Custom, Excise & Service Tax Tribunal
M/S Larsen & Toubro Ltd vs Commissioner Of Service Tax, Ahmedabad on 16 April, 2015
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No.ST/121/2007-DB; ST/ROA/10076/2015
[Arising out of OIO No.STC/CCS/17/COMMR/AHD/2004-07, dt.02.03.2007, passed by Commissioner of Central Excise & Service Tax, Ahmedabad]
M/s Larsen & Toubro Ltd. Appellant
Vs
Commissioner of Service Tax, Ahmedabad Respondent
Represented by:
For Appellant: Shri Prakash Shah, Advocate For Respondent: Shri Jitendra Nair, Authorised Representative For approval and signature:
Honble Mr. P.K. Das, Member (Judicial) Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No 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 of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL) Date of Hearing/Decision:16.04.2015 Order No. A/10329 / 2015, dt.16.04.2015 Per: P.K. Das
1. The Appellant filed the application for restoration of appeal dismissed by Order No.A/10043/2015, dt.12.01.2015.
2. After hearing both the sides, we find that there is sufficient reason for recalling the Order dt.12.01.2015. The learned Advocate relied upon the decision of the Honble Supreme Court in the case of M/s Balaji Steel Re-rolling Mills Vs Commissioner of C.Ex. & Customs 2014 (310) ELT 209 (SC) and the decision of Honble Gujarat High Court in the case of M/s Kiran Ship Breaking Corporation Vs Customs & Service Tax 2011 (269) ELT 491 (Guj.) on the identical issue. We find that the appeal was dismissed for non-prosecution without going into the merits. In view of that, we recall the Order dt.12.01.2015 and restore the appeal to its original number. With the consent of both the sides, we take up the appeal for hearing.
3. After hearing both the sides and on perusal of the records, we find that the learned Advocate on behalf of the Appellant is contesting the imposition of penalty under Sections 76 & 78 of Finance Act, 1994. It is submitted that the Appellant entered into an agreement dt.03.02.2005 with M/s Gujarat State Petronet Limited (in short GSPL) for development of Mora to Vapi Pipeline Project on EPC basis. On 25.02.2005, they received an amount of Rs.35,19,00,000.00 by way of advance against the bank guarantee of equal amount from M/s GSPL. On 13.05.2005, Explanation 3 was inserted under Section 67 of Finance Act, 1994 as under:-
Explanation 3- For the removal of doubts, it is hereby declared that the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.
4. DGCEI officers during investigation to the Appellants factory found that the Appellant had received the amount against which they have not paid the tax. The Appellants were under a bonafide belief that they received the amount prior to insertion of Explanation 3 to Section 67 of the Act and therefore, no tax is leviable. But, at the instance of the officers on 04.01.2006, they have paid the entire amount of tax alongwith interest on advance amount. A Show Cause Notice dt.30.03.2006 was issued to appropriate the amount deposited by them and also to impose penalties. By the impugned order, the Commissioner of Service Tax, Ahmedabad confirmed the demand of tax alongwith interest and appropriated the same as deposited by them and also imposed penalty under Section 76, 77 & 78 of Finance Act, 1994.
5. It is seen from the impugned order that the Adjudicating Authority imposed penalties on the ground that the Appellant had suppressed the amount of advance received towards the value of the taxable service in the ST-3 return. There is no bonafide belief on the part of the Appellant that such amount was not taxable. We find that the Appellant filed Writ Petition under Article 226 of the Constitution of India before Honble Madras High Court in the nature of a writ of declaration to declare the amendment to Section 65 (105) and Explanation 3 to Section 67 introduced by the Finance Act, 2005 to Finance Act, 1994 levying service tax on receipts even before services provided, as ultra vires. The Honble Madras High Court by order dt.16.10.2006, granted interim injunction on the levy of tax.
6. The learned Advocate fairly submits that they are not contesting the demand of tax alongwith interest, which they have already paid in the present appeal. We find that the Appellant is contesting the demand of tax on the identical issue by filing the writ petition before the Honble High Court and obtained injunction, which is still pending as contended by the learned Advocate. Even though, they have paid entire amount of tax along with interest in the present proceedings which has already been appropriated by the Adjudicating authority.
7. In our considered view, when the Appellant challenged the levy of tax for the period prior to insertion of Explanation 3 to Section 67 before the High Court and obtained injunction, it would be sufficient to establish that there is a prima facie case in favour of the Appellant. In such situation, there is no scope to doubt the bonafide of the Appellant. Hence, it is a fit case to invoke Section 80 of the Act, 1994 and no penal provision should be invoked.
8. In view of the above discussion, we modify the impugned order in so far as the penalties are set aside. The appeal is allowed in above terms.
(Dictated & Pronounced in Court) (H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial) cbb 4