Custom, Excise & Service Tax Tribunal
M Pallonji & Co. Pvt. Ltd vs Mumbai on 8 May, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/257/2005
[Arising out of Order-in-Appeal No: BR(12)12/STC/2005 dated 25/07/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri 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?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
M Pallonji & Co. Pvt. Ltd.
Appellant
Vs
Commissioner of Central Excise & Service Tax
Mumbai
Respondent
Appearance:
Shri Akshay R. Shah, Chartered Accountant for the appellant Shri V. K. Agarwal, Addl. Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 08/05/2013 Date of decision: 08/05/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeal is directed against Order-in-Appeal No: BR(12)12/STC/2005 dated 25/07/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.
2. The appellant, M Pallonji & Co. Pvt. Ltd., undertook chipping and painting of vessels in Mumbai Port during the period 09/01/2002 to 29/01/2003. Since the activity undertaken by the appellant was in the nature of repair services, which was not a taxable service at the relevant time, the appellant was under the bona fide belief that they were not liable to service tax and accordingly did not obtain any service tax registration nor discharge service tax liability. The department conducted enquiries in the matter and was of the view that the activity undertaken by them would come within the purview of Port Services and accordingly issued a show cause notice dated 19/07/2004 demanding service tax of ` 75,715/- along with interest thereon and also proposing to impose penalties. The notice was adjudicated upon and demands were confirmed along with interest and penalties were imposed under Sections 75A, 76, 77 and 78 of the Finance Act, 1994. The appellant also paid all the adjudged dues. They filed an appeal before the lower appellate authority challenging the levy. The lower appellate authority rejected their appeal and hence the appellant is before us.
3. The learned consultant for the appellant submits that during the impugned period, the activity undertaken by them was not a taxable service as defined under Section 65(105) of the Finance Act, 1994. Maintenance and Repair service came under the tax net only in the budget 2003 and levy came into force on 01/07/2003. Therefore, the appellant was under the bona fide belief that no tax is payable. He also relies on the decision of this Tribunal in the case of Homa Engineering Works vs. Commissioner of Central Excise 2007 (7) STR 546 wherein it was held that contract service of repair of vessel can not be held to be port services. Accordingly, he prays for allowing the appeal.
4. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the lower authorities. It is his contention that when the short-levy was pointed out, the appellant discharged the service tax liability along with interest and after passing of the impugned order the appellant also discharged penalty under Sections 75A, 76 and 77 and 25% of the penalty under Section 78 within a period of 30 days from the date of passing of the adjudication order. In their submissions before the lower authorities, the appellant had requested for not imposing any penalties in view of the fact that as soon as the short-levy was pointed out they had paid up the dues. In other words, the appellant did not contest the levy before the adjudicating authority and, therefore, at the second appellate stage, the appellant cannot take the plea that they are not liable to pay service tax. Accordingly, he prays for sustaining the impugned order. He also refers to Boards Circular No. 67/16/2003-ST dated 10/11/2003 wherein it was clarified that repair of vessels undertaken would come within the purview of port services.
5. We have carefully considered the rival submissions. We have also perused the Boards circular dated 10/11/2003. The opening para of the said circular reads as follows:
I am directed to say that a doubt has been raised regarding levy of Service Tax on ship repair during the dry docking by the person duly authorised in this behalf by port authorities. This involves removal of damaged parts and replacement by new parts. This may involve repairing the outside bottom area of a Ship/Vessel by supplying huge quantities of MS plates etc.
6. The opening sentence itself makes it clear that there were doubts during the relevant period whether repair activities was a taxable service or not. If that be so, the appellant cannot be faulted for entertaining a bona fide belief that they are not liable to pay service tax, especially when such an activity was not a taxable service defined separately. In the instant case the demand notice has been issued in July, 2004 for the period February 2002 to January 2003. Therefore, the demand is clearly time-barred. There was no intention on the part of the assessee to evade or avoid service tax payment. Further, as held by this Tribunal, services of repair of vessels cannot be held to be port services as held in the case of Homa Engineering Works (supra). The Revenue is not able to show any other decision contrary to the above. In view of the above, we hold that the impugned order is not sustainable in law both on merits as also on account of time-bar and accordingly we set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law.
(Dictated in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 5