Custom, Excise & Service Tax Tribunal
Mjp Steels P Ltd vs Jaipur-I on 15 January, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT - IV
Service Tax Appeal No. ST/51005/2014 [SM]
[Arising out of Order-in-Appeal No. 197-VC-ST-JPR-I-2013 dated
20/11/2013 passed by the Commissioner(Appeals), Central Excise,
Jaipur-I]
MJR Steels P Ltd ...Appellant
Vs.
C.C.E. & S.T.-Jaipur-I ...Respondent
Present for the Appellant : Ms. Priyanka Goel, Advocate Present for the Respondent: Ms. Tamana Alam, DR Coram: HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) Date of Hearing: 06.12.2018 Pronounced on : 15.01.2019 FINAL ORDER No. 50047/2019 PER: RACHNA GUPTA M/s MJR Steel (P) Ltd., the appellant, is a registered dealer having Central Excise Registration but not having the service tax registration under the category of Transport of goods by Road service. During the course of audit of the records (freight ledger account) of the appellant it was noticed that the appellant has not paid service tax on the freight charges paid to the transporters during the period from 2007-08 and onwards. Though it was mentioned that freight is being paid by their Head office at Howrah, Kolkata but they could not produce copy of centralized registration or other evidence to show that service tax on GTA pertaining to Jaipur Branch has been paid by their Head office. Hence, SCN dated 20.01.2011 was issued calling upon as to why :-
(i) Service Tax amounting to Rs. 14,11,306/- (Service Tax 13,70,200/-, Ed. Cess Rs. 27,405/-, SH Edu Cess Rs. 2
ST/51005/2014 [SM] 13,701/-)not paid by them should not be recovered alongwith interest from them under proviso to Section 73(1) and 75 of the Finance Act, 1994.
(ii) Penalty should not be imposed upon them in terms of the provision of Section 76, 77 & 78 of the Finance Act, 1994 for contravention of the provisions of Section 67, 68, 69 & 70 of the Finance Act, 1994 and Rule 4,6 & 7 of the Service Tax Rules, 1994.
2. I have heard Ms. Priyanka Goel, Ld. Advocate for the appellant and Ms. Tamana Alam, Ld. AR for the Department.
3. It is submitted on behalf of appellant that the appellant are having a branch office at Jaipur whereas their head office is situated at Kolkata. Whatever goods have been transported from Kolkata to Jaipur by road the liability of Service Tax on the transportation charges from Kolkata to Jaipur have been discharged at their head office/ works situated at Kolkata. On this account only the appellant at Jaipur did not paid any Service Tax on the transportation charges, during the financial year 2008-09 and 2009-10 as the service tax has already been deposited by their head office and the service tax is not required to be paid second time on the same amount. In support of this contention reliance is placed on the Circular F. No. 341/18/2004-TRU (Pt.) dated 17.12.2004 wherein para 5.7 which is reproduced hereinafter:
"5.7 if service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax, service tax should not be charged for the same amount from any other person, to avoid double taxation."
Shakti Securities Vs. Commissioner of C. Ex., Belgaum 2008 (11) S.T.R. 39 (Tri.-Bang.) is relied upon. It is further submitted that the period involved in the present SCN is from 2007-09 to 2009-10 and the SCN has been issued on 20.01.2011. Therefore, 3 ST/51005/2014 [SM] the service tax demanded for the period upto September, 2009 is time barred, illegal and untenable especially when the appellants were always under a bonafide belief that once service tax has been deposited by the head office the branch is not required to deposit service tax. Therefore, no malafides can be attributed on their part. Commissioner of Central Excise, Hyderabad Vs Chemphar Drugs and Liniments 1989 (40) ELT 276 (S.C.) is relied upon. For the same reason no question of interest on penalty arises. Sre Venkateswara Hi-Tech Machinery Vs. Commissioner of Central Excise Coimbatore 2007 (6) STR 139 (Tri.-Chennai) is relied upon.
4. Ld. DR, per contra, has justified the Order under challenge and has prayed for dismissal of Appeal.
5. After hearing and perusing the record, I observe that following are the admitted facts:
The appellants are a branch office at Jaipur whereas their head office and works is situated at Kolkata, All the bills pertaining to different branches of the appellants company are raised centrally by the head office of the company situated at Kolkata, All freight charges for transportation of goods from Kolkata to Jaipur by road have been paid by the Head Office of the Company at Kolkata, In view thereof since the freight of the transportation is paid by the Kolkata office naturally in view of the provisions contained in Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994, the service tax payable on the amount of freight can be paid by the Head Office of the company situated at Kolkata, else it shall amount to double taxation. In the case of Shakti Securities (supra) it has been held: 4
ST/51005/2014 [SM] "Sub-broker is not liable to pay service tax when liability stands discharged by main stock broker. Since documents produced evidencing payment of tax by main broker, payment of tax again by appellant, question does not arises. Section 11B of Central Excise Act, 1944 as applicable to service tax vide Section 83 of Finance Act, 1994 [paras 1,4,5]"
But simultaneous fact remains that there is no evidence of centralized registration being produced by the appellant. Also, the documents tendered are insufficient to prove that Kolkata office has discharged the liability of Jaipur office as has also been observed by the adjudicating authorities below. The Chartered Accountant's Certificate shows much higher an amount of freight charges for Kolkata office only then the amount shown by the appellant qua freight charge of Kolkata as well as Jaipur office. Thus, I observe no infirmity in the Order of the adjudicating authority below as far as confirmation of impugned demand is concerned.
Now coming to the aspect of imposition of penalty, it is observed that from the perusal of the documents showing details of deposit of service tax and interest thereon during the period 2007- 08, 2008-09 and 2009-10 it is found that even though the service tax a amount of Rs. 14,11,306/- had been demanded from the appellants they have already deposited service tax for an amount of Rs. 22,01,193/- alongwith interest of Rs. 1,89,532/-. Further, the perusal of the said charts would clearly show that the entire amount of service tax of RS. 14,11,306/- demanded from the appellants alongwith interest thereon had been deposited much earlier than the date of issuance of SCN. Thus, appellants certainly, cannot be alleged of committing an act of non payment of service tax by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or the Rules made thereunder, with intent to evade payment of Service Tax. In result, the appellant were not liable to be imposed with any 5 ST/51005/2014 [SM] penalty under any of the provisions contained in the Finance Act, 1994. I draw my support from:
Mass Marketing & Advertising Services Pvt. Ltd. Vs. CCE, Bangalore 2006 (3) STR 333 (Tri.-Bang.) CCE, Mangalore Vs. Cosmo Vision 2010 (18) STR 758 (Tri.- Bang.) Service Care Vs CST, Chennai 2010 (20) STR 344 (Tri. - Chennai) CCE & ST, LTU, Bangalore Vs. Adecco Hexione Workforce Solution Ltd. 2012 (26) STR 3 (Kar. High Court) Penalty - Service tax ad interest for delayed payments paid before issue of SCN - authorities wasting their time in proceeding against persons who are paying service tax with interest promptly - Authorities are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon them to make payment and not to harass and initiate proceedings against persons who are paying tax with interest for delayed payment - As per Section 73(3) of Finance Act, 1994 no notice shall be served against person who have paid with interest - If notices are issued contrary to section, the person to be punished is the person who has issued notice and the person to whom it is issued. [paras 3, 4]
6. Finally coming to the issue of availing cenvat credit by the appellants, I am of the opinion that once there is no proof of payment of service tax by appellant question of entitlement of cenvat credit does not arise at all.
7. In view of above discussion, it is held that appellant could not have proved that the liability towards GTA has been discharged. Hence, appellant is held liable to discharge the said liability though the same stands already paid with interest. Hence, the Order is set aside to the extent of confirming penalty. Consequent to the above discussion, Appeal is hereby partly allowed.
[Pronounced in the open Court on 15.01.2019 ] (RACHNA GUPTA) MEMBER (JUDICIAL) D.J.