Custom, Excise & Service Tax Tribunal
Cce & St, Jaipur-Ii vs Tan Singh Chauhan on 21 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing/Order: 21.10.2016
Appeal No. ST/3662/2012-CU (DB)
(Arising out of Order-in-Original No. 29/2012/ST/JPR-II-Commr. dated 29.8.2012 passed by the Commissioner, Central Excise, Jaipur-II)
For Approval & Signature :
Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Mr. Ashok K. Arya, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
CCE & ST, Jaipur-II Appellant
Vs.
Tan Singh Chauhan Respondent
Appearance :
Shri Sanjay Jain, D.R. - for the Appellant
Ms. Rinky Arora, Advocate - for the Respondent
CORAM: Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Mr. Ashok K. Arya, Member (Technical)
Final Order No. 54578/2016
Per Archana Wadhwa:
The present appeal filed by the Revenue is against that part of the impugned order of Commissioner vide which, while confirming the demand of service tax against the respondent, he has dropped the penal proposal in terms of Section 80 of the Finance Act, 1994.
2. It is seen that during the course of adjudication and in fact prior to the issuance of the Show Cause Notice itself, the appellant had deposited the entire service tax along with interest. As regards, penalty they had raised the following contentions:
(i) Service rendered by them were under works contract i.e. composite contracts on which courts have given different views from time to time, as per the following judgements:
(a) Daelim Industrial case [2004 (170) ELTA 181 (SC)].
(b) Larsen & Toubro Ltd. Vs. CCE [2004 (174) ELT 322 (Trib)].
(c) CCE Vs. Larsen & Toubro Ltd. (2006 (4) STR 63 (Trib.)]
(d) CCE Vs. Shapoorji Pollevji & Co. [2006 (1) STR 164 (Trib.)].
(e) Blue Star Ltd. Vs. CCE (2007 (5) STR 353 (Trib)].
(f) CCE Vs. Orissa Sponge Iron Ltd. [2004 (174) ELT 322 (Trib.)].
(g) CCE Vs. Ishika Wajima-Harima Ltd. Co. Ltd. (2009 (13) STR 650 (Trib.].
(ii) That in view of the above conflicting judgements a bonafide belief was entertained by the assessee that no service tax was payable on the composite contracts. Further the matter whether a composite contract is divisible or not has been a bone of dispute and the matter has been referred to Larger Bench of the Honble Tribunal and even Larger Bench have given conflicting decisions. In the case of BSBK Ltd. 2010 (18) STR 555 (Tri.-LB), it was held by the Larger Bench that a works contract is divisible for service tax purpose even prior to 1.6.2007. But in the case of Jyoti Ltd. Vs. CCE 2008 (9) STTR 373 (Tri.-LB) and in the case of Indian Oil Tanking Ltd. 2010-TIOL-1015-CESTAT-MUM), it was held by the Larger Bench that service tax can be levied on the service portion involved in the execution of a works contract only after 1.6.2007 and not prior to 1.6.2007. Therefore, divergent decisions have been given by the Larger Bench as. In this situation, the entertainment of bonafide belief by the assessee has got force. The decisions by the Larger Bench has been given in 2010 whereas they have already deposited tax in 2008.
3. The said contention of the assessee was accepted by Commissioner by observing as under :
The above provisions clearly spell out that if the assessee is under bonafide belief that they were not liable to pay service tax then penalties under Section 76, 77 & 78 can be waived. As per my findings in paras 6.1 to 6.4 there were conflicting views of the Courts on the issue of works contracts and, therefore, assessee was under a bonafide belief that service tax is not payable. Accordingly, no penalties are required to be imposed upon the assessee in view of 76, 77 & 78 of the Finance Act, 1994.
4. Now, we find that in fact the issue on merits is also no more res integra and stands decided by the Honble Supreme Courts decision in the case of CCE Kerala Vs. Larsen & Toubro Ltd. 2015 (39) STR 913 (SC) laying down that works contract were not taxable prior to 1.6.2007. The fact of settling the issue at the apex Court level itself reflects upon the fact that the issue was not clear and attained finality only recently. The appellant having not contested the service tax liability and having deposited the same even prior to the issuance of the show cause notice, we are of the view that invocation of Section 80 of the Finance Act by Commissioner was justified. Accordingly, Revenues appeal is rejected.
(Dictated & pronounced in open Court) (Archana Wadhwa) Member (Judicial) (Ashok K. Arya) Member (Technical) RM 3