Custom, Excise & Service Tax Tribunal
M/S. Rns Infrastructure Ltd vs Cce, Belgaum on 9 December, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 09/12/2010
Date of decision:09/12/2010
Appeal No.ST/621/08
(Arising out of Order-in-original No.07/2008-(Commr.) dt. 8/9/2008 passed by CCE&C, Belgaum)
For approval and signature:
Honble Mr. M.V. Ravindran, Member(Judicial)
Honble Mr. B.S.V. Murthy, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. RNS Infrastructure Ltd.
..Appellant(s)
Vs.
CCE, Belgaum
..Respondent(s)
Appearance Mr. S. Raghu, Advocate for the appellant.
Mr. D.P. Nagendra Kumar, Jt.CDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. B.S.V. Murthy, Member(Technical) FINAL ORDER No._______________________2010 Per M.V.Ravindran This appeal is directed against the Order-in-original No.07/2008-(Commr.) dt. 8/9/2008.
2. The relevant facts that arise for consideration are that the appellants herein are registered with the authorities for rendering various taxable services viz. commercial or industrial construction service, consulting engineers service, business auxiliary service, manpower recruitment agency service, and transport of goods by road under Goods Transport Agency service. The officers of the Central Excise HQ Preventive (Service Tax), Belgaum visited the premises of the appellants, on an intelligence, that they are not discharging the service tax liability on services of commercial or industrial construction rendered to Bellary Thermal Power Station (BTPS for short) plant despite receiving consideration. On verification of the records, it was noticed that the appellants had received an amount from Karnataka Power Corporation Ltd. (KPCL for short) for construction of raw water pond inside the BTPS plant and also received other amounts pertaining to various receipts and that the appellants had not discharged service tax to the tune of Rs.9,24,430/- in respect of various services rendered during 1/4/2006 to 31/1/2007. A show-cause notice was issued to the appellants to show cause as to why unpaid service tax and which escaped the assessment be not demanded from them and along with interest and penalty be not imposed. The appellants resisted the show-cause notice on various grounds. The Adjudicating Authority after considering the submissions made by the appellants, came to the conclusion that the appellants are liable to pay the service tax in respect of the receipt of construction of raw water pond for BTPS plant and are ineligible for availment of abatement of 67% under Notification No.1/2006 as regards other receipts to various other construction activities undertaken by them during the period 1/4/2006 to 31/1/2007 and are liable to pay the amount which they are collected for the various services rendered but did not deposited with the Department. Coming to such conclusion, he confirmed the demand along with interest and imposed penalties under Section 76 and 78 of the Finance Act, 1994. Hence, this appeal.
3. Ld. Counsel appearing on behalf of the appellants would submit that as regards the issue of non-depositing of an amount of Rs.9,24,430/- with the Department, it is his submission that the entire amount was paid on 31/3/2007. He submitted that the service tax which were collected by them could not be deposited with the Department due to financial difficulties. It is his submission that they are challenging only the penalties as they had already paid the amount along with interest before issuance of show-cause notice and hence, penalties imposed under Section 76 & 78 should be set aside. As regards the other two demands raised by the Department, he would submit that in respect of construction of raw water pond to the BTPS plant this would fall under the category of works contract. He would fairly concede, that this point was not taken by them before the Adjudicating Authority in reply to the show-cause notice during the personal hearing. He would submit that an identical issue was decided by this Bench in the case of Soma Enterprise Ltd. Vs. CC,CE&ST, Hyderabad [2009(15) STR 559 (Tri. Bang.)] and in the case of Nagarjuna Construction Co. Ltd. Vs. CCE, Hyderabad [2010(19) STR 259 (Tri. Bang.)]. He would submit that this issue may be remanded back for re-consideration by the Adjudicating Authority. As regards the demand of differential service tax on abatement availed by them, it is his submission that they had never taken the benefit of modvat credit and hence they are eligible for the benefit of Notification No.1/2006 dt. 1/3/2006. He would submit that they produced various evidences regarding the reversal of the Cenvat Credit availed on the common input services and also contended that the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 will be applicable and the entire amount of credit need not be reversed, but the Adjudicating Authority had not discussed this issue.
4. Ld. Jt.CDR on the other hand, as regards the penalty of an amount of Rs.9,24,430/- would submit that penalty is imposable on the appellant under Section 76 of the Finance Act, 1994. As regards the penalty imposed under Section 78, he leaves it to the Bench. On the other issues, he would submit that the points raised by the ld. Counsel today were never taken up before the authorities hence the lower authorities could not be faulted with the orders which have been passed.
5. We have considered the submissions made at length by both sides and perused the records.
6.1. As regards the first issue of leviability of penalty on the appellant for an amount of service tax of Rs.9,24,430/- collected and not deposited with the Government, we find from the records that the appellants have been showing this amount as service tax liability in the returns. It is admitted fact that the appellants did not deposit the amounts as soon as it was collected or at the time when they were supposed to deposit with the Government. Be that as it may, entire dues were paid on 31/3/2007 along with interest while show-cause notice was issued on 24/9/2007. This case is not the case for imposition of penalty under Section 78 as there was no suppression of facts. In view of this, we set aside equal penalty imposed under Section 78 of the Finance Act, 1994 on this amount by the Adjudicating Authority. We uphold the penalty imposed by the Adjudicating Authority on this amount under Section 76 of the Finance Act, 1994. Appellants are directed to deposit the amount of penalty within four weeks from the date of receipt of this order.
7.1. As regards the other two issues, we are of the view that the legal point taken by the ld. Counsel that construction of raw water pond inside the BTPS plant would amounts to works contract, was taken before us for the first time. This point being not raised before the Adjudicating Authority, which Counsel fairly conceded as not been raised, we are of the view that the Adjudicating Authority should be given a chance to consider this submission.
7.2. As regards the eligibility to avail the abatement of 67% as per the Notification No.1/2006, we find from the perusal of the documents produced before us, that the appellants had reversed the entire amount of Cenvat Credit taken on common inputs, and his plea as to applicability of provisions of Rule 6(3) of the Cenvat Credit Rules, needs to be gone into detail by the appreciation of the evidences on record, which could not be done by this Tribunal at this juncture as the Adjudicating Authority has not recorded any findings on these pleas. In view of this, we set aside the demands, interest thereon and the penalties imposed by the Adjudicating Authority on these two issues and without expressing any opinion on the merits of the case, keeping all the issues open as regards these two issues, we remand the matter back to the Adjudicating Authority to re-consider the issue afresh after following the principles of natural justice.
8. Accordingly, the appeal is disposed off as indicated hereinabove.
(Operative portion of this order pronounced on conclusion of the hearing) (B.S.V. MURTHY) MEMBER (TECHNICAL) (M.V.RAVINDRAN) MEMBER (JUDICIAL) Nr 6