Custom, Excise & Service Tax Tribunal
C.S.T. New Delhi vs Shri Jitender Lalwani on 25 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. ST/381, 385/2012-CU(DB)
[Arising out of Order-in-Appeal No. 310/ST/DLH/2011 dated 23.12.2011, by the Commissioner of Customs, Central Excise & Service Tax (Appeals), New Delhi].
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Honble Shri V. Padmanabhan, Member (Technical)
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 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?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
C.S.T. New Delhi .Applicants
Vs.
Shri Jitender Lalwani
Shri Kamal Lalwani .Respondent
Appearance:
Shri Sanjay Jain, DR for the Applicants Ms. Seema Jain, Advocate for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing: 10.11.2016 Date of Pronouncement: _25/11/2016_ FINAL ORDER NO. 55552-55553 /2016-CU(DB) Per Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (A) vide which he has rejected the Revenues appeal filed before him as the impugned order passed by the Assistant Commissioner was in favour of the assessee, Revenue has preferred the present two appeals which are being disposed of by a common order, as the issue involved is identical.
2. As per the facts on record, proceedings were initiated against the respondent by issuing a show cause notice dated 01.01.2008 alleging that during the period from 2003-04 to 2006-07, by selling the goods of M/s. Amar Products on commission basis, they have provided business auxiliary services, which were liable to service tax, raised the demand of service tax against the appellant. During adjudication the original adjudicating authority took a view that as the appellant was providing such services to M/s. Amar Products as an individual and not under the name of any commercial concern he would not be covered by the definition of Business Auxiliary Services as appearing in section 55 (105)(zzb) of the Finance Act 1994. The adjudicating authority referred to various circulars of the board as also various decisions of the Tribunal to impress upon that prior to 01.05.2006, when the commercial concern was replaced by any person in the definition of Business Auxiliary Services, a person providing such services would not be covered. He also held in favour of the assessee on the issue of time bar. Accordingly, he dropped the proceedings under the show cause notice.
3. Being aggrieved with the said order of original adjudicating authority, Revenue filed an appeal before Commissioner (A). The respondent took a categorical stand before the appellate authority that they were not engaged in providing any promotion marketing custom care or other incidental or auxiliary services falling under the category of Business Auxiliary services to Amar Products and has introduced only one buyer to the exporter and that too only for one time. They have no establishment or any commercial concern providing such services. Introduction of one particular customer would not amount to providing business auxiliary services. They also relied upon various circulars of the board wherein it was clearly emphasizes that it is not one / few isolated activities which would determine whether or not a institution is a commercial concern. An isolated activity of introduction of one buyer to only one exporter cannot be termed as activity provided by commercial concern. The respondent also assailed the demand on the point of limitation. While dealing with the merits of the case, commissioner (A) observed as under:
From the clarifications issued by the CBEC in the above mentioned Circulars, it is amply clear that services performed by individuals in their individual capacity without having proper commercial establishment would not be chargeable to Service Tax. In other words, individuals undertaking services cannot be subjected to Service Tax where scope to levy service tax has been limited to a commercial concern only by virtue of definition in the relevant section. Therefore, applying the same analogy, in the instant case also, individuals undertaking services in their individual capacity cannot be regarded as commercial concern as per the definition in section 65 (105)(zzb) of the Finance Act, 1994 as it existed prior to 01.05.2006 in respect of Business Auxiliary Services. However, same are chargeable to Service Tax w.e.f 01.05.2006 when the term Commercial concern has been substituted by the term person w.e.f. 01.05.2006 in respect of subject Business Auxiliary Services. Therefore, there is no legal infirmity in the order of the adjudicating authority holding that services provided by individual person other than commercial concern would not be taxable prior to 01.05.2006 and according to evidence placed on record Shri Ravi Lalwani had provided said service in his individual capacity without having any commercial establishment. Though the CBEC Circulars relied upon above by the respondents and the adjudicating authority are in respect of other services but same analogy and underlying principle laid down by the CBEC can be applied to the Business Auxiliary Services under consideration also and such Circulars in favour of the assessee are binding on the department as per principle laid down by the Honble Apex Court in the matter of CCE Vs. Dhiren Chemical Ind. 2002 (139) ELT 3 (SC).
4. As regards limitation the commissioner (A) has observed as under:
I further find that extended period under section 73 of the Act ibid was not invokable in the case in hand as respondent was under a bonafide belief that services rendered by him were not taxable under service tax on account of various CBEC circulars and judgments of the Honble Tribunal in this regard. I find that it is settled principle of law that extended period is not invokable where the issue involves interpretation of various provisions of law and information is already disclosed in statutory documents such as Balance Sheet or Income Tax Returns. Accordingly, the submission of the appellant in this regard does not hold ground. Keeping in view, the aforesaid CBEC circulars, judgments relied upon by the adjudicating authority and facts and circumstances of the case, I hold that there is no substance and force in the appeal filed by the Revenue and uphold the findings of the adjudicating authority that respondent had undertaken the said services as an individual and cannot be regarded as commercial concern in terms of definition of Commercial Concern in section 65(105)(zzb) of the Finance Act, 1994 as it existed prior to 01.05.2006, therefore, cannot be charged to service tax under the category of Business Auxiliary services before 01.05.2006 when the term Commercial Concern has been substituted by the term person in Section 65(105)(zzb) of the Finance Act 1994 w.e.f. 01.05.2006.
5. On hearing both the sides we find that both the lower authorities have dropped the demand by taking into consideration clarification issued by the board through their circular being circular no. 59/8/2003 dated20.06.2003, 62/11/2003-ST(F.No. B3/7/2003) dated 21.08.2003 and B/2/8/2004-TRU dated 10.09.2004.
6. There is no dispute on the facts that the appellant in his individual capacity has provided services to M/s. Amar Products and was not having any commercial concern for undertaking the business in regular course. As such we find no infirmity in the views adopted by Commissioner (A) or the original adjudicating authority which is based upon boards circular and the precedent decisions.
7. Apart from the merits we also note that the lower authorities have rightly explained the benefits to the respondent on the issue of time bar. Admittedly, during the relevant period there was a lot of confusion. All the activities undertaken by the appellant were a part of the reflection made in the balance sheet and income tax return in which case no suppression or malafide can be attributed to the assessee. Revenue has not been able to produce any evidence on record to show that the tax which according to the revenue was payable was not being paid on account of any malafide. As such we agree with the lower authorities that the extended period would not be available to the Revenue.
8. We also note that an identical appeal of the Revenue being appeal no. ST/384/2012-CU(DB) stands rejected by the Tribunal vide order dated 25.11.2016. In view of the foregoing discussion we find no merits in the Revenues appeal. The same is accordingly rejected.
[Pronounced in the open Court on _25/11/2016_]
(V. Padmanabhan) (Archana Wadhwa)
Member (Technical) Member (Judicial)
Bhanu
5
ST/384/2012-CU(DB)