 109 </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">4. The submissions made in the above paragraphs prove that the
bonafide view entertained by the appellant that they are not affixing brand
name belonging to M/s Hindustan Safety glass is vindicated.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">5. It is also well settled law that larger time limit is not
invokable when assessee entertains a bonafide view. In this case the decisions
prevalent at the relevant period of time. The following ratio decisions fully
support the above contention.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">a. Hyderabad
Vs. ITW Signod India Ltd. - 2004 (65) RLT 828.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">b. CCE Vs Dewarane Macnelli & Co. Ltd. - 1991 (56) ELT 645</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">c. Refco Icematic Company Viz, CCE - 1998 (27) RLT 327</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">d. Shakti Iron & Steel Co. Ltd., - 1999 (30) RLT 641</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">e. Vallabh Cement - 1998 (98) ELT 106</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">f. Ellora Machanical - 1998 (98) ELT 109</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">g. Movika Pharmaceuticals - 1998 (27) RLT 230</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">h. New Vikram Cement - 1998 (27) RLT 474</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">i. Jana Jeevan Foods (P) Ltd., - 1999 (30) RLT 686</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">j. Sterllite Industries (I) Ltd., - 1998 (27) RLT 419</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">k. Gurunanak Steel & Allied Industries - 2001 (42) RLT 37 (T)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">l. Aldowin & Others _ 2003(56)RLT620 (T)</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span lang="FR" style="color: black; font-family: Verdana; font-size: 10.0pt; mso-ansi-language: FR; mso-bidi-font-family: Arial;">m. Surat Textiles - 2004(62)RLT351(SC)</span><span lang="FR" style="color: black; font-family: Arial; font-size: 9.0pt; mso-ansi-language: FR;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">6. Apart from the above ratio decisions the appellant relies on
the following ratio decisions to support their plea that the demand is clearly
barred by limitation.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">1. 2004(167) E.L.T. 494 (S.C) MENTHA & ALLIED PRODUCTS LTD.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Demand and penalty – Different views expressed at different stages
by Tribunal and High Court – Supreme Court – Supreme Court also not clear as to
whether law is absolutely clear on matter or not and authorities issuing
clarification from time to time – Section 11A of Central Excise Act, 1944 not
invokable – Penalty and application of extended period of limitation not
justified.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">2. 2002 (150) E.L.T. 284 (Tri.- Chennai) QUEEN ELECTRICAL
INDUSTRIES</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Demand – limitation – Suppression – Non-disclosure of brand name
in the declaration – Same brand name being used by sister concern though not
registered in their name – Larger period under Section 11A of Central Excise
Act, 1944 not invokable.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">3. 1998 (80) E.L.T 445 (Tribunal) INTERCITY CABLE SYSTEM (P) LTD.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">SSI Exemption – Brand name ‘Shyam’ belonging to another person in
respect of different product affixed by appellant in respect of EPABX and
telephone equipments – Brand name of other person not eligible for exemption
under the notification being used by appellant, benefit of exemption under
Notification No. 175/86-C.E., dated 01.03.1986 as amended by Notification No.
223/87-C.E., dated 22.09.1987 not available.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">4. 2006 (199) E.L.T. 855 – M/s Tisco Ltd.,</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Demand – Limitation – Suppression of facts – Bonafide doubt about
excisability due to divergent judicial views – </span><span style="background: blue; color: white; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Extended period not invokable</span><span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">, especially in
absence of positive act on part of assessee – Date of knowledge of department
found to be irrelevant – Section 11A of Central Excise Act 1944.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">5. 2006 (199) ELT 159 – Prakash Udyog Samiti</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Demand - Limitation – Intent to evade payment of duty – As
appellants adopted the view adopted by Larger Bench of Tribunal they could not
have intention to evade payment of duty – Extended period of limitation not
invokable – Section 11A of CEA 1944.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">6. 2006 (201) ELT 27 – Mahindra & Mahindra Ltd.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Impression of non-excisability prevailed during material period
among assessees and officers – decisions during material period favouring
assessee – Charge of suppression of facts not sustainable – Extended period of
limitation not invokable – demands hit by time bar.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">14. In the case of M/s Grasim Industries M/s Rukimini Packwell
Traders M/s Mahan Dairy etc., the original decisions of the Tribunal were all
in favour of the appellant as it was held by the Tribunal in those cases that
the benefit cannot be denied if the brand name/ trade name is affixed is of a
different class. These ratio decisions were reversed by Apex Court only recently. Hence the ratio
decision of Honorable Apex Court in the case of Mentha and Allied products
limited reported in 2004 (167) ELT 494 is clearly applicable as the Honorable
Apex Court has held that larger time limit is not invokable when different
views are expressed at different stages by various judicial forums. Hence the
demand for extended period is clearly barred by limitation and assuming but not
admitting duty is payable, it can be only for a period of six months prior to
date of issue of show cause notice.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Alternate submissions </span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">1. Assuming but not admitting duty is payable, the benefit of cum
duty price is to be granted as per the Apex court decision in the case of M/s
Maruthi Udyog Limited reported in 2000 (49) RLT 1.<br />
2. The benefit of modvat credit is to be extended in respect of inputs
purchased by the appellant as per the following ratio decisions.<br />
<br />
a. Supreme Industries Limited - 2004 (64) RLT 135</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">b. Multiplex Lami Prints - 2004 (64) RLT 532</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">c. CCE Vs Suromed Pvt Ltd. - 2004 (172) ELT 318</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">d. Formica India
- 1995 (77) ELT 511 SC</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">e. Chamundi Re-rolling Mills - 1996 (81) ELT 563<br />
<br />
3. The appellant is entitled to modvat credit not withstanding the fact that
they did not follow the procedure at the relevant period of time. Though this
ground was not raised in the appeal memorandum a misc. application has been
filed along with documents and requisite fee of Rs. 500-00 seeking for
admitting this ground as additional ground and the eligibility to modvat credit
being question of law can be raised at this stage also.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Penalty and interest</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">1. the mandatory penalty has been imposed under Section 11AC and
11AB even though it is well settled law that the provisions of these sections
arte applicable only for the period after 28.09.1996. Though this ground is
raised at all stages no finding is given.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">2. Even otherwise no penalty can be imposed in this case as can be
seen from the narrations made in the preceding paragraphs that lot of ratio
decisions were in favour of the appellant during the relevant period of time
and hence it cannot be concluded that the appellant violated the provisions and
hence liable for penalty. The apex court in the case of CCE Vs. Crasim
Industries reported in 2005 (183) ELT 123 has held that no penalty is imposable
when bonafide belief is caused by Tribunal’s decisions. Hence no penalty can be
imposed in this case either prior to 28.09.1996 or after 28.09.1996 and we pray
for setting aside the entire penalty.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">3. Interest under section 11AB can only be for the period after
28.09.1996 and this interest can be demanded only if the duty liability stands
confirmed. As already stated the major demand is barred by limitation and hence
the interest can be if any only for period of normal limitation.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Penalty on Sri B.L. Narayanaswamy</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">4. As per the ratio decision of Grasim Industries cited supra, and
number of other ratio decisions, no penalty can be imposed when there are
conflicting decisions and hence the penalty on Sri B.L. Narayanaswamy is also
liable to be set aside.<br />
5. It is also well settled law that penalty cannot be imposed simultaneously on
partnership firm and individual partners.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Shyam Traders - 2002 (143) ELT 95</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Darshan C Sandhviv CCE - 2002 (142) ELT 676</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Alfa Ceramics - 2002 (145) ELT 454</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Swem Industries - 2003 (154) ELT 417</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Compusoft - 2003 (154) ELT 241</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Kamdeep Marketing - 2004 (165) ELT 206</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Sarpin Pharmacal - 2004 (167) ELT 472</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Ramashyama Papers - 2004 (63) RLT 130</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">Vinaykumar Baid - 2004 (164) ELT 33</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">J.B. Industries - 2004 (168) ELT 316</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">6. We therefore pray that the Honorable Tribunal may be pleased to
set aside the impugned order with consequential benefits as per law.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">He submits that the demands have to be restricted for six months
in the facts and circumstances of the case in the light of the written
submissions.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">3. Heard learned JDR, who submits that they are not eligible for
the SSI Exemption in view of the Apex
Court judgment rendered in the case of CCE Vs.
Grasim Industries (supra). He submits that the appellant had not informed the
department about the affixing of the said brand name “SAFEX” and hence, larger
period was invokable.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
<div class="MsoNormal" style="mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: Verdana; font-size: 10.0pt; mso-bidi-font-family: Arial;">4. On a careful consideration, we notice that in the present case
that the department had investigated and drawn Mahazar on 13.02.1998 and show
cause notice has been issued on 09.08.1998, this would save the period for six
months. Revenue has not proved that appellants have suppressed any material
information with an intention to evade duty. The appellants had also filed an
application for registration of their brand name in their favour. There were
several factors including Tribunal rulings in the appellant’s favour to grant
the benefit of the Notification. Therefore, in such a circumstance, it cannot
be said that there was intentional suppression of facts to avail the benefit of
the Notification. The written submission made by the learned Counsel in this
behalf and circumstances referred to in the said Notification, the demands for
larger period has to be set aside. Ordered accordingly. The benefit of cum duty
and modvat has to be granted to the assessee. The demands for six months is
sustainable, therefore, the matte is remanded to Original Authority to
re-compute the duty by granting the benefit of cum and modvat credit for six
months. The appellants shall be heard in the matter and matter shall
re-adjudicated within four months from the receipt of this order. As the appellants
had not deliberately suppressed any facts, therefore in the light of several
judgments cited by the assessee, the imposition of penalty is not justified and
penalty is set aside in the matter. Appeal is allowed by remand to the Original
Authority to re-compute the duty as ordered.</span><span style="color: black; font-family: Arial; font-size: 9.0pt;"></span></div>
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venkatrao kedarihttp://www.blogger.com/profile/03753665157339360626noreply@blogger.com1tag:blogger.com,1999:blog-5497481255385309799.post-81351698590006530272012-10-12T05:23:00.001-07:002012-10-12T05:23:17.308-07:00Service tax Payable on TDS as it is part of Consideration<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://taxguru.in/service-tax/service-tax-payable-tds-part-consideration.html">TDS INCLUDEABLE IN SERVICE TAX PAYABLE</a><br />
<br />
Section 67 of the Act has made provision for valuation of <span class="IL_AD" id="IL_AD1">taxable service</span> for charging <span class="IL_AD" id="IL_AD3">service tax</span>. According to Section 67(1)(a) of the Act where there is a monetary consideration paid to provide taxable service, the assessable value for levy of service tax is ‘gross amount’ charged by the <span class="IL_AD" id="IL_AD11">Service provider</span> for the taxable service provided. Sub-section (2) of the said section has made provision to include the amount of service tax to the gross valuie of consideration where taxable service provided is inclusive of service tax. The term ‘consideration’ for the valuation of taxable service is defined by explanation appearing under Section 67 meaning that consideration includes any amount that is payable for the taxable service provided or to be provided.<span id="more-53026"></span>
<br />
<div style="text-align: justify;">
The liability of the appellant arose under the Act in terms of Section 66A of the Act as recipient of service <span class="IL_AD" id="IL_AD12">of Engineering</span> Consultancy from the Consultant abroad. Rule 7 (1) of the Service tax
(determination of value) Rules, 2006 which came into force with effect
from 19.4.2006 has made provision in respect of services covered by
Section 66A of the Act. According to this Rule, measure of value for
taxation of service covered by that Section shall be such amount as is
equal to the actual consideration charged for the services provided or
to be provided.</div>
<div style="text-align: justify;">
Although the Show Cause Notice dated 19.11.2002 refers to para 5.1 at page 19 (Appendix 2 <span class="IL_AD" id="IL_AD5">Terms and conditions</span>) of the Agreement and a copy thereof was enclosed to the said notice, that <span class="IL_AD" id="IL_AD7">paper</span> was not available in the paper <span class="IL_AD" id="IL_AD6">book</span>
filed by the appellant. The show cause notice indicates that on perusal
of the agreement entered into between the assessee and M/s. Prodrive
Automation Technology (Europe) Ltd (one of the service providers abroad)
it appears that the price set out in the Consultancy Agreement as was
examined by notice issuing authority noticed <span class="IL_AD" id="IL_AD8">that to be</span>
net of all duties, taxes and other Government charges which, where
applicable were payable in addition to the price. Accordingly, Revenue
held that <span class="IL_AD" id="IL_AD4">income</span> deducted at
source formed part of gross amount of consideration paid to foreign
consultant. It appears that there were 22 service providers as per
Annexure to Show Cause Notice appearing at page 58 to 61 of the Paper Book filed by the appellant. But no agreement copy was available on record or Paper Book.
There was no pleading on material facts by the appellant as to how the
facts in issue suggest and support defence of appellant that income tax deducted at source shall not form part of the gross amount of taxable service received when Rule 7(1) of Service Tax
(Determination of Value) Rules, 2006 provides that actual consideration
charged for the service provided or to be provided shall be assessable
value in respect of services covered by Section 66A of the Act.
Therefore, the expression what is ‘actual consideration charged for
service provided or to be provided’ shall depend on the facts and
circumstances of each case. Further, in terms of Section 66A of the Act
the service covered by that section is treated as if the recipient had
himself provided the service in India. Thus by such legal fiction the
consideration inclusive of income tax deducted at source shall be
assessable value for the purpose of the Act in the hands of the service
recipient. Since the Show Cause Notice states that the agreement with
M/s. Prodirve Automation Technology (Europe) Ltd. in terms of para 5.1
at page 19 (Appendix 2 Terms and Conditions) of the agreement speaks of
the price of contract payable was net of taxes and taxes if any payable
in addition to the price of contract was payable by the payer thereon as
price of the contract and such factual aspect remaining unrebutted by
appellant clearly establishes that tax payable in India was to form part
of contract price. Thus consideration charged for the service provided
shall include income tax deducted at source as per terms of contract and is in accord with Section 66A read with Rule 7(1) of the Service Tax
(Determination of Value) Rules 2006 for the reason that net price of
contract agreed to be paid to foreign consultant was to include income
deducted at source thereon to be price also. Thus the tax demand on the
assessable value comprising the consideration inclusive of income tax
deducted at source relating to the period (9.4.2006 to September 2007)
which was agreed to be price of the contract sustains.</div>
<div style="text-align: center;">
CESTAT, CHENNAI BENCH</div>
<div style="text-align: center;">
<strong>T.V.S. Motor Company Ltd.</strong></div>
<div style="text-align: center;">
<strong><em>v</em>.</strong></div>
<div style="text-align: center;">
<strong>Commissioner of Central Excise, Chennai – III</strong></div>
<div style="text-align: center;">
FINAL ORDER NO. 652 OF 2012</div>
<div style="text-align: center;">
JUNE 13, 2012</div>
<div style="text-align: justify;">
<strong>ORDER</strong></div>
<div style="text-align: justify;">
<strong>D.N. Panda, Judicial Member</strong>
– Pursuant to Miscellaneous Order No.258/2011 passed by the Bench on
6.6.2011 against Revenue’s application dated 30.11.2009 for early
hearing, this matter came up for hearing today after 3 (Three) years of
passing Stay order vide No.411/2009 dt. 18.5.2009 granting full waiver
of predeposit to the appellant against service tax demand of Rs.
1,65,53,563/- followed by levy of equal amount of penalty imposed under
Section 78 of Finance Act, 1994 (hereinafter referred to as ‘the Act’)
and interest on the said service tax demanded.</div>
<div style="text-align: justify;">
<strong>2.</strong> None present for
Appellant even though the matter was repeatedly called and stay order as
well as Miscellaneous order aforesaid disclosed name of Shri K.S.
Venkatagiri and Shri V. Panchanathan learned Counsels respectively in
the case.</div>
<div style="text-align: justify;">
<strong>3.</strong> An application
addressed to the Assistant Registrar of Tribunal and signed by an
unnamed person for Lakshmikumaran and Sridhanan was filed in Court today
and none was found to be present to state reasons of default of
Appellant or its Authorized Representative. The application stated that
the matter is listed today for final hearing at <span class="IL_AD" id="IL_AD2">serial number</span>
37 and Shri K.S. Venkatagiri, Advocate who is authorized to appear in
this matter is unable to appear due to his personal reasons. Prayer was
made therein to adjourn to a short date after two weeks.</div>
<div style="text-align: justify;">
<strong>4.</strong> The application
aforesaid not being signed naming the signatory, an enquiry was made
from record to ascertain whether any Vakalatnama of Sri K.S. Venkatagiri
is existing on record. But on thorough scrutiny of record containing 8
pages of order sheets and 278 pages appeal memo and other <span class="IL_AD" id="IL_AD9">papers</span> (in appeal folder I) no vakalatnama was found on record. The Court Master accordingly noted as under:</div>
<div style="text-align: justify;">
‘No vakalatnma has been filed by any one
in this case. Shri K.S. Venkatagiri, Advocate who sought for
adjournment has also not filed vakalat.’</div>
<div style="text-align: justify;">
<strong>5.</strong> Record further
revealed that although early hearing application of Revenue was allowed
on 6.6.2011, for hearing the matter on 11.8.2011, due to no Benches
available, the matter was adjourned from time to time on 3 (three)
occasions and finally came up to Board today. It is also apparent from
record that the adjournments were noted under some signatures.</div>
<div style="text-align: justify;">
<strong>6.</strong> Law is laid down by Apex Court in para 21 of the judgment in the case of <em>Uday Sankar Triyar</em> v. <em>Ram Kalesawar Prasad Singh </em>AIR 2006 SC 269 with regard to filing up proper Vakalatnama in a proceeding before Courts which reads as under:</div>
<div style="text-align: justify;">
’21. We may at this juncture digress and
express our concern in regard to the manner in which defective
Vakalatnamas are routinely filed in courts. Vakalatnama, a species of <span class="IL_AD" id="IL_AD10">Power of Attorney</span>,
is an important document, which enables and authorizes the pleader
appearing for a litigant to do several acts as an Agent, which are
binding on the litigant who is the principal. It is a document which
creates the special relationship between the lawyer and the client. It
regulates and governs the extent of delegation of authority to the
pleader and the terms and conditions governing such delegation. It
should, therefore, be properly filled/attested/accepted with care and
caution. Obtaining the signature of the litigant on blank Vakalatnamas
and filling them subsequently should be avoided. We may take judicial
notice of the following defects routinely found in Vakalatnamas filed in
courts :</div>
<div style="text-align: justify;">
(<em>a</em>) Failure to mention the name/s of the person/s executing the Vakalatnama, and leaving the relevant column blank;</div>
<div style="text-align: justify;">
(<em>b</em>) Failure to disclose the
name, designation or authority of the person executing the Vakalatnama
on behalf of the grantor (where the Vakalatnama is signed on behalf of a
company, society or body) by either affixing a seal or by mentioning
the name and designation below the signature of the executant (and
failure to annex a copy of such authority with the Vakalatnama).</div>
<div style="text-align: justify;">
(<em>c</em>) Failure on the part of the pleader in whose favour the Vakalatnama is executed, to sign it in token of its acceptance.</div>
<div style="text-align: justify;">
(<em>d</em>) Failure to identify the
person executing the Vakalatnama or failure to certify that the pleader
has satisfied himself about the due execution of the Vakalatnama.</div>
<div style="text-align: justify;">
(<em>e</em>) Failure to mention the address of the pleader for purpose of service (in particular in cases of outstation counsel).</div>
<div style="text-align: justify;">
(<em>f</em>) Where the Vakalatnama is
executed by someone for self and on behalf of someone else, failure to
mention the fact that it is being so executed. For example, when a
father and the minor children are parties, invariably there is a single
signature of the father alone in the Vakalatnama without any
endorsement/statement that the signature is for ‘self and as guardian of
his minor children’. Similarly, where a firm and its partner, or a
company and its Director, or a Trust and its trustee, or an organisation
and its office bearer, execute a Vakalatnama, invariably there will be
only one signature without even an endorsement that the signature is
both in his/her personal capacity and as the person authorized to sign
on behalf of the corporate body/firm/society /organisation.</div>
<div style="text-align: justify;">
(<em>g</em>) Where the Vakalatnama is
executed by a power-of-attorney holder of a party, failure to disclose
that it is being executed by an Attorney-holder and failure to annex a
copy of the power of attorney;</div>
<div style="text-align: justify;">
(<em>h</em>) Where several persons sign
a single vakalatnama, failure to affix the signatures seriatim, without
mentioning their serial numbers or names in brackets. (Many a time it
is not possible to know who have signed the Vakalatnama where the
signatures are illegible scrawls);</div>
<div style="text-align: justify;">
(<em>i</em>) Pleaders engaged by a
client, in turn, executing vakalatnamas in favour of other pleaders for
appearing in the same matter or for filing an appeal or revision. (It is
not uncommon in some areas for mofussil lawyers to obtain signature of a
litigant on a vakalatnama and come to the seat of the High Court, and
engage a pleader for appearance in a higher court and execute a
Vakalatnama in favour of such pleader).</div>
<div style="text-align: justify;">
We have referred to the above routine
defects, as Registries/Offices do not verify the Vakalatnamas with the
care and caution they deserve. Such failure many a time leads to
avoidable complications at later stages, as in the present case. The
need to issue appropriate instructions to the Registries/Offices to
properly check and verify the Vakalatnamas filed requires emphasis. Be
that as it may.’ [Emphasis supplied]</div>
<div style="text-align: justify;">
<strong>7.</strong> Following aforesaid
rulings of Apex Court, Hon’ble High Court of Delhi disposing a writ
petition W.P.No.2651 of 2009 on 8.10.2009 in the case of <em>Deepak Khosla</em> v. <em>Union of India</em> directed as under:</div>
<div style="text-align: justify;">
’13. We direct that henceforth while
scrutinizing the vakalatnamas filed, be it in the Registry of this
Court, the Subordinate Courts in Delhi or the Tribunals, Authorities and
Foras in Delhi, failure/defect in the vakalatnamas, noted in sub-paras
‘a’ to ‘e’ of Para 21 of the decision of the Supreme Court in <em>Uday Shankar’s</em> case (<em>supra</em>),
shall be treated as a deficiency in the execution of the vakalatnamas
making liable the said vakalatnama to be returned Further, in the
situation contemplated by sub-paras ‘f’ to ‘i’ of Para 21 of the
decision in <em>Uday Shankar’s</em> case (<em>supra</em>), vakalatnamas
not executed in the manner indicated in the said sub paras shall also be
treated as a deficiency in the execution of the vakalatnama, making
liable said vakalatnama to be returned.</div>
<div style="text-align: justify;">
14.? We are passing the directions in
public interest for the reason even we have come across vakalatnamas
which are filed in a most lackadaisical manner. Many a times, precious
judicial time is lost in determining whether a proper representation is
being made under a proper authority’. [Emphasis supplied]</div>
<div style="text-align: justify;">
The Hon’ble Court further directed as under;</div>
<div style="text-align: justify;">
’16. The Registrar General of this Court
is directed to make available a copy of this order to the Registry of
this Court and to forward a copy thereof to all the District Judges in
Delhi with a direction that strict compliance should be made with the
letter and spirit of the law and our directions pertaining to execution
of vakalatnamas. Similarly, to the Registrars of the Tribunals and Foras
functioning in Delhi, a copy of this order may be sent for compliance.’
[Emphasis supplied]</div>
<div style="text-align: justify;">
<strong>8.</strong> It is surprising
that in this case, Advocates from the cited law firm have appeared
earlier and have obtained waiver of pre-deposit and stay without there
being any vakalatnama in their favour. In the absence of a valid
vakalatnama, they can neither be allowed to represent the appellants nor
any adjournment request from them can be entertained. Hence, the
adjournment request is declined.</div>
<div style="text-align: justify;">
<strong>9.</strong> Considering that the
appeal is already 3 years old and prayer of Revenue was to
expeditiously dispose the appeal due to blockage of crores of rupees of
tax and penalty involved in the appeal as well as Appellant’s knowledge
of hearing granted by the Miscellaneous order aforesaid, the matter was
taken up for hearing with assistance of Representative for Revenue.</div>
<div style="text-align: justify;">
<strong>10.</strong> Heard Revenue.</div>
<div style="text-align: justify;">
<strong>11.</strong> Shri V.V.
Hariharan, ld. Commissioner (AR) for Revenue submitted that for the
period March 2004 to September 2007, the Appellant was recipient of
technical consultancy and project consultancy services from service
providers abroad having no place of business in India and such service
falls under Consultancy Engineering Service. The service so received
being taxable service under the Act, the recipient was liable to pay
service tax in terms of Section 66A of the Act read with Rule 2(1)(d)(v)
of the Service Tax Rules, 1994. Admittedly the appellant paid service
tax on the reduced value of such taxable service without including the
income tax deducted at source under Income tax Law to the consultancy
fees paid to foreign consultant. That resulted in short payment of
service tax for which adjudication was made and that resulted in proper
demand by adjudication order. It was categorically submitted by Revenue
that there was difference between the value paid to foreign service
provider and value disclosed in the service tax return giving rise to
understatement of gross amount resulting in short payment of service
tax. Tax deducted at source under income tax law was not included in
gross payment. Therefore, adjudication order which levied service tax on
the gross value of taxable service was correct and invocation of
proviso to Section 73(1) of the Act was justified for which that does
not call for interference in the present appeal. According tax, interest
and penalty levied in adjudication should be upheld.</div>
<div style="text-align: justify;">
<strong>12.</strong> Examined the adjudication order thoroughly in absence of Appellant.</div>
<div style="text-align: justify;">
<strong>13.</strong> Record reveals that
Learned Adjudicating Authority examined the Service tax Returns of the
appellant for the admitted period i.e. March 2004 to September 2007 and
considered pleadings of the appellant to complete adjudication to the
best of his judgment when there was no proper disclosure of gross amount
in the return. He confirmed adjudication for above period during which
technical consultancy and project consultancy services were availed by
appellant from abroad and nature of service remained undisputed.</div>
<div style="text-align: justify;">
<strong>14.</strong> One of the grounds
of present appeal of appellant is that services rendered outside India
were not liable to service tax prior to 18.4.2006 in view of no
provision in that regard existed to realize service tax from service
recipient. There is no difference to this proposition when there was no
law to tax the impugned service received from abroad prior to 18.4.2006.
Section 66A was incorporated into the statute book with effect from
18.4.2006 to tax the taxable services provided by foreign service
providers having no permanent address or usual place of residence in
India. The service so provided made recipients of the service in India
who have their place of business or fixed establishment or permanent
address or usual place of residence is in India, liable to pay the
service tax as if such service is provided by the recipients in India.
Also Rule 2(i)(d)(iv) of Service tax Rules, 1994 made provision for
recovery of service tax from such recipients. Thus the value of service
received by the appellant prior to 18.4.2006 shall not be liable to tax
and adjudication order to such extent shall get modified following the
decision of Apex Court in <em>Union of India</em> v. <em>Indian National Shipowners Association</em> [2010] 24 STT 366 (SC) where the decision of Hon’ble High Court of Bombay in <em>Indian National Shipowners Association</em> v. <em>Union of India</em> [2009] 18 STT 212 (Bom.) holding no liability arises against assessee was merged.</div>
<div style="text-align: justify;">
<strong>15.</strong> The crucial ground
of appeal which caused anxiety to Revenue is valuation of taxable
service. While appellant claimed that assessable value of Consultancy
Engineering service provided by the foreign consultant shall be
exclusive of income tax deducted at source under the Income tax law for
levy of service tax if there shall be levy at all, Revenue claims that
gross amount to be exigible to service tax shall be before deduction of
income tax at source therefrom to tax. Appellant’s further claim was
that as per contract it was obligation of appellant to make payment to
the service provider the engineering consultancy fees net of tax for
which the amount actually remitted to the service provider shall be
basis of levy.</div>
<div style="text-align: justify;">
<strong>16.</strong> Section 67 of the
Act has made provision for valuation of taxable service for charging
service tax. According to Section 67(1)(a) of the Act where there is a
monetary consideration paid to provide taxable service, the assessable
value for levy of service tax is ‘gross amount’ charged by the Service
provider for the taxable service provided. Sub-section (2) of the said
section has made provision to include the amount of service tax to the
gross valuie of consideration where taxable service provided is
inclusive of service tax. The term ‘consideration’ for the valuation of
taxable service is defined by explanation appearing under Section 67
meaning that consideration includes any amount that is payable for the
taxable service provided or to be provided.</div>
<div style="text-align: justify;">
<strong>17.</strong> The liability of
the appellant arose under the Act in terms of Section 66A of the Act as
recipient of service of Engineering Consultancy from the Consultant
abroad. Rule 7 (1) of the Service tax (determination of value) Rules,
2006 which came into force with effect from 19.4.2006 has made provision
in respect of services covered by Section 66A of the Act. According to
this Rule, measure of value for taxation of service covered by that
Section shall be such amount as is equal to the actual consideration
charged for the services provided or to be provided.</div>
<div style="text-align: justify;">
<strong>18.</strong> Although the Show
Cause Notice dated 19.11.2002 refers to para 5.1 at page 19 (Appendix 2
Terms and conditions) of the Agreement and a copy thereof was enclosed
to the said notice, that paper was not available in the paper book filed
by the appellant. The show cause notice indicates that on perusal of
the agreement entered into between the assessee and M/s. Prodrive
Automation Technology (Europe) Ltd (one of the service providers abroad)
it appears that the price set out in the Consultancy Agreement as was
examined by notice issuing authority noticed that to be net of all
duties, taxes and other Government charges which, where applicable were
payable in addition to the price. Accordingly, Revenue held that income
deducted at source formed part of gross amount of consideration paid to
foreign consultant. It appears that there were 22 service providers as
per Annexure to Show Cause Notice appearing at page 58 to 61 of the
Paper Book filed by the appellant. But no agreement copy was available
on record or Paper Book. There was no pleading on material facts by the
appellant as to how the facts in issue suggest and support defence of
appellant that income tax deducted at source shall not form part of the
gross amount of taxable service received when Rule 7(1) of Service Tax
(Determination of Value) Rules, 2006 provides that actual consideration
charged for the service provided or to be provided shall be assessable
value in respect of services covered by Section 66A of the Act.
Therefore, the expression what is ‘actual consideration charged for
service provided or to be provided’ shall depend on the facts and
circumstances of each case. Further, in terms of Section 66A of the Act
the service covered by that section is treated as if the recipient had
himself provided the service in India. Thus by such legal fiction the
consideration inclusive of income tax deducted at source shall be
assessable value for the purpose of the Act in the hands of the service
recipient. Since the Show Cause Notice states that the agreement with
M/s. Prodirve Automation Technology (Europe) Ltd. in terms of para 5.1
at page 19 (Appendix 2 Terms and Conditions) of the agreement speaks of
the price of contract payable was net of taxes and taxes if any payable
in addition to the price of contract was payable by the payer thereon as
price of the contract and such factual aspect remaining unrebutted by
appellant clearly establishes that tax payable in India was to form part
of contract price. Thus consideration charged for the service provided
shall include income tax deducted at source as per terms of contract and
is in accord with Section 66A read with Rule 7(1) of the Service Tax
(Determination of Value) Rules 2006 for the reason that net price of
contract agreed to be paid to foreign consultant was to include income
deducted at source thereon to be price also. Thus the tax demand on the
assessable value comprising the consideration inclusive of income tax
deducted at source relating to the period (9.4.2006 to September 2007)
which was agreed to be price of the contract sustains.</div>
<div style="text-align: justify;">
<strong>19.</strong> The appellant in
para 22 of appeal memorandum stated that in reply to Show Cause Notice
dated 19.11.2007 it was pleaded that the notice was barred by limitation
upto 30.9.2006. There is no quarrel to such proposition since law was
not in force prior to 18.4.2006 to bring the appellant to the purview of
service tax on the disputed issue following apex court decision in <em>National Shipowners Association</em> case (<em>supra</em>).
Therefore, the appellant shall be liable to tax for the normal period
covered by the Show Cause Notice and tax demand with interest if any
shall be computable for such period and the adjudication order gets
suitably modified to this extent.</div>
<div style="text-align: justify;">
<strong>20.</strong> One of the grounds
of Appeal is to grant cum-tax benefit. The Authority may consider such
grounds at the time of raising modified demand in accordance with law.</div>
<div style="text-align: justify;">
<strong>21.</strong> So far as levy of
penalty under Section 78 is concerned, considering the difficulty in
understanding the law applicable at inception and date of incidence to
taxability, it would be proper to waive the penalty imposed under that
Section.</div>
<div style="text-align: justify;">
<strong>22.</strong> In the light of the aforesaid discussions it is ordered:-</div>
<div style="text-align: justify;">
(1) That there shall not be levy of
service tax on the engineering consultancy services availed from foreign
consultant abroad prior to 18.4.2006.</div>
<div style="text-align: justify;">
(2) There shall be levy of service tax
at the applicable rate for the period 19.4.2006 to 30.9.2007 on the
gross amount of consideration inclusive of income tax deducted at source
involved in availing engineering consultancy service availed under
Section 66A of the Act.</div>
<div style="text-align: justify;">
(3) Adjudication order gets modified by the extent indicated in (1) and (2) above.</div>
<div style="text-align: justify;">
(4) Cum tax benefit if any admissible shall be granted in accordance with law.</div>
(5) There shall not be penalty under Section 78 of Finance Act, 1994.</div>
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