Custom, Excise & Service Tax Tribunal
M/S South Eastern Coalfields Ltd vs Cce, Raipur on 15 May, 2012
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Court No.III
ST/Appeal No.199/2002
(Arising out of order in original No.Comm/RPR/119/2006 dated 29.11.06 passed by the Commissioner of Customs & Central Excise, Raipur)
Date of Hearing: 15.5.2012
Date of pronouncement:
For Approval and signature:
Hon'ble Mrs. Archana Wadhwa, Member Judicial
Hon'ble Mr.Mathew John, Technical Member
_________________________________________________
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 would be released under Rule 27 of
the CESTAT (Procedure) rules, 1982 for
publication in any authoritative report or not?
3. Whether their lordships wish to see the fair
copy of the order?
4. Whether order is to be circulated to the
Department Authorities?
M/s South Eastern Coalfields Ltd Appellant
Vs
CCE, Raipur Respondent
Appeared for the Appellant: Shri S.N. Kapur, Advocate
Appeared for the Respondent: Shri K.P. Singh, DR
Coram: Hon'ble Mrs. Archana Wadhwa, Member(Judicial)
Hon'ble Shri Mathew John, Member (Technical)
ORDER
Per Mathew John:
The matter involved in this appeal relates to payment of service tax on services rendered by goods transport operators which is demanded from the Appellant as receiver of the service as per provisions of Rule 2 (d) (xvii) of the Service Tax Rules 1994, during the period 16-11-97 to 02-06-98. The Show Cause Notice in this matter was issued on 08-11-02.
2. Subsequently a corrigendum to the notice was issued on 02-11-2004 pointing out the retrospective amendment made in Finance Act, 1994 by Finance Act 2003 and the prospective amendment in section 73 of Finance Act 1994 made by Finance Act 2004. Finally the notice was adjudicated confirming demand of service tax amounting to Rs. 1466.73 lakhs with interest and penalties under different sections of Finance Act, 1994.
3. Before the year 2000, an issue came up that Rule 2 (d) (xvii) of the Service Tax Rules 1994 was ultra virus the provisions of the Finance Act, 1994 in as much as the Act provided for demanding duty only from service providers and not from receivers of service. This was a matter of a few decisions of the Courts including the Apex Court and also a matter on which Government of India made certain retrospective legislations. In brief the issue involved in these cases is whether the retrospective amendments made were good enough for collecting the tax liability from the service receivers who did not file any returns and did not pay the tax.
4. The major decision to the effect that Rule 2 (d) (xvii) was ultra virus was in the case of Laghu Udyog Bharati reported at 1999 (112) ELT 365 SC. During the said period there were some service receivers who had paid service tax and there were some others who did not file any return or pay service tax. The assesses involved in the present cases are of the latter category.
5. To overcome the defect pointed out by the Apex Court in the case of Laghu Bharati Udyog (Supra), The Parliament made retrospective amendment by section 117 of the Finance Act, 2000. This amendment validated the action taken under the said rule not withstanding any judgement, decree or order of any court, Tribunal or any authority. Now the question arose whether this amendment was good enough to issue demands under section 73 of Finance Act, 1994 on persons who had not paid tax during the said period a per Rule 2 (d) (xvii). The dispute raised was that during the relevant period, such service receivers were not required to file any return under Section 70 and they were not required to disclose any information because they were not liable to the assesse under Section 71.
6. To overcome the defect pointed out by the Apex Court in the case of Laghu Bharati Udyog (Supra), the Parliament made retrospective amendment by section 117 of the Finance Act, 2000. This amendment validated the action taken under the said rule not withstanding any judgement, decree or order of any Court, Tribunal or any authority.
7. The Show Cause Notice in this case is issued after the retrospective amendment made by Finance Act, 2000 but before the amendment made by Finance Act, 2003 and 2004 in this matter which are also being mentioned in this order for sake of clarity on the issue and for the reason that corrigendum to the Show Cause Notice was issued on 02-11-2004.
8. After the retrospective amendment by Finance Act 2000, the question arose whether this amendment was good enough to issue demands under section 73 of Finance Act, 1994 on persons who had not paid tax during the said period as per Rule 2 (1) (d) (xvii). The dispute raised was that during the relevant period, such service receivers were not required to file any return under Section 70 and they were not required to disclose any information because they were not an "assessee" within the meaning of the word under Sections 70 and 71, specifically mentioned in section 73. This issue is relevant for deciding the present case.
9. Section 73 of the Finance Act as it stood prior to the amendment made on 10-09-2004 to read as under:
"73. Value of taxable services escaping assessment, - If -
(a) the Assistant Commissioner of Central Excise or, as the case may be, the Deputy Commissioner of Central Excise has reason to believe that by reason of omission or failure on the part of the assessee, to make a return under section 70 for any prescribed period or to disclose wholly or truly all material facts required for verification of the assessment under section 71, the value of taxable service has escaped assessment or has been under-assessed or any sum has erroneously been refunded, or;
(b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any prescribed period has escaped assessment or has been under-assessed, or any sum has erroneously been refunded, he may, in cases falling under Clause (a), at any time within five years, and in cases falling under Clause (b), at any time within six months from the date for filing the return, serve on the assessee a notice and proceed to assess or reassess the value of the taxable service.
Explanation - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of five years or six months, as the case may be."
10. The question whether notices issued under the provisions of section 73 of the Act as it stood prior to 10-09-2004, for recovery of taxes not paid for the said period was initially decided by Tribunal in the case of L.H. SUGAR FACTORIES LTD. Vs. CCE- 2004 (165) E.L.T. 161 (Tri. - Del.) which was affirmed by the Apex Court as reported at 2005 (187) ELT 5 (SC) in favour of the service recipients. Going by this decision the demand issued in this case on 02-11-2004 is not maintainable.
11. Finance Act, 1994 was amended again by Finance Act 2003 to insert a clause 71A retrospectively for the period 16th day of July, 1997 and ending with the 16th day of October, 1998, reading as under:
'71A. Filing of return by certain customers. - Notwithstanding anything contained in the provisions of sections 69 and 70, the provisions thereof shall not apply to a person referred to in the proviso to sub-section (1) of section 68 for the filing of return in respect of service tax for the respective period and service specified therein and such person shall furnish return to the Central Excise Officer within six months from the day on which the Finance Bill, 2003 receives the assent of the President in the prescribed manner on the basis of the self assessment of the service tax and the provisions of section 71 shall apply accordingly.';"
12. Still there appeared to be difficulty in recovering the amounts not paid during the said period because section 73 of Finance Act, 1994 enabling issue of demand short levy did not include returns filed in the new section 71A inserted as indicated above.
13. Section 73 was amended by Finance Act 2004, to replace section 73. After such amendment Section 73 was made applicable without reference to any specific section under which return was to be filed as was the case earlier. Revenue then issued notices invoking provisions of the new section 73 in many such cases where the service receivers had not paid tax during the period 16-11-97 to 02-06-98. In the case before us the notice already issued on 02-11-2004 was amended by corrigendum dated 02-11-2004 to reference to the amendments made by Finance Act, 2003 and Finance Act, 2004.
14. We note that two High Courts have decided that demands issued even after amendments by Finance Act, 2004 for liability that arose for the period the 16-11-97 to 02-06-98 were barred by limitation. The following decisions are relevant in this regard:
(i) Precot Mills Vs. UOI-2011 (24) STR 283 (Ker)
(ii) CCE Vs. Eimco Elecon Ltd-2010 (20) STR 603 (Guj)
(iii) CCE Vs. Hiran Aluminium Ltd-2010 -TIOL 682-HC-AHM-ST;
15. In view of the above position it is very clear that the demand issued in 2002 invoking provisions of section 73 of the Finance Act as existing at that time is not maintainable. The amendment to Show Cause Notice made on 02-11-2004 also does not make the demand sustainable.
16. In view of the legal position as discussed above the Appeal filed by Appellant is allowed holding that the demand is time barred. Once the demand itself is held to be not maintainable the orders regarding interest and penalty also are not maintainable. Thus appeal is allowed.
(Pronounced in Court on______________) (Archana Wadhwa) Member (Judicial) (Mathew John) MPS* Member (Technical) ?? ?? ?? ?? 2 1