Custom, Excise & Service Tax Tribunal
Penna Cement Industries Limited vs Commissioner Of Customs, Central ... on 19 March, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/30/2008-SM, ST/84/2008-SM [Arising out of Order-in-Appeal No. 22-2007 dated 24/10/2007 passed by CCE&C(Appeals), Guntur] [Arising out of Order-in-Appeal No. 29-2007 dated 27/12/2007 passed by the Addl. Commissioner of C,CE, Tirupati , ] For approval and signature: HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER 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? Yes 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 PENNA CEMENT INDUSTRIES LIMITED TALARICHERUVU VILLAGE, TADPATRI MANDAL, ANATAPUR DIST. A.P Appellant(s) Versus Commissioner of Customs, Central Excise and Service Tax GUNTUR NULL P.B.NO. 331...C.R.BUILDING, KANNAVARI THOTA, GUNTUR, - 520004 ANDHRA PRADESH Respondent(s)
Appearance:
Ms. Rukmani Menon, Advocate For the Appellant Shri N. Jagdish, Superintendent(AR) For the Respondent Date of Hearing: 19/03/2015 Date of Decision: 19/03/2015 CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 20822-20823 / 2015 Per : B.S.V. MURTHY The appellant is a manufacturer of cement and clinker. They are liable to pay service tax on the GTA service received by them as a receiver of service. the issues involved in both the appeals are linked with each other and therefore both the appeals are considered together and a common order is passed.
2. The appellant was the recipient of goods transport operator(GTO) service for the period from 16/11/1997to 02/06/1998 (period in respect of which tax was leviable on goods transport operator service). In terms of Section 65 and 66 of Finance Act, 1994 as amended by the validatiing provisions of Section 116 and 117 of the Finance Act, 2000, a letter was issued to the appellant by the Superintendent of Central Excise vide letter O.C. No.406/2003 dt. 11/11/2003 followed by a reminder dt. 12/12/2003. At this juncture, it would be appropriate to consider the events leading to the final amendment of provisions with retrospective effect made by the Government in 2003.
3. Levy was introduced in the year 1997 and was exempted w.e.f. 03/06/1998 by Notification No.49/98. The levy was challenged before the Honble Supreme Court and Honble Supreme Court in the case of Laghu Udyog Bharati Vs. UOI [1998(112) ELT 365 (SC)] held that the provisions of Rules 2(d)(xii) and 2(d)(xvii) are ultra virus of Finance Act, 1994. In the year 2000, in the Finance Act, various provisions were amended with retrospective effect. Section 116 amended Section 65 in order to include the goods transport operator in the definition of assessee and Section 117 sought to retrospectively validate the taxes collected by the Department under Service Tax Rules.
4. In 2003, once again certain amendments were made in Section 68, 71A and 73 giving retrospective effect. After these amendments, as per the provisions of Section 68, in relation to services by GTO, the person liable to pay freight was deemed to be the person liable to pay service tax. Section 71A was introduced providing a non-obstante clause and providing that irrespective of provisions of Sections 69 and 70, the GTO has to furnish return to the Central Excise officer within 6 months from the date on which the financial bill became the act. Section 73 was amended to enable the Government to raise demands against persons liable to file returns under Section 71A.
5. The Honble Supreme Court gave another 15 days i.e. the time for filing the return was allowed upto 28/11/2003 pending the decision of the Supreme Court on the petitions filed challenging the retrospective amendments carried out in 2003. As per the order of the Honble Supreme Court, all the service receivers were liable to file returns before 28/11/2003 and make the payment of service tax.
6. Even though the matter came up to be finally decided upholding the retrospective amendment, in respect of the petitions filed in 2005, that decision is not relevant as far as the recovery of the tax and proceedings for recovery of the tax are concerned which were already permitted by the Honble Supreme Court earlier in November 2003.
7. In the case of the present appellant, when the retrospective amendment was carried out in the year 2000, the appellant filed a writ petition before the Honble High Court of Andhra Pradesh No.4184/2001 challenging the provisions of Section 116 and 117 of Finance Act, 2000. After the letter was received from the Range Superintendent dt. 11/11/2003 and 11/12/2003, the appellant filed another Misc. application WPMP No.2809 of 2004. Honble High Court of Andhra Pradesh vide order dt. 04/02/2004, ordered the following:-
Petition under Section 151 of CPC praying the High Court to grant stay of further proceedings pursuant to the notice of the proposed 4th Respondent dated 11-11-2003, pending W.P.No.4184/2001 on the file of the High Court. The Petition coming on for hearing upon perusing the petition and affidavit filed herein, and upon hearing the arguments of Mr. P. Srinivasa Reddy, Advocate for the Petitioner. The Court made the following ORDER:
Pending passing further orders, there shall be stay. However, the stay order granted by this court however be subject to passing further orders in the writ petition.
8. The Department did not take any further action and on 09/08/2005 Honble High Court relying on the decision of the Honble Supreme Court in the case of Gujarat Ambuja Cements Ltd. Vs. UOI [2006(3) STR 608 (SC)], dismissed the writ petition filed by the appellant. Thereafter on 02/09/2005, the letter was written by the Revenue to the appellant to make payment of service tax with interest and file returns. On 15/09/2005, appellants filed the returns and paid the service tax thereafter in the same month. On 04/05/2006, a show-cause notice was issued for the recovery of the service tax of Rs.34,38,570/- and since the appellant had already paid the amount, proposal was to appropriate the amount already paid and interest was demanded and penalty was proposed to be levied. After completion of proceedings, the demand for service tax was upheld, amount deposited was appropriated, interest was demanded and a penalty of Rs.1,36,800/- was imposed in addition to penalty under Section 76 of Finance Act, 1994 which has not been quantified.
9. In appeal No.ST/84/2008, the demand for service tax with interest and penalty imposed is the subject matter.
10. After payment of the service tax in September 2005, on 24/01/2006 appellant filed a refund claim on the ground that no show-cause notice had been issued for recovery of service tax for the relevant period. Proposal was made for rejecting the refund claim by issue of show-cause notice on 18/04/2006 and the refund claim was duly rejected in separate proceedings by the lower authorities. Appeal No.ST/30/2008 deals with the issue of eligibility for the refund.
11. From the facts narrated above, the issues to be decided can be framed as under:-
i. Whether the show-cause notice issued for recovery and appropriation of the amount of service tax, demand for interest and imposition of penalty can be sustained or not; ii. If the answer is no (only if the answer is no) to the first question above, the question of eligibility of refund arises; and iii. Whether penalties imposed can be sustained or not and whether interest is payable by the assessee or not.
12. The learned counsel on behalf of the appellant relied upon the decision of the Honble Supreme Court in the case of L.H. Sugar Factories Ltd. upholding the decision of the Tribunal reported in 2004(165) ELT 161 (Tri. Del.)]. In this case, the Tribunal had taken the view that no show-cause notice could have been issued since the relevant provisions did not cover and did not require the concerned assessees to file returns. However on going through the decision, I find that in the case of L.H. Sugar Factories Ltd., the period was prior to the amendments carried out in the year 2003 to the Finance Act and the defects which were noticed and were considered for taking a view in favour of the assessees in the case of L.H. Sugar Factories Ltd., were made good in the Finance Act, 2003 which came to be subsequently held valid by the Honble Supreme Court. Under the circumstances, the decision of the Honble Supreme Court in the case of L.H. Sugar Factories Ltd. would not be applicable to the present case. At this stage, it would be appropriate to take note of the fact that the Tribunal had relied upon the decision of the Honble Supreme Court in the case of Laghu Udyog Bharati Vs. UOI [1998(112) ELT 365 (SC)] and in respect of this decision, finally the Honble Supreme Court upheld the view that after the amendments made in 2003, the assessees were required to file returns and pay the tax.
13. The learned counsel submitted that in this case, the Revenue should have issued a show-cause notice instead of writing the letter. The show-cause notice was issued in the year 2006 whereas the liability had arisen and crystallized in November 2003 itself. Therefore the show-cause notice will not be sustainable unless extended period is invoked. She submits that the stand taken by the Revenue that because of the stay granted by Honble High Court of Andhra Pradesh, the show-cause notice could not have been issued is not correct. It is her submission that the stay order passed by the Honble High Court did not specifically bar the Revenue from issuing the show-cause notice, therefore belated issue of show-cause notice without invoking suppression cannot be sustained.
14. Learned AR on the other hand would submit that the stay order passed by the Honble High Court is quite clear. It granted stay against all further proceedings in pursuant to the notice dt. 11/11/2003. This order was passed in February 2004 and the petition was filed also in 2004. Therefore after the letters written on 11/11/2003 and 12/12/2003, further issue of show-cause notice could not be taken up since the stay was granted staying further proceedings pursuant to the notice dt. 11/11/2003. The notice issued on 11/11/2003 required the assessee to pay service tax and interest and this would have been followed up by issue of a show-cause notice which can be called as commencement of further proceedings consequent to the letter issued on 11/11/2003. In view of the stay of all further proceedings pursuant to the letter dt. 11/11/2003, the stand taken by the Revenue that show-cause notice could not have been issued till the disposal of the writ petition filed by the appellant is correct.
15. I have considered the submissions made by both the sides. I have already reproduced the order of the Honble High Court. In first paragraph of the order, the Honble High Court has considered and stated as to what exactly is the petition. In this paragraph, it has been stated that appellant was seeking stay of further proceedings pursuant to the letter dt. 11/11/2003. I agree with the submission that further proceedings pursuant to the letter dt. 11/11/2003 would be issue of show-cause notice unless the assessee files the return and pays the tax which they did not do. In the absence of any filing the return and payment of tax, show-cause notice could not have been issued because there was a stay of all further proceedings. Therefore I agree with the submission of the learned AR that the stand taken by the Revenue that during the pendency of writ petition filed by the appellant, show-cause notice could not have been issued. According to the provisions of Section 73(2b) Explanation where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or five years, as the case may be. In this case, the stay was granted on 04/02/2004, the final decision rejecting the writ petition was rendered on 09/08/2005. If we calculate the period during which the writ petition was pending and there was a stay order, the show-cause notice issued by the Revenue has to be considered as having been issued within one year. Therefore the show-cause notice has to be considered as issued within the normal period of limitation.
16. In view of the above discussion on merits, the tax paid by the appellant is in accordance with law and therefore the demand for service tax made by Revenue has to be upheld. Consequently the refund claim filed by the appellant and the rejection of the same also has to be upheld. I do so.
17. Now I come to the question whether interest is payable or not. Now it is settled law that once service tax liability is upheld, the interest liability also has to be upheld. Therefore there cannot be any dispute as regards payment of interest. In this case, the appellant has not paid the interest. The appellant should pay the interest within three months from the date of this decision. The officers concerned of the Department are requested to ensure that within a month from the date of this order, the interest is calculated and communicated to the appellant so that appellant can pay the same. There will be no harm if the assessee themselves calculate and pay the same.
18. As regards penalties, the learned AR submitted that imposition of penalty is perfectly in order and needs no interference. There was delayed payment of the tax and further the assessee violated the provisions of law by not paying the tax after the Honble Supreme Court issued directions to the assessee to pay service tax after filing the returns.
19. In my opinion, the assessee cannot be treated on par with others in this case. They had already challenged the amendments carried out to the law in the year 2000 and the writ petition was still pending. Moreover they had filed a Writ miscellaneous petition before the Honble High Court and they had obtained a stay against all the proceedings. During the course when they obtained the stay from the Honble High court expecting them to file the returns and pay the tax during the period when the stay was in operation may not be proper. Therefore penalty also could not have been imposed on the ground that the assessee did not file the return and did not pay the tax during the period. Once the writ petition was dismissed on 09/08/2005, the appellants filed returns on 15/09/2005 and paid the entire amount of tax during the same month. It cannot be said that there was undue delay or lapse on the part of the appellant after their writ petition was dismissed. Therefore, I find that it would not be appropriate to sustain the penalties imposed on the appellants. Accordingly, the penalties are set aside.
20. Both the appeals are decided in above terms.
(Order pronounced and dictated in open court) B.S.V.MURTHY TECHNICAL MEMBER Raja.
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