Customs, Excise and Gold Tribunal - Tamil Nadu
S.S.I. Media India Pvt. Ltd. vs Commissioner Of Service Tax on 14 January, 2008
Equivalent citations: 2008[11]S.T.R.136, [2008]14STT267
ORDER P. Karthikeyan, Member (T)
1. In this application, filed by M/s. S.S.I Media India (P) Ltd, Chennai, the applicants have sought waiver of predeposit of an amount of Rs. 6,26,497/- being the service tax demanded from it, interest thereon, equal amount of penalty under Section 78 of the Finance Act 1994 (the Act), penalties imposed under Sections 76 and 75 of the Act and stay of their recovery.
2. Moving the application, ld. Counsel for the appellants submits that the appellants are not liable to pay the service tax demanded as there is no dispute that the impugned service had been rendered by a partnership firm which had been dissolved. The taxable service as per the impugned order had been rendered during 1999-00 to 2001-02 (upto 11/2001) by a partnership firm, one of the partners of which is a Director in the appellant firm. The partnership firm existed before the appellant firm, a private limited company, was incorporated on 29.10.2001. The demand has been made on the limited company, a legal entity which cannot be fastened with the liability of the partnership firm for the reason that one of the Directors of the limited company happens to be a partner of the dissolved partnership firm. She submits a copy of the Tribunal's decision in Special Board Mfg. Co. v. CCE & C, Ahemdabad . It was held in the decision that when a partnership firm is dissolved and its business taken over by the appellant company, the benefit of Notification No. 138/86-CE was not deniable to the appellant company on the ground that the partnership had earlier availed the benefit of Notification No. 175/86-CE and the benefit of both the notifications could not be claimed in one Financial Year. The Tribunal took the above decision on the ground that a partnership firm and a limited company were two different legal entities. In the said order, the Tribunal had vacated the demand. Ld. Counsel also submits that the partnership firm used to render advertisement service through F.M Radio whereas the appellants are engaged in out-door advertisement business such as display on bus shelters, railway stations, hoardings etc.
3. Ld. SDR submits that the Director of the appellant firm was a partner in the partnership firm and the liability of the partnership firm devolved on the partners of the firm. Therefore the impugned order demanding tax and penalty has been passed in accordance with law.
4. I have carefully considered the facts of the case and the submissions made by both sides. I find that the tax liability had been incurred by a partnership firm. The appellant is a private limited company. One of the Directors of the company was a partner of the firm which had rendered the taxable service as per the impugned order. As rightly pointed out by the Ld Counsel for the appellants, the appellants, a limited company cannot be penalized nor any liability of the erstwhile partnership fastened on it for the sole reason that a partner of the firm which had rendered the impugned service is now a Director of the private limited company. The appellant is a legal entity distinct from the partners of the firm who were liable to pay the tax or suffer penalty for rendering service without following the statutory formalities. I find that the appellants have made a prima facie case against the demand and penalties in the impugned order. In the circumstances, it is ordered that there shall be complete waiver of predeposit and stay of recovery of the dues as per the impugned order till the final disposal of the appeal.
(Dictated and pronounced in open court)