Custom, Excise & Service Tax Tribunal
M/S.Ballarpur Industries Ltd vs Commissioner Of Central Excise, Nagpur on 14 January, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/112 to ST/114/2005-Mum. Appeal No.ST/04 and ST/05/2006-Mum (Arising out of Order-in-Appeal No. SVS/73 to 75/NGP-C-ST/2005 dated 03.03.2005, SVS/354/NGP-C-ST/2005 and SVS/355/NGP-C-ST/2005 dated 14.10.2005 passed by the Commissioner of Central Excise & Customs (Appeals), Nagpur). For approval and signature: Honble Shri A.K. Srivastava, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s.Ballarpur Industries Ltd. Appellants
Vs. (Rep.by Shri Bharat Raichandani and
Ms.Kanupriya Bhargava, Advocates)
Commissioner of Central Excise, Nagpur Respondents
(Rep.by Sh. S.M.Vaidya, JDR)
Commissioner of Central Excise, Nagpur Appellants
(Rep.by Shri S.M..Vaidya, JDR)
Vs.
M/s.Ballarpur Industries Ltd. Respondents
(Rep.by Shri Bharat Raichandani and
Ms.Kanupriya Bhargava, Advocates)
CORAM:
Shri A.K. Srivastava, Member (Technical)
Date of hearing : 13.01.2009 and 14.01.2009
Date of decision : 02.2009
ORDER NO.
`Per : Shri A.K. Srivastava, Member (Technical)
Appeal Nos.ST/4/06 and ST/5/06 have been filed by the Revenue against the Orders-in-Appeal both dated 14.10.2005 passed by the Commissioner (Appeals), Customs and Central Excise, Nagpur. The Commissioner (Appeals), vide the impugned orders, sanctioned the refund claims of Rs.2,70,503/- and Rs.8,84,499/- respectively to M/s.Ballarpur Industries Ltd.(hereinafter in short referred to as BIL).
2. The Commissioner(Appeals) has sanctioned the refunds by setting aside the Orders-in-Original both dated 10/11.5.2005 passed by the Assistant Commissioner of Central Excise Division, Chandrapur by which the Assistant Commissioner had rejected the refund claims. The following is the extract of the orders passed by the Commissioner (Appeals).
The matter is no more res integra. The judgement of CESTAT in L.H.Sugar Factories Ltd. Vs. Other 2004 (165) ELT 161(Tri.-Del) holding that even in amended provisions of Service Tax in case of Goods Transport Operators Services, the service receiver is not liable to pay Service Tax upto the period 01.06.1998, is upheld by the apex court in Civil appeal No.4426-4431 of 2004 in their judgement dated 27.07.2005 2005 (187) ELT 5 (SC). The operative portion of the judgement is reproduced below We have heard counsel for the parties.
2. Learned counsel for the parties have drawn our notice to the relevant provisions of the Finance Act as it stood in the year 1994 and thereafter as it stood after the various amendments to the Act in subsequent years. Having considered the relevant provision of the Act, the Tribunal has, inter-alia, recorded the following conclusion:-
The above would show that even the amended Section 73 takes in only the case of assessees who are liable to file return under Section 70. Admittedly, the liability to file return is cast on the appellant only under Section 71A. The class of persons who come under Section 71A is not brought under the net of Section 73. The above being the position show cause notices issued to the appellants invoking Section 73 are not maintainable.
3. We entirely agree with the conclusion arrived by the Tribunal. We find no merit in these appeals and the same are accordingly dismissed. No order as to cost.
The period involved in the present appeal is upto 01.06.1998 and squarely covered by the apex court judgement. Therefore the Order-in-Original being contrary to the law of the land is liable to be set aside. Accordingly, following order is passed.
The appeal is allowed by way of setting aside the Order-in-Original in question.
3. Heard both the sides and perused the records.
4. The learned JDR opposed the reasoning and contentions of the Commissioner (Appeals) in allowing the refunds to BIL and argued that by Section 116 of the Finance Act, 2000, the law covered each and every recipient of goods and transport operators services and clearing and forwarding agents services during 16.7.1997 to 16.10.1998. By Section 117 of the Finance Act, 2000, the law covered the assessees, who were absolved by even the Court from any liability to pay service tax as recipient by virtue of the Rules having been held ultra vires. He submitted that Section 71A was added by Finance Act, 2003 to enable the recipients of goods transport operators services and clearing and forwarding agents services during the said period to file returns. By inserting the said machinery provision, it was made clear that every person liable to pay the service tax in respect of the said period under the amended provisions shall file the return. It was submitted that persons like BIL could not have filed the return under Section 70 as they are covered under Section 71A. It was submitted that the adjudicating authority was under no obligation to assess in cases of self-assessment, and even if there was no regular assessment, the service tax paid by BIL on the basis of self-assessment was to be treated as tax assessed and paid. It was argued that since there was no demand made by issuing any show cause notice to BIL, the question of applicability of Section 73 did not arise and the decision of CESTAT in L.H.Sugar Factories Ltd. as upheld by the Supreme Court was not applicable to the facts of the present case. He pointed out that the provisions of the Validating Acts were upheld by Honble Supreme Court in Gujarat Ambuja Cements Ltd. vs. Union of India reported in 2005 (182) ELT 33 (SC) and, therefore, the protest under which the tax was paid under self-assessment did not survive. The learned JDR also submitted that in the instant case, neither the show cause notice was issued under Section 73 nor the said Section was invoked in the letter dated 29.03.2004 issued by the Assistant Commissioner of Central Excise, Chandrapur Division. He also relied upon the decision of the Tribunal in the case of J.K. Industries Ltd. Vs. Commissioner of Central Excise, Indore reported in 2006 (03) STR 14 (Tri.-Del) for the proposition that the service tax paid on the basis of self-assessment as per statutory provisions was a valid collection of tax by Government and not refundable to BIL, who are liable to pay the same under the amended provisions of Section 71A of the Finance Act, 1994 as inserted by the Finance Act, 2003. He also referred to the Tribunals decision in the case of Commissioner of Central Excise, Jaipur Vs. Mangalam Cement Ltd. reported in 2007 (7) STR 673 (Tri.-Delhi) which has affirmed the Tribunals decision in the case of J.K. Industries Ltd. (supra).
5. The learned counsel appearing on behalf of BIL contended that since no action was already taken in their case, the provisions of Validating Act did not create any liability on their part to pay the tax in respect of the said periods from 16.11.1997 to 1.6.1998 and 16.7.1997 to 16.10.1998. It was further contended that the Finance Act, 1994 contemplated an outside period of limitation of five years in Section 73 and, therefore, no demand of service tax could have survived after 2nd June, 2003. The retrospective amendment, therefore, cannot revive something, which was time barred. It was submitted that the payment of the service tax on the GTO and C & F services made by BIL was based on the demand made by the Assistant Commissioner of C. Ex. Chandrapur Dn. vide his letter dt. dt.29.03.04 and accordingly the returns were also filed. As such in view of even amendment in the year 2003, as the service tax was demanded by issue of letter, no liability survives. Moreover, two show cause notices which were issued by the Department viz. both dated 03.05.01 were dropped by the Adjudication Authority vide his O-in-O no.238/ST/CWD/2003 dt.25.03.04 and 236/ST/CWD/2003 dt.25.03.04 and which were not appealed by the Department. As such, the issue has already been decided in their favour and is binding on the Revenue. Therefore, the issue cannot be reopened considering the principles of res judicata.
6. I have carefully considered the rival submissions. The main issue involved in the Appeal Nos.ST/04/06 and ST/05/06 filed by the Revenue is whether the service tax has been validly paid by BIL as recipient of the services rendered by goods transport operators and clearing and forwarding agents for the period from 16.11.07 to 02.06.98 and 16.07.97 to 16.10.98 respectively.
7. It is seen that the Honble Supreme Court in Gujarat Ambuja Cement Ltd. Vs. Union of India reported in 2005 (182) ELT 33 (SC) has upheld the constitutional validity of Section 116 and 117 of the Finance Act, 2000 and Section 158 of the Finance Act, 2003. Section 116 and 117 of the Finance Act, 2000 and Section 158 of the Finance Act, 2003 sought to overcome the Judgement of the Supreme Court in the case of Laghu Udyog Bharti Vs. Union of India reported in 1999 (112) ELT 365 (SC) striking down Rules 2(1) (d) (xii) and (xvii) of the Service Tax Rules 1994 (as amended in 1997) as ultra vires of the Act. The Supreme Court in Gujarat Ambuja Cements Ltd. (Supra) held that a legislature was competent to remove infirmities retrospectively and make imposition of tax declared invalid, valid. It was held that the law must be taken as having always been as was now brought about by the Finance Act, 2000 and that the statutory foundation for the decision in Laghu Udyog Bharti was replaced and the decision has thereby ceased to be relevant for the purpose of construing the present provisions.
8. At the outset, it is to be noted that it is very clear that the obligation to pay tax arising under the amended provision on the part of BIL, who were the recipient of services in question, was never extinguished. It is seen that no demand was made by issuing any show cause notice to BIL. Therefore, the question of applicability of Section 73 does not arise and the decision of the Tribunal in the case of L.H. Sugar Factories Ltd. [2004 (165) ELT 161 (T)] as upheld by the Supreme Court [2005 (187) ELT 5 (SC)] and which has been relied upon by the Commissioner (Appeals) in the impugned order, is not applicable to the facts of the present case. The letter dated 29.03.2004 from the Assistant Commissioner of Central Excise, Chandrapur Division asking BIL to pay service tax and file the prescribed returns, failing which recovery action will be initiated, cannot be construed as action under Section 73. The service tax was paid by BIL on the basis of self assessment. As regards the aspect of time bar raised by the learned Counsel, it is observed that the Tribunal in the case of J.K. Industries Ltd. Vs. Commissioner of Central Excise, Indore reported in 2006 (3) S.T.R. 14 (Tri.-Del.), after considering the Tribunal decision in the case of L.H. Sugar Factories Ltd. Vs. Commissioner [2004 (165) ELT 161 (T)] and the Supreme Court Judgement in the case of Gujarat Ambuja Cements Ltd. [2005 (182) ELT 33 (SC)], has held in para 9 as under:
9.The service tax paid on the basis of self-assessment as per the statutory provision was a valid collection of tax by the government and therefore, it was in no way refundable to the appellant who was liable to pay the same under the amended provisions. The period for filing of the returns was provided in Section 71A which was six months from the date on which the Finance Act,, 2003 received the assent of the President, and the appellant filed the return within the period so prescribed. In a case which was covered by Section 71A read with Rule 7A the date of filing of return cannot be drawn from the provisions of Section 70. In fact, Section 71A clearly specified that the provisions of Section 70 did not apply to persons referred to in the proviso to sub-section(1) of Section 68 for the filing of return. It cannot, therefore, be accepted that the time limit for filing of return by the appellant should be computed on the basis of the provisions of Section 70 and 73 as from the date on which the half-yearly return could have been filed under Section 70 read with Rule 7 which were wholly inapplicable in case of the appellant when specific provision of Section 71A was made in the context of the persons like the appellant for filing of the return and period within which the return was to be furnished was also provided. The contention that the appellant was not liable to pay the service tax since the recovery would have been time barred on the basis of the deemed liability having been arisen earlier on the expiry of the relevant period in 1998, is , therefore, wholly misconceived. The return filed by the appellant under Section 71A on the basis of the self-assessment could have been verified under Section 71 by the concerned officer in view of the specific provision made in Section 71A to the effect that Section 71 shall apply to such return. However, even when it was not taken up for verification, it cannot be said that the service tax paid on the basis of self-assessment was not tax assessed. Since the service tax was validly paid under the liability arising under the amended provisions, particularly under Section 71A requiring the appellant to file such return, the appellants are not entitled to the refund. There was no question of issuance of any show cause notice under Section 73 for recovery, because, the appellants had paid the tax on self assessment basis under the return filed under Section 71A of the Act read with Rule 7A of the Act. None of the contentions raised on behalf of the appellant has therefore any substance.
9. The Honble Supreme Court in its Judgement in the case of Gujarat Ambuja Cements Ltd. (Supra) in para 19 has observed as under:-
In addition, Section 71 which provides for the filing of returns was amended to provide, with retrospective effect, for the insertion of Section 71A. Under the newly inserted section, the provisions of Section 69 and 70 do not apply to a person referred to in the proviso to sub-section (1) of Section 68 as far as the filing of returns in respect of service tax for the period commencing from 16th July 1997 was concerned. It seeks to provide that such persons 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 provisions of Section 71 shall apply accordingly.
10. Thus, BIL were required to file fresh return within six months from the date of enactment of the Finance Bill, 2003 in the manner prescribed on the basis of self assessment of service tax. The manner of filing the return was prescribed by inserting Rule 7A vide Notification No. 4/2003ST dated 14.5.2003, which stipulated that the service receivers of goods transport operator shall furnish a return within a period of six months from 13.05.2003 (i.e., before 13.11.2003) in form ST-3B alongwith copy of TR6 challan in triplicate, failing which the interest and panel consequences as prescribed in the Act shall follow. In the light of the above, I hold that the plea of time bar raised by the learned Counsel of BIL is not sustainable and the same is rejected.
11. As regards the submissions of the learned Counsel of BIL that the doctrine of res judicata will apply in their case in as much as the show cause notices dated 03.05.01 were dropped by the Adjudicating Authority vide his orders dated 25.03.04, which were not appealed against and hence have become final and binding, I find that the doctrine of res judicata does not apply in the mater of revenue and where public interest is involved. The Supreme Court in the case of Commissioner of Central Excise vs. Hira Cement reported in 2006 (194) ELT 257 (SC) has held that non filing of an appeal against an order in any event would not be a ground for refusing to consider the mater on its merit. When public interest is involved in interpretation of law, the court is entitled to go into the question. The Tribunal in the case of Ford India Pvt.Ltd. vs. Commissioner of Customs, Chennai reported in 2008 (228) STR 71 (Tri-Chennai) has held that res judicata is not applicable in taxation matter, when the matter involves public interest. It further observed that if regardless of the Revenues legitimate claim arising out of strict interpretation of exemption notification, the present appeals are allowed solely on the ground that an order in favour of the assessee on similar set of facts exists and Revenue has not filed appeal against it, the public exchequer will be deprived of substantial revenue. It was held that the appeals are to be disposed of on merits.
12. The Commissioner (Appeals), while allowing the appeals filed by BIL, has relied upon the decision of the Tribunal in the case of L.H. Sugar Factories Ltd. [2004 (165) ELT 161 (Tri.-Del.)] as upheld by the Supreme Court [2005 (187) ELT 5 (SC)]. In this regard, I deem it necessary to reproduce below the relevant paras of the Tribunals orders in the case of Commissioner of Central excise Jaipur Vs. Mangalam Cement Ltd. [2007 (7) STR 673 (Tri.-Del)], which are relevant and pertinent to the case.
13. The reliance of the respondents-assessees on the ratio of the decision in L.H. Sugar Factory (Supra), which is affirmed by Honble the Supreme court by its order reported in 2006 (3) S.T.R. 715 (S.C.)- 2005 (187) E.L.T. 5 (S.C.) is wholly misconceived in view of the amendments in the law, particularly, by insertion of the proviso to Section 68(1) and Section 71A which created enforceable liability of the recipients of services from GTOs during the period from 16.11.1997 to 1.6.1998. As held in J.K. Industries ltd. Vs. CCE Indore reported in 2006 (3) ST.R 14 (Tri.-Del.), such assesses were bound to file return as mandatorily required by Section 7A. In the present case, the returns were filed by the respondents as per the said machinery provisions of Section 71A read with rule 7A, though the service tax was paid by them subsequently, having lost on their writ petitions being dismissed by Honble the Supreme Court. The respondents paid up the service tax in consonance with the outcome of their petitions by the decision of Honble the Supreme Court, in a group of petitions in Gujarat Ambuja Cement Ltd. (supra). The service tax liability was assessed by the respondents-assessees in their ST-3B Form and was declared to be a correct self-assessment, as required by that Form. They have asserted that they had filed the ST-3B Form required to be filed under Rule 7A read with Section 71A within the time prescribed which was extended by Honble the Supreme Court by fifteen days from 14.11.2003. Under Section 71A, it was provided that notwithstanding anything contained in the provisions of Section 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 in the prescribed manner on the basis of the self-assessment of the Service tax, and the provisions of Section 71 shall apply accordingly..
14. It will be noticed from the decision in L.H. Sugar Factories ltd. (supra) that the show cause notice was issued in that case in the year 2002 and it is in that context the Tribunal concluded in Para 9 that the show cause notice issued to those appellants was not sustainable because under the provisions of section 73, as it stood on the date of issue of the show cause notice and also under the provisions as amended by Finance Act, 2003 were not sustainable. Affirmation of that decision by Honble the Supreme Court by order dated 27.7.2005 cannot be construed as nullifying the effect of the ratio of the decision of the Apex Court in Gujarat Ambuja Cement Ltd., (supra), in which it was categorically held, in the context of the said provisions, that the law must be taken as having always been as is now brought about by the Finance Act, 2000, and that the statutory foundation for the decision in Laghu Udyog Bharati (which was followed in L.H. Sugar Factories Ltd. by the Tribunal) had been replaced and the decision has thereby ceased to be relevant for the purposes of construing the amended provisions.
16. In view of the clear ratio of the decision of the Honble Supreme Court in Gujarat Ambuja Cement Ltd. (supra), which was followed by this Tribunal in J.K. Industries ltd. (supra), any contrary decisions simply giving directions without dealing with or showing dissent from the ratio laid down in these decisions or attempting to distinguish them, cannot be considered to be laying down any precedent on the doctrine of ratio decidendi. Mere directions, issued contrary to the settled legal position, cannot be said to be laying down any contrary ratio, so as to constitute an opposite precedent or laying down a contrary proposition. We are of the opinion that the ratio of the decision of Honble The Supreme Court in Gujarat Ambuja Cement Ltd. (supra), cannot be overlooked on the specious plea of a learned Authorized Representative of the respondents-assessees that later is better. It is obvious that while affirming the decision of the Tribunal in L.H. Sugar Factories Ltd. (supra), the Honble Supreme Court was not concerned with the validating provisions which prompted the decision in Gujarat Ambuja Cement Ltd. (supra). In fact, there could be no conflict between the two decisions, which dealt with different situations, one dealing with challenge against a show cause notice in a situation prevailing before the validating law and the other dealing with the effect of the validating provisions. Therefore, even if the decision of the L.H. Sugar Factories Ltd. rendered by the Tribunal came to be affirmed later on, that is after the decision in Gujarat Ambuja Cement Ltd., the subsequent decision was relevant only in the context of the law, as stood prior to the validating provisions, the constitutionality of which came to be upheld by the Honble Supreme Court in Gujarat Ambuja Cement Limited. For the same reason any contrary decision rendered by this Tribunal cannot be followed, because that would be defying the law laid down by the Honble Supreme Court in Gujarat Ambuja Cement Limited.
13. In the light of the above observations of the Tribunal in the case of Mangalam Cement Ltd. (Supra), I hold that the impugned orders passed by the Commissioner (Appeals) are not sustainable.
14. The service tax paid by BIL was in respect of the period from 16.11.1997 to 1.6.1998 during which they had received service from goods transport operators. The amount of service tax paid was Rs.2,70,503/- vide TR6 challan No.002/04-05/ST dt.26.04.04 as stated in the return of Service Tax in form ST-3B filed by BIL on 27.04.04, prescribed under Rule 7A of the said Rules and Rs.8,57,986/- vide TR6 challan No.01/04-05/ST dt.26.04.04 as stated in the return of Service Tax in form ST-3B filed by BIL on 27.04.04. An amount of Rs.26,513/- vide TR6 challan No.003/04-05/ST dt.27.04.04 was paid on account of service tax on the services of C & F agents availed by BIL, during the period from 16.07.1997 to 16.10.1998.
15. The BIL have filed the ST-3B return on 27.4.2004. They are, therefore, liable to pay the interest under Section 75 of the Act for the late payment of service tax for the period from 13.11.2003 to 26.4.2004.
16. In the light of the above discussions, I hold that BIL are not entitled to the refund of Rs.2,70,503/- and Rs.8,84,499/- as service tax has been validly paid by them. Appeal No.ST/04/06 and ST/05/06 filed by the Revenue are allowed. The impugned orders passed by the Commissioner (Appeals) are set aside. The Orders-in-Original both dated 10/11.5.2005 passed by the Assistant Commissioner are restored.
17. Since it has been held that service tax has been validly paid by BIL, it follows that they are liable to pay the interest of Rs.1,798/-, Rs.18,342/- and Rs.58,179/-. I uphold the three Order-in-Appeal all dated 03.03.2005 passed by the Commissioner (Appeals), by which he has upheld the Orders-in-Original passed by the Assistant Commissioner directing BIL to pay interest of Rs.1,798/-, Rs.18,342/- and Rs.58,179/- under Section 75 of the Finance Act, 1994. Appeal Nos.ST/112/05, ST/113/05 and ST/114/05 filed by BIL are rejected.
(Pronounced in court on /02/2009)
A.K. Srivastava
Member (Technical)
Sm
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