Custom, Excise & Service Tax Tribunal
M/S Seksaria Biswan Sugar Factory Ltd vs Commissioner Of Central Excise, ... on 1 October, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
S.T. Appeal No.557/09
Arising out of O/A No.75-ST/LKO/2009 dated 18.03.2009 passed by Commissioner of Central Excise(Appeals) & Customs, Lucknow.
For approval and signature:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? :
3. Whether His Lordship wishes to see the fair copy
of the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s Seksaria Biswan Sugar Factory Ltd.
APPELLANT(S)
VERSUS
Commissioner of Central Excise, Lucknow
RESPONDENT (S)
APPEARANCE Shri Kapil Vaish, C.A. for the Appellant (s) Shri Dipak Kumar Deb, A.C. (D.R.) for the Department CORAM:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) DATE OF HEARING & PRONOUNCEMENT : 01. 10. 2015 ORDER NO.__________________________ Per Mr. Anil Choudhary :
The Appellant, M/s Seksaria Biswan Sugar Factory Ltd., is in Appeal against Order-in-Appeal No.75-ST/LKO/2009 dated 18.03.2009 passed by Commissioner of Central Excise (Appeals), Lucknow, by which the Appellants, who are the receiver of the goods under Goods Transport Operator (GTO) services, have been fastened with the liability of service tax being receiver of services.
2.1 Before entering into the facts, ld.Counsel brings to the notice, the legal provisions in respect of GTO services. The tax was imposed w.e.f.05.11.1997 vide Notification Nos.42/97-ST & 43/97-ST both dated 05.11.1997 read with Rule 2 (c) (d) of Service Tax Rules, 1994. These rules were inserted by the aforementioned Notifications. Due to agitation of GTO, by the Notification No.49/98-ST dt.02.06.1998, they were exempted from payment of service tax. Thereafter, the Revenue sought to impose service tax on the person, who pays or is liable to pay freight either himself or through his agent for the transportation of goods by road. By Notification No.43/97-ST dated 05.11.1997, the term person defined is a factory, company or corporation etc. Thereafter, levy in respect of GTO services was withdrawn by Notification No.49/98-ST dated 02.06.1998 by exempting the service from taxation. The Appellant relied upon a decision of the Honble Supreme Court in the case of Laghu Udyog Bharati Vs. Union of India reported in 1999 (112) ELT 365 (S.C.). The Honble Apex Court has observed as under :
8. Section 66, which is a charging section provides that the charge of tax at the rate of 5% is on the value of the taxable services which are provided to any person by the persons responsible for collecting the service tax. In so far the clearing agents and the transporters are concerned Section 66 has to be read with Section 65(d)(41), (J) and (M), according to which taxable service is what, in the case of clearing and forwarding agents, rendered to his client and in the case of goods transporter is rendered to its customer. The person responsible for collecting the service tax referred to in Section 66 has to be read with Section 65 (28) which defines this expression to mean the person who is required to collect the service tax or to pay the same. It is clear from the reading of these provisions that according to the Finance Act, the charge of tax is on the person who is responsible for collecting the service tax. It is he, who by virtue of the provisions of Section 65 (5) is regarded as assessee. He is the person who provides the service.
9. Secton 68 (1A) is a special provision which has been inserted by the Finance Act, 1997. According to Section 68 (1) every person who was providing the taxable service is the one who is required to collect the service tax at the rate specified in Section 66. With respect to the taxable services referred in Item G to R of sub-clause (41) of Section 65, Section 68(1A) provides that the service tax for such service shall be collected from such person and in such manner as may be prescribed and to such person all the provisions shall apply as if he is the person responsible for collecting the service tax in relation to such service. As we read Section 68, it does not in any way seek to alter or change the charge of service tax levied under Section 66, which is on the person responsible for collecting the service tax. It also does not to our mind, in any way, amend any of the sub-sections of Section 65 which contains the definitions of different expressions. All that Sections 68 (1A) enables to be done is that with regard to the assesses or the persons who are responsible for collecting the service tax, the individual or the officer concerned can be identified and it is that person who would be the person responsible for collecting the service tax . In other words, this provision, namely, Section 68(1A) cannot be so interpreted as to make a person, as an assessee even though he may not be responsible for collecting the service tax. The service tax is levied by reason of the services which are offered. The imposition is on the person rendering the service. Of course, it may be an indirect tax, it may be possible that the same is passed on to the customer but as far as the levy and assessment is concerned, it is the person rendering the service who alone can be regarded as an assessee and not the customer. This is the only way in which the provisions can be read harmoniously .
10. By amending the definition of person responsible for collecting the service tax in the impugned rules with regard to services provided by the clearing and forwarding agents and the goods transport operator, the person responsible is said to be the client or the customer of the clearing and forwarding agents and the goods transporter. In relation to the services provided by others and referred to in sub-rules (i) to (xi) and (xiii) of Rule 2 (d), the definition of the person responsible is in consonance with the definition of that expression occurring in Section 65 of the Act. However, with regard to the services rendered by clearing and forwarding agents and the goods transport operator the definitions contained in Rules 2 (d)(xii) and (xvii), which seeks to make the customers or the clients as the assessee, is clearly in conflict with Sections 65 and 66 of the Act.
11. Section 68(1A) cannot, to our mind, regard a customer or a client of the clearing and forwarding agent or of the goods transport operator being treated as an assessee, who will become liable to file a return and be subjected to the levy of service tax and if he does not file the return, would render himself to penalty and other proceedings. In this connection, we may refer to Sections 70 and 71 which read as under :
70. Person responsible for collecting service tax to furnish prescribed return.- (1) Every person responsible for collecting the service tax shall furnish or cause to be furnished to the Central Excise Officer n the prescribed form and verified in the prescribed manner, a quarterly return, within fifteen days of the end of the preceding quarter, showing
(a) the aggregate of payments received in respect of the value of taxable services ;
(b) the amount of service tax collected ;
(c) the amount of service tax paid to the credit of the Central Government ; and
(d) such other particulars as may be prescribed.
(2) In the case of any person, who in the opinion of the Central Excise Officer, is responsible for collecting service tax under this Chapter but who has not furnished a return under sub-section (1), the Central Excise Officer may, before the expiry of the quarter in which the return is to be furnished, issue a notice to such person and serve it upon him, requiring him to furnish within thirty days from the date of service of the notice the return in the prescribed form and verified in the prescribed manner setting forth the prescribed particulars.
(3) Any person responsible for collecting the service tax who has not furnished the return within the time allowed under sub-section (1) or sub-section (2) or having furnished a return under sub-section (1) or sub-section (2), discovers any omission or wrong statement therein, may furnish a return or a revised return, as the case may be, at any time before the assessment is made.
71. Assessment.- (1) For the purposes of making an assessment under this Chapter, the Central Excise Officer may serve on any person, who has furnished a return under Section 70 or upon whom a notice has been served under sub-section (2) of Section 70 (whether a return has been furnished or not), a notice requiring him on a date therein to be specified, to produce or cause to be produced such accounts or documents or other evidence as the Central Excise Officer may require from the noticee requiring the production of such further accounts or documents or other evidence as he may require.
(2) The Central Excise Officer, after considering such accounts, documents or other evidence, if any, as he has obtained under sub-section (1) and after taking into account any relevant material, which he has gathered, shall by an order in writing, assess the value of taxable service and the amount of service tax payable on the basis of such assessment.
12. These sections clearly show that the return which has to be filed pertains to the payment which are received by the person rendering the service in respect of the value of the taxable services. Surely, this is a type of information which cannot under any circumstances, be supplied by the customer. Moreover, the operative part of sub-section (1) of Section 70 clearly stipulates that it is the person responsible for collecting the service tax who is to furnish the return. By rules which are framed, the person who is receiving the services cannot be made responsible for filing the return and payment of tax. Such a position is certainly not contemplated by the Act.
13. .
14. We have no hesitation in holding that the provisions of Rule 2 (d)(xii) and (xvii), in so far as it makes persons other than the clearing and forwarding agents or the persons other than the goods transport operator as being responsible for collecting the service tax, are ultra vires the Act itself. The said sub-rules are accordingly quashed. 2.2 The Honble Supreme Court has held that the liability to be ultra vires of service tax of GTO on the receiver of services and also quashed the provisions of Rule 2 (d)(xii) & (xvii), in so far it makes persons other than the clearing and forwarding agents or the persons other than the GTO as being responsible for collecting the service tax are ultra vires the Act itself.
2.3 In so far as the reverse charge on the receiver of service, was also considered by the Honble Bombay High Court (affirmed by the Apex Court) in the case of Indian National Shipowners Association Vs. Union of India : 2009-TIOL-129-SC-ST wherein it has been held that the service tax under reverse charge, cannot be imposed prior to 18.04.2006, when Section 66A was brought on Statute. The said ruling was also upheld by the Honble Supreme Court.
2.4 By the Finance Act, 2000, Section 116 was amended during the period commencing from 16th July, 1997 and ending on 16th October, 1998, the provisions of Chapter V of the Finance Act, 1994, shall be deemed to be effective subject to the modification of Section 65 of the Finance Act,1994 and in Clause (c), in relation to service provided by GTO to a customer, shall be the gross amount charged by such operator for services in relation to carrying of goods by road in a goods carriage. Further, Section 117 of the Finance Act, 2000, provided for validation of service tax collected under Service Tax Rules to the effect that notwithstanding any order from any Court/Tribunal, sub-clauses (xii) and (xvii) of Clause (d) of sub-rule (1) of Rule 2 of the Service Tax Rules, 1994 as it stood immediately before the commencement of the Service Tax (Amendment) Rules, 1998, shall be deemed to be valid and have always been valid as if the said sub-clauses had been in force at all material times. Thus, these amendments were sought to nullify the effect of ruling of the Honble Supreme Court in the case of Laghu Udyog Bharati (supra). The Appellant already deposited the tax.
3. The ld.Counsel for the Appellants, submits that no provision in particular was made by the amendment vide the Finance Act, 2000 to collect service tax for GTO services where neither the Assessee had paid nor the Revenue had taken an effective steps for collection of tax on such transaction. It is further taken note of the fact that the service tax in respect of GTO was re-introduced w.e.f. 01.01.2005 on the receiver of transport services (on reverse charge basis). The ld.Counsel further pointed out that this Tribunal under similar circumstances, in the case of M/s L. H. Sugar Factories Ltd. Vs. Commissioner of Central Excise, Meerut II reported in 2004 (165) ELT 161 (Tri.-Del.), where the inputs were sugar and the Appellants in the course of business, availed services of GTO for transportation of goods and the service tax was not collected w.e.f. 16.11.1997 to 01.06.1998. This Tribunal following the ruling of the Honble Supreme Court in the case of Laghu Udyog Bharati (supra), observed that under the provisions of Sections 73, 68 (1), 71A & 73 (3) of the Finance Act, 1994, in so far receiver of services is concerned, there was no date for filing prescribed for return as laid down by the Honble Supreme Court in the case of Laghu Udyog Bharati (supra). Accordingly, it was justified, in such a condition that no show-cause notice could have been issued against them under Section 73 of the Finance Act, 1994 as it stood on the date of issue of SCN. He further urged that even by amendment in Section 73, amended by the Finance Act, 2000, an assessee can only file return under Section 70. Admittedly no liability is passed on the assessee under Section 71 of the Finance Act as the receiver of services and the notice under Section 73 is wholly without jurisdiction. The said ruling of the Tribunal, have been upheld by the Honble Supreme Court in the case of Commissioner of Central Excise, Meerut II Vs. L. H.Sugar Factories Ltd. Reported in 2005 (187) ELT 5 (S.C.). It is also brought to my notice that this Tribunal in the case of Hi-Tech Carbon Vs. Commissioner of Central Excise, Allahabad reported in 2006 (3) STR 388 (Tri.Del.), in similar facts and circumstances, following the earlier decision of the Tribunal in the case of L. H.Sugar Factories Ltd. (supra), held that even after amendment in Section 73, no show-cause notice could be issued under Section 73 of the Finance Act, 1994 in respect of the GTO services and the same was upheld by the Honble Supreme Court in the case reported as 2015 (35) STR J-82 (S.C.).
4. Heard the ld.D.R. for the Revenue.
5. I find that the issue is squarely covered by the earlier ruling of this Tribunal in the cases of L. H.Sugar Factories Ltd. (supra) & Hi-Tech Carbon (Supra). Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief in accordance with law, if any.
6. At this stage, the ld.Counsel for the Appellant, has pointed out that the total demand of Rs.8,03,076, was raised on the Assessee, out of which, Rs.3,74,294/- was paid by them before issuance of show-cause notice and during investigation, they also paid Rs.4,28,782/- on 27.11.2003 before passing of the Order-in-Original. In the present circumstances, it is not an issue of unjust enrichment involved and the Appellant is also entitled to refund of the total amount of Rs.8,03,076/-. The said amount shall be granted to the Appellant within three months from the date of receipt a copy of this order subject to the verification of arithmetical accuracy of the amount.
7. Appeal is allowed with consequential benefits.
(Dictated and pronounced in the open Court)
Sd/
(ANIL CHOUDHARY)
mm MEMBER (JUDICIAL)
mm
11
S.T. Appeal No.557/09