Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs Bhuwalka Steel Industries Ltd. on 11 March, 2005
Equivalent citations: 2005(185)ELT153(TRI-CHENNAI), 2006[3]S.T.R.603
ORDER P.G. Chacko, Member (J)
1. In this appeal, filed by the Revenue, the challenge is against an order passed by Commissioner (Appeals) vacating a demand of service tax confirmed against the respondents by the original authority. During the period of dispute (16-7-1997 to 31-8-1999), the respondents had got their goods marketed through their consignment agent, for which the latter was paid a commission. A demand of service tax on the service rendered by the consignment agent to the respondents was raised on the latter by the department in a SCN dated 28-8-2002. The respondent contested the demand by contending that they did not avail any taxable service from their consignment agent and, further, that, even otherwise, the demand was time-barred. These objections were rejected and the demand was confirmed against them by the adjudicating authority. The first appellate authority vacated the demand as time-barred. Hence this appeal of the Revenue.
2. Ld. DR reiterates the grounds of this appeal and submits that, on account of retrospective revalidation of Rule 2(1)(d)(xii) of the Service Tax Rules, 1994 under Section 117 of the Finance Act, 2000, the tax on the service availed by the respondents during the period of dispute was recoverable from them. Ld. Counsel for the respondents submits that the service, rendered by their consignment agent was not in the nature of "Clearing and Forwarding" service and hence not exigible to service tax as held by this Tribunal in Mahavir Generics v. CCE, Bangalore - 2004 (170) E.L.T. 78 (Tri.-Del.). Even otherwise, according to learned Counsel, the demand of service tax raised by the department is heavily time-barred inasmuch as the demand raised after 12-5-2000 was not validated under Section 117 of the Finance Act, 2000. Ld. Counsel has relied on the decision of this Bench in CCE Chennai v. EID Parry Confectionery Ltd. - 2005 (179) E.L.T. 447 (Tri.-Chennai).
3. After considering the submissions, I find that the respondents' claim is fully supported by case law cited by learned Counsel. According to them, any service availed by them from their consignment agent was not in the nature of "Clearing and Forwarding" and hence not taxable under the Finance Act, 1994. According to the appellant, the service availed by the respondents is "Clearing and Forwarding" service and hence tax was liable to be paid by them under Rule 2 of the Service Tax Rules, 1994 as amended. This claim of the appellant is not tenable in view of the Tribunal's decision in Mahavir Generics (supra), wherein it was held that the activity of supplying goods on consignment basis and getting them sold to customers through consignment agent was not within the purview of "Clearing and Forwarding" and hence service tax was not leviable thereon. Apart from this, as rightly pointed out by learned Counsel, the demand of service tax in question is time-barred. The question as to how such a demand is unsustainable in law was dealt with by this Bench in the case of EID Parry Confectionery Ltd. (supra). The relevant part of the order passed by the Bench in that case is extracted below :-
"5. I have carefully considered the submissions. The assessees in both the appeals are recipients of taxable services, namely, 'Clearing and Forwarding' service, and 'Goods Transport' service. In respect of both these services, rules had been framed by Central Government to recover Service tax from the recipients of service. But these rules were held to be ultra vires Sections 65 and 66 of the Finance Act, 1994 by the Hon'ble Supreme Court in the case of Laghu Udyog Bharati (supra). In order to get over the Supreme Court's ruling, Parliament amended Section 65 ibid in relation to the limited period 16-7-1997 to 16-10-1998 under Section 116 of the Finance Act, 2000, whereby recipients of 'Goods Transport' service and 'Clearing and Forwarding' service were defined as "assessees". Further, for the aforesaid limited period, Parliament declared that "any action taken or anything done or purported to have been (i) taken or done at any time during the period commencing on and from the 16th day of July, 1997 and ending with the day, the Finance Act, 2000 receives the assent of the President shall be deemed to be valid and always to have been valid for all purposes, as validly and effectively taken or done" vide Section 117 of the Finance Act, 2000. Later on, the Finance Act, 2003, made certain amendments to the Service tax provisions of the Finance Act, 1994, whereby the aforesaid assessees were required to present Tax return to the proper officer within six months from 14-5-2003 (date on which the Finance Act, 2003 received Presidential assent). Ld. Counsel has also invited my attention to the legal opinion given by the Additional Legal Advisor to Government of India. This opinion is to the effect that Service tax could not be recovered from the afore-mentioned service receivers for the period covered by the amendment where no action was initiated against them for such recovery during such period.
6. In the instant case, the demands of Service tax were raised beyond 12-5-2000 in show cause notices dated 13-5-2002 and 14-2-2003. Such demands are not affected by the amendments made to Section 65 by Parliament under Section 116 of the Finance Act, 2000 and consequently they are hit by the Apex Court's ruling in Laghu Bharati (supra)."
4. Following the above view, I sustain the impugned order and reject this appeal.