Custom, Excise & Service Tax Tribunal
M/S Elcon Infrastructure vs Commissioner Of Central Excise, ... on 25 March, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20403 / 2014 Application(s) Involved: ST/Stay/27324/2013 in ST/27007/2013-DB Appeal(s) Involved: ST/27007/2013-DB [Arising out of Order-in-Original No. 12/2013 (Commr) dated 26/03/2013 passed by Commissioner of Central Excise, Customs and Service Tax , BELGAUM] M/s Elcon Infrastructure F-51/52, 1st Floor, Lakshmi Complex, Neeligin Road, HUBLI KARNATAKA-580029 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - BELGAUM NO. 71...CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM, KARNATAKA-590001 Respondent(s)
Appearance:
Mr. M.S. Nagaraja, Adv # 48, 11TH MAIN, BANASHANKARI, 2ND STAGE, BANGALORAE KARNATAKA-560070 For the Appellant Mr. A.K. Nigam, A.R. For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 25/03/2014 Date of Decision: 25/03/2014 Order Per : B.S.V.MURTHY The demand for service tax of Rs. 1,30,61,383/- with interest has been confirmed against the appellant and penalties have been imposed under various sections of Finance Act 1994 on the ground that appellant had rendered service of supply of tangible goods such as excavators, rollers, pavers etc. The demand relates to the period from 16.5.2008 to 31.03.2011 and the show-cause notice was issued initiating proceedings on 21.02.2012. The learned counsel on behalf of the appellant submits that the entire demand is based on the figures in the balance-sheet of the appellant for the years under question. The figures given in balance-sheet under the income part have been straight away taken and considered as the amount received for rendering of supply of tangible goods service and proceedings initiated. To support his submission, he compares the figures in the balance-sheet with the figures in the show-cause notice. He also submits that even though in the balance-sheet it has been clearly stated that amounts have been received under two Headings namely sub-contractor charges received and transportation charges received (reproduced as in the balance-sheet for the year 2010). Yet, while demanding the service tax the entire amount received has been taken as the amount received for rendering of supply of tangible goods. It has been assumed by the Commissioner without any basis that the transportation charges received and reflected in the balance-sheet relates to the transportation of excavators, rollers, pavers etc and therefore it is includible. He further submits that the Commissioner while coming to the conclusion that the service rendered by the appellant is of supply of tangible goods, has relied upon five work orders. On what basis, these five orders have been selected is not indicated. Further, he also submits that in the show-cause notice, no work orders have been relied upon. He also submits that the appellant had given complete list of work orders executed by them for the period of three years. According to him, these works orders and statements given by Shri Satish Balannavar, Proprietor and Shri Shivappa Basavaraj Bellad, Accounts Assistant have not been examined by the Commissioner.
2. Learned A.R. on the other hand submits that the Commissioner has considered all aspects of the matter and came to a proper conclusion. He reads a portion of the statement of the Proprietor and submits that the Proprietor has admitted that he has provided the service. For better understanding, the portion read out by the learned A.R. is reproduced below:
Question No. 4: On perusal of your audited Balance sheet/Profit & Loss A/c for the financial year ending 31.03.2009 it is seen that the direct incomes of the firm is shown as Rs. 5,34,36,935/- and the direct incomes as shown in the provisional Balance Sheet/Profit & Loss a/c of M/s Satish Balannavar & Co. and M/s Ekon Infrastructure, Hubli put together is Rs. 5,92,12,232/- for the financial year ending 31.03.2010 and the direct incomes as shown in the provisional Profit & Loss A/c for the period 04/2010 to 06/2010 is Rs. 95,24,267/-. The Service Tax liability approximately works out to the tune of Rs 1.22 crores whereas it is seen from the answer to question 2 above that you have paid service Tax to the tune of Rs. 24.07 lakhs only. Kindly comment.
Ans. I have seen and perused the audited Balance sheet/Profit & Loss A/c for the financial year ending 31.03.2009 wherein it is seen that the direct incomes of the firm is shown as Rs. 5,34,36,935/-, the provisional Balance Sheet/Profit & Loss A/c of M/s Satish Balannavar & Co and M/s Ekon Infrastructure, Hubli wherein the total of the direct incomes put together is Rs 5,92,12,232/- for the financial year ending 31.03.2010 and the provisional Profit & Loss A/c for the period 04/2010 to 06/2010 wherein the direct incomes is shown in the is Rs 95,24,267/-. I have put up my dated signature in confirmation of having seen the same and in confirmation of the said facts. As already stated in my answer to question no.1, I am supplying tangible goods such as road making equipments like rollers, pavers, motor graders, asphalt compacters etc. which are owned by us as well as taken from others and supplied to our various customers/contractors. Till date, I have been paying service tax on the gross amount received from my customers with regard to the supply of tangible goods owned by me and in respect of the tangible goods (owned by others) supplied, service tax is paid only on the net amount received (i.e. difference between the payments received from my customers and the payments made by my firm to the owner/supplier of the above said tangible goods). However, now I have realized that I have to pay service Tax on the gross amount received by me from the customers irrespective of the fact whether the said payment is towards the supply of tangible goods owned by me or otherwise. On being asked, I would like to state that I am duty bound to pay the Service Tax liability on the gross amount received from my customers, which I shall pay along with interest at the earliest. I am submitting the cheque no. 105799 dated 24.08.2010 of NKGSB Co-op Bank Ltd., Hubli Branch for Rs 4,00,000.00 and cheque no. 105799 of NKGSB Co-op Bank Ltd., Hubli Branch for Rs. 6,00,000.00 towards the partial Service Tax liability for the period from 15.05.2008 to 30.06.2010. After finalizing the total Service Tax liability due from my firm, I shall pay the same at the earliest. After a portion of the statement was read out, we requested the learned A.R. to show where exactly is the admission by the Proprietor that the service rendered was supply of tangible goods. Suffice it to say, we have not been able to locate such a clear admission on the part of the Proprietor. Further, the learned A.R. also took us through the impugned order to show that the Commissioner has considered the entire submission. The Commissioner in paragraph 60 has observed that there is an admission by the proprietor of M/s Ekon Infrastructure that the amounts received in the balance-sheet are for supply of tangible goods. Thereafter, Commissioner proceeds to examine of a few selected work orders. No doubt, after going through the submission, we find that there is an admission by the owner in the second statement that the amounts received in the balance-sheet are for supply of tangible goods. However, can we rely on the statements alone when there is work orders which speak otherwise is a question which arises before us. When the Bench enquired with the learned counsel as to why his statement should not be held as binding on the appellant and the Commissioners order to be in order, learned counsel submits that the supply of tangible goods is a terminology used specially in the Statute relating to service tax and the appellant is a proprietor of a firm and may not have been able to understand the subtle distinction between the supply of tangible goods and the nature of work undertaken by him and while giving the statement he may not have understood the provisions. Therefore, when reply to the show-cause notice was given, the details were submitted and while submitting the details all the copies of work orders were given and he also submits that even in the balance-sheet though the words supply of tangible goods has been used, in our opinion even if the appellant had given a statement, once a reply to the show-cause notice on the basis of records requested the Commissioner to consider the issue, conclusions emerging from the records should have been made and if there is a contradiction between the records and the statements, that should have been verified and discussed. We find that it has not been done at all.
Further we also find that Commissioner selected five work orders and all of them give an impression that they are for supply of tangible goods. Further, we find that there are definitely some work orders which in our opinion may not be considered as for supply of tangible goods at all. In any case, we feel that once the statement is given and work orders were given, Commissioner could have asked his subordinate officers to go through the orders and prepare a verification report if he himself could not do so before proceedings to pass the order. In such a case, after verification of each order, officers could have given a report as to why the item should be treated as supply of tangible goods contract or otherwise and such a report could have been made available to the appellant, thereafter adjudication could have been completed. Neither, the Commissioner has examined all the work orders and has recorded the conclusion nor all the work orders have been examined and on the basis of examination of all the work orders he has come to the conclusion. Based on five work orders he has come to the conclusion. In our opinion this is not a correct practice. We also find that the transportation charges have simply been assumed to be cost of transportation of the equipment. In our opinion this also requires to be re-examined by the Commissioner. This is in view of the submission by the appellant that they had business of transportation of goods and transportation charges collected does not relate to transportation of equipment but the business undertaken by him. This also can be verified on going through the invoices and records.
In the result we find that the issue requires a complete re-examination in the light of our observations herein above. While we make it clear that we are not able to come to any conclusion as to whether the work undertaken by the appellant in all the work orders amounts to supply of tangible goods or otherwise, we find that the issue needs definitely a more detailed consideration by the original authority. Accordingly instead allowing waiver of pre-deposit and keeping the appeal pending for number of years in view of the large pendency, we consider it appropriate that we remand the matter at this stage itself to the learned Commissioner with a direction to reexamine the issue after giving an opportunity to the appellant to explain their case. At this stage the learned counsel submits that they requested for benefit of CENVAT credit received as cum-tax value, which we have not dealt with. We make it clear that the Commissioner should consider all the issues properly in accordance with law and pass an order.
(Order dictated and pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Pnr...2