Custom, Excise & Service Tax Tribunal
Sandvik Asia Ltd vs Cce Pune on 22 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. ST/24/10 Mum
Arising out of Order-in-Appeal No. P-I/VSK/225/2009 dated 14.10.2009 passed by the Commissioner of Central Excise (Appeals), Pune I.
For approval and signature:
Shri. M.V. Ravindran, Member (Judicial)
Shri. P.R. Chandrasekharan, 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 : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
Sandvik Asia Ltd.
:
Appellant
Versus
CCE Pune
Respondent
Appearance Shri Vinay Jain, C.A. for appellant Shri A.B. Kulgod, Asst. Commissioner (A.R.) For Respondent CORAM:
Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 22.01.2015 Date of Decision : 22.01.2015 ORDER NO.
Per : M.V. Ravindran This appeal is directed against Order-in-Appeal No. P-I/VSK/225/2009 dated 14.10.2009.
2. Heard both sides and perused the records.
3. The issue involved in this case is regarding service tax liability on the appellant under reverse charge mechanism for the period 01.01.2005 to 31.3.2008 on the ground that appellant having made payments to the commission agent who was residing abroad during the period.
4. After hearing both sides, we find that as regards the period from 01.01.2005 to 17.04.2006, service tax liability does not arise on the appellant in view of the judgement of the Honble Bombay High Court in the case of Indian National Ship Owners Associations v. Union of India reported in 2009 (13) STR 235 (Bom.) and the same view has been upheld by the Honble Apex Court as reported at 2010 (17) STR J-57. The said judgement categorically settled the law that no service tax is payable by the recipient of the service, if the said services are rendered prior to 18.04.2006 when the provisions to Section 66A were introduced in statute. Accordingly, we hold that for the period 01.01.2005 to 17.04.2006 the service tax liability, interest thereof and the penalties imposed are unsustainable and are set aside. With regard to the service tax liability for the period 18.04.2006 to 31.03.2008 the appellant is liable to discharge service tax liability.
5. Learned Chartered Accountant would submit that a sum of Rs.2,743,943/- towards service tax liability has been paid by the appellant on 29.07.2008. A show-cause notice has been issued on 11.11.2008. Before issuance of show-cause notice the service tax liability has been paid by the appellant for the period 18.04.2006 to 31.3.2008. CENVAT Credit has also been availed by them as such no penalties is imposable on them. The claim of the learned C.A. is that the issue was being disputed and challenged before the Honble High Court and they had bonafide belief that since the constitutional validity was being challenged, they deferred to discharge service tax liability in time and hence penalties imposed on them under Section 78 be set aside.
6. In our considered view, for the period 18.04.2006 to 31.3.2008 service tax liability along with interest gets fastened on appellant is required to discharge interest liability on the said service tax in accordance with law. This takes us to the penalty imposed by the lower authorities on the appellant specifically for the period 18.04.2006 to 31.03.2008. We find that the contentions raised by the learned C.A. have a strong force. We do agree that during the relevant period the entire issue of service tax liability under reverse charge mechanism was being contested vehemently by both the sides at higher judicial forum. We find that the issue has attained finality with the judgement of Indian National Ship Owners Association on 14.12.2009. In our considered view and the facts and circumstances of this case, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994, by setting aside the penalties imposed by the lower authorities, we do so.
7. Appeal is disposed of in the above terms.
(Dictated in open Court) (P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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