Custom, Excise & Service Tax Tribunal
M/S Jindal Vegetable Products Ltd vs Cce, Meerut Ii on 4 January, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV Service Tax Appeal No. 455 of 2012 (SM) [Arising out of the Order-in-Appeal No. 30-CE/MRT-II/2012 dated 31/01/2012 passed by The Commissioner (Appeals), Customs and Central Excise, Meerut II.] For Approval and signature : Honble Shri Rakesh Kumar, 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? 2. Whether it would 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? 4. Whether order is to be circulated to the : Department Authorities? M/s Jindal Vegetable Products Ltd. Appellant Versus CCE, Meerut II Respondent
Appearance Shri Kapil Vaish, C.A. for the appellant.
Shri R.K. Mathur, Authorized Representative (DR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 04/01/2013.
Final Order No. 55189/2013 Dated : 04/01/2013 Per. Rakesh Kumar :-
The appellant are registered with the department as a service provider in respect of goods transport agency service, for the purpose of payment of service tax on the service of GTA received by them. The period of dispute in this case is from 2007-2008 to 2008-2009. The appellant during this period had rented their immovable property. W.e.f. 1/6/07 by virtue of Section 65 (105) (zzzz),the service in relation to renting of immovable property became taxable. However, the validity of levy of tax on this service was challenged before Honble Delhi High Court in the case of Home Solution Retail India and Honble Delhi High Court vide judgement dated 18/4/09 reported in 2009 (14) S.T.R. 433 (Del.) held that the service of renting of immovable property by itself cannot be regarded as service. Subsequently by Finance Act, 2010, the Government amended Section 65 (105) (zzzz) by expanding its scope to include even the renting of immovable property as service taxable under this entry with retrospective effect. On 19/11/10, a show cause notice was issued to the appellant for demand of service tax amounting to Rs. 3,47,316/- on the rental for immovable property received by the appellant from 2007-2008 to 2008-2009 invoking extended period under proviso to Section 73 (1) of the Finance Act, 1994. The show cause notice also demanded interest on the service tax beside penalty on them under Section 76 as well as Section 78. The show cause notice was adjudicated by Assistant Commissioner vide order-in-original dated 13/10/11 by which the service tax demand as made in the show cause notice was confirmed alongwith interest invoking extended period and beside this, penalty were imposed under Section 76 and 78 of the Finance Act. On appeal against this order of the Assistant Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 31/1/12 held that service tax was not chargeable for April and May 2007, as the retrospective amendment is valid only w.e.f. 1/6/07 and the appellant was also eligible for small service providers exemption under Notification No. 6/2005-ST. Accordingly, the service tax demand was reduced to Rs. 2,01,460/-. The Commissioner (Appeals) also set aside the penalty under Section 76 on the ground that the penalty under Section 78 has also been imposed. The Commissioner (Appeals), however, upheld invoking extended period under proviso to Section 73 (1) and also the imposition of penalty under Section 78, which is attracted when the non-payment or short payment of service tax is due to fraud, wilful misstatement, suppression of facts etc. on the part of the service provider. Against this order of the Commissioner (Appeals), this appeal has been filed challenging invoking of extended period under Section 73 (1) of the Central Excise Act and upholding the imposition of penalty under Section 78.
2. Heard both the sides.
3. Shri Kapil Vaish, C.A., the learned Counsel for the appellant, pleaded that in the circumstances of the case, the extended period was not invokable, that though the service in relation to renting of immovable property had been brought within the service tax net by Section 65 (105) (zzzz) w.e.f. 1/6/07, Honble Delhi High Court in the case of Home Solution Retail India (supra) had held that this entry does not cover the renting of immovable property by itself and that the renting of immovable property cannot by itself be treated as service, that the renting of immovable property by itself was brought within the tax net by amending Section 65 (105) (zzzz) with retrospective effect by Finance Act, 2010, that in view of these circumstances, the appellant cannot be accused of wilful suppression of the relevant information, more so, when the appellant themselves had produced the records showing the income from immovable property rental in course of audit of records, and that in this regard he relies upon the judgment of Honble Supreme Court in the case of J.K. Cotton Spg. & Wvg. Mills and Anr. vs. Union of India reported in 1987 (32) E.L.T. 234 (S.C.) and also the judgment of the Tribunal in the case of L.H. Sugar Factories Ltd. vs. CCE, Meerut II reported in 2006 (3) S.T.R. 230 (T-Del.). He, therefore, pleaded that neither extended period under proviso to Section 73 (1) of Finance Act was invokable in this case nor Section 78 was invokable on the appellant.
4. Shri R.K. Mathur, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in the impugned order and emphasised that the appellant, during the period of dispute, had service tax registration as the person liable to pay service tax in respect of GTA service received by them, that while filing the ST-3 returns, they never declared the amount received from renting of immovable property, that this amounts to suppressing the relevant facts from the department and, hence, extended period has been correctly invoked and penalty under Section 78 had been correctly imposed. He, therefore, pleaded that there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. There is no dispute that the activity of the appellant was renting of immovable property. Though service in relation to renting of immovable property had been brought within the service tax net w.e.f. 1/6/07 by introducing Section 65 (105) (zzzz), the validity of this levy had been challenged before the Honble Delhi High Court and Honble Delhi High Court vide judgment dated 18th April 2009 in the case of Home Solution Retail India (supra) held that mere renting of immovable property by itself cannot be regarded as service and would not attract service tax. It is only by retrospective amendment introduced w.e.f. 1/6/07 by Finance Act, 2010, that the renting of immovable property by itself became a taxable service, neutralising the judgment of judgment of Honble Delhi High Court. In the circumstances of the case, I am of the view that the appellant cannot be accused of suppressing the relevant information from the department as during the period of dispute there was doubt about the levy of service on the renting of immovable property till the dispute was put to an end by retrospective amendment made by Finance Act, 2010. Honble Apex Court in the case of Continental Foundation Jt. Venture reported in 2007 (216) E.L.T. 177 (S.C.), has held that when during the period of dispute there was doubt about interpretation of some provisions of law on account of conflicting judgments, which were later on resolved by a Larger Bench, the extended period under proviso to Section 11A (1) cannot be invoked. I am of the view that the ratio of this judgment of Apex Court is squarely applicable in this case and in this case the longer limitation period under proviso to Section 73 (1) would not be applicable and for the same reason, the penalty under Section 78 of the Finance Act, 1994 also would not be attracted, as the elements required for invoking longer limitation period under proviso to Section 73 (1) are the same as those required for imposing penalty under Section 78 of the Finance Act, 1994. Thus, the entire service tax demand is time barred. The impugned order is, therefore, not sustainable. The same is set aside. The appeal is allowed.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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