Custom, Excise & Service Tax Tribunal
M/S Kerala State Civil Supplies ... vs Commissioner Of Central Excise, ... on 21 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE Final Order No. 21482 / 2014 Application(s) Involved: ST/Stay/21510/2014 in ST/21327/2014-DB Appeal(s) Involved: ST/21327/2014-DB [Arising out of 62/2014 dated 16/01/2014 passed by Commissioner of Central Excise, Customs and Service Tax (Appeals), COCHIN ] M/s Kerala State Civil Supplies Corporation Ltd Maveli Bhavan, Maveli Road, Gandhi Nagar , P.B. No.2030 KOCHI 682020. Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax, Cochin C R BUILDING, I S PRESS ROAD, ERNAKULAM, COCHIN - 682018 Respondent(s)
Appearance:
G. SUBRAMANIAN ADV C/O. CENTAB, KARIMPATTA RAOD, KOCHI-16 For the Appellant Mr. R. Gurunathan, A.R. For the Respondent CORAM :
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER ________________________________________ Date of Hearing: 21/08/2014 Date of Decision: 21/08/2014 Per B.S.V. MURTHY When the matter was called, learned counsel for the appellant filed written submission which is reproduced in succeeding paragraphs -
2.1 The issue involved is levy of service tax for transporting levy sugar. The appellant, a Government of Kerala organization, had been entrusted with the work of transporting levy sugar from the different manufacturers allotted to the State, to their depots and sub-depots and having it distributed through the Public Distribution System (PDS) through the authorized retails distributors (ARD) at the retail price fixed by the Central Government. Sugar has been declared as an essential commodity under the Essential Commodities Act (vide the extract re Sugar & Sugarcane Policy at pages 38/43 of P.B.).
2.2 Hence, in the light of the above, the work of transporting the levy sugar has been considered as a statutory function. In this context kind attention is invited to the letter C. No. IV/16/4/2014-ST dated 20.3.2014 from the office of the Commissioner of Central Excise, cochin (copy at page 59 of P.B.), which confirms distribution of levy sugar as a statutory function vide Para 3 therein, though it is mentioned therein that since the appellant is receiving the service of transportation from the GTAs service tax is payable for the same. Transporting of levy sugar from the manufacturer to the appellants depots is an integral function for its further distribution through the PDS system. Without transport, the distribution cannot take place. Hence transportation is integral with distribution and has to be considered as part and parcel of the statutory function of distribution of levy sugar. Therefore the whole function of transporting and distributing the levy sugar becomes a statutory function and so not liable to service tax, in the light of Boards Circular No. 89/7/2006-Service Tax dated 18 December 2006 (copy at page 50 of the P.B.).
2.3. In the appeal under consideration the appellant had however, paid the service tax for the transportation of levy sugar as directed by the departmental officers who had visited the appellants office and had discussion on this point. They had paid the tax involved from 1.1.2005 to 31.3.2008 during February-April 2008, long before the show-cause notice was issued in December 2008. The Commissioner (Appeals), cochin while striking down the penalties imposed under Section 76 and 78 of the Finance Act, 1994, considering that the appellant being a Kerala Government Company, no malafides could be attributed, still maintained that the tax was payable as the appellant is a company registered under the Companies Act. He did not give any finding on the statutory nature of the function, which had been detailed in the appeal. He has also not accepted the submission that the difference of Rs. 1,16,670/- was relating to the period prior to 1.1.2005. The appellant had also paid the interest involved for delayed payment amounting to Rs. 4,94,849/- in December 2009 as submitted in Para 8 of the stay application.
2.4 The appellant prays that as the whole function of transporting and distributing levy sugar through the PDS system as per directions of the Central Government through the State Government is a statutory function, for which in fact no service tax is leviable, and nevertheless the tax and interest involved having been paid, the further deposit of Rs. 1,16,670/- may not be insisted and the appeal may kindly be taken up for final disposal.
3. After hearing both sides and going through the records, the Bench informed learned counsel that prima facie, the appellant does not have a case since the appellant is a Limited Company and they are liable to pay service tax on GTA services and no valid ground other than stating that it is statutory function has been specified. Transportation of sugar by a Limited Company cannot be considered as statutory function. Moreover, the appellant has paid entire amount of tax plus interest and only an amount of Rs. 1,16,670/- is to be paid. This amount was not paid on the ground that this was related to prior to 1.1.2005. It was pointed out by learned counsel that this amount was received only after 1.1.2005 and the claim of the appellant was that this was in respect of services rendered prior to 1.1.2005 and therefore, no liability arises is not acceptable. Prima face, the appellant does not have a case in their favour. Moreover, there is nothing left in the matter to decide at final stage. Learned counsel fairly agreed that the appellant is liable to pay service tax and will pay.
3. In view of above discussion, the impugned order, as far as service tax and interest are concerned, is upheld. Penalties imposed have already been set aside. Appeal and stay application are disposed of in above terms.
(Operative portion of the order has been pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER /vc/