Customs, Excise and Gold Tribunal - Delhi
Katni Minerals (P) Ltd. vs Cc & Ce on 20 December, 2002
Equivalent citations: 2003(86)ECC435, 2006[3]S.T.R.81, [2007]9STT359
JUDGMENT V.K. Agrawal, Member (J)
1. M/s. Katni Minerals Ltd. have filed this Appeal against the Order-in-Review No. 18/ST/Commr/2001 dated 24.12.2001 by which the Commissioner of Customs & Central Excise in exercise of powers under Section 84 of the Finance Act, 1994 has confirmed the demand of Sales Tax and imposed penalty.
2. We heard Shri B.L Narsimhan, learned Advocate for the appellants, and Shri Vikas Kumar, Ld. Senior Departmental Representative for the Revenue. The learned Advocate submitted that initially a show cause notice dated 29.3.98 was issued to them to show cause as to why the penalty should not be imposed upon them under the Provisions of Section 77 of the Finance Act, 1994 for not filing of the Service Tax returns; that the Deputy Commissioner under Adjudication Order No. 18/99 dated 27.12.99 dropped the proceedings against them in terms of the judgment in Laghu Udyog Bharti v. Union of India, 1999 (65) ECC 687 (SC) : 1999 (33) RLT 911 (SC) under which the Supreme Court had struck down the provisions relating to imposition of Service Tax on services of goods transport operators by holding the provisions of Sub-rule (xii) and (xvii) of Rule 2(1 )(d) Service Tax Rules as ultra vires; that Clause 117 of Finance Act, 2000 validated said sub-clauses with retrospective effect; that the Commissioner, thereafter reviewed the Adjudication Order No. 18/99 passed by the Deputy Commissioner and issued fresh notice dated 4.6.2001 demanding Service Tax. The learned Advocate, further submitted that the power of revision can be exercised by the Commissioner only with regard to proceedings which were initiated by officers subordinate to him; that the only issue taken up by the Deputy Commissioner, under Section 77 of the Finance Act, 1944 was for not filing the returns and there was no proposal in the said show cause notice for levy of Service Tax; that as such there was no adjudication on these issues by the Deputy Commissioner and accordingly these issues cannot be taken up in revision. Learned Advocate also mentioned that this issue stands decided by the Tribunal's decision in the case of Markfed Oil and Allied Industries v. Commissioner of Central Excise, Chandigarh, 2002 (84) ECC 860 (T) : 2002 (53) RLT 276 (CEGAT).
3. Countering the arguments., Shri Vikas Kumar, learned Senior Departmental Representative, submitted that the show cause notice dated 29.3.98 was issued as the Appellants had failed to furnish quarterly return in the prescribed form ST 3; that the Service Tax assessment can be completed only after filing of the ST 3 returns and as such the present Order is not beyond the show cause notice dated 29.3.98 inasmuch as unless and until the return is filed, there is nothing available with the Department to verify the services'' rendered on which the Service Tax could be assessed.
4. We have considered the submissions of both the sides. We find that the similar issue was involved in the case of M/s. Markfed Oil & Allied (supra) wherein the Tribunal has held as under:
"4 We have considered the submissions of both the sides. Section 73 of the Finance Act, 1994 provides for issuing of a show cause notice to the assessee, if the value of taxable service has escaped the assessment by reason of omission or failure on the part of the assessee to make the return under Section 70 of any particular period. Further, Section 2 empowers the proper officer to make the assessment of the value of taxable service to the best of his judgment and determination the same payable by the assessee after he fails to make the return under Section 70 of the Act. A perusal of the show cause notice dated 12.5.99 clearly reveals that the Appellants were only called upon to show cause to the Assistant Commissioner as to why the penal action against them be not taken for non-filing the quarterly returns. The Appellants were not put on notice at all for non-making the Service Tax which has been since paid by them; that, however, this fact of non-payment was duly mentioned in the show cause notice. As such the learned Advocate has rightly submitted that there was no proposal for payment of Service Tax which was not paid by them. Section 84 of the Finance Act, 1994 empowers the Commissioner to call for the record of the proceedings which has been taken by the Assistant Commissioner/Deputy Commissioner and makes such inquiry and pass such orders as he thinks fit. As the record of the proceedings did not contain any proposal and any Order for making the payment of Service Tax, the Commissioner in exercise of the revision powers cannot demand the payment of Service Tax with interest. It is settled law that the revisionary Authority cannot travel beyond the show cause notice. This was the view taken by the Tribunal in the case of Extrusion Process P. Ltd. v. Commissioner of Central Excise Bombay-11, 1994 (44) ECC 231 (T) : 1994 (69) ELT 144 (Tri). In the case of Dasaunda Singh, Waryam Singh, relied upon by the learned Advocate, Punjab & Haryana High Court held that as the assessing Authority did not invoke its jurisdiction for levying the penalty, the revisionary Authority has no jurisdiction to invoke the revisionary power and remanded the case to the Adjudicating Authority with a direction to redecide the matter. In the present matter, as the notice was not issued under Section 73 of the Finance Act and it was issued only under Section 77 for imposing penalty on account of failure to file returns, the Commissioner cannot under the Revisionary powers pass an Order for making payment of Service Tax with interest. Accordingly, the Appeal is allowed to this extent."
5. Following the ratio of the decision in the case of Markfed OH and Allied case, we allow the Appeal. We must however, mention that the Department will be at liberty to demand Service Tax, if any, payable after the assessment of ST 3 return filed by the Appellant in accordance with the law.