Karnataka High Court
The Commissioner Of Service Tax vs M/S Bst Ltd on 4 October, 2018
Bench: Chief Justice, S.G.Pandit
CEA.No.59/2017
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF OCTOBER, 2018
PRESENT
HON'BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE
AND
HON'BLE MR.JUSTICE S.G.PANDIT
CEA. NO.59 OF 2017
BETWEEN:
THE COMMISSIONER OF SERVICE TAX
SERVICE TAX COMMISSIONERATE
BENGALURU - 560 001. ... APPELLANT
(BY SRI. ARAVIND. K. V., ADVOCATE )
AND:
M/S. BST LTD.,
DODDABALLAPUR- 560 123. ... RESPONDENT
THIS CEA / CENTRAL EXCISE APPEAL UNDER SEC.35G OF
THE CENTRAL EXCISE ACT, PRAYING TO ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE IN FAVOUR
OF THE APPELLANT IN THE INTEREST OF JUSTICE AND EQUITY;
SET ASIDE THE IMPUGNED FINAL ORDER NO. 20240/2017
DATED:13/02/2017 (VIDE ANNEXURE-D) PASSED BY THE CESTAT,
SOUTH ZONAL BENCH, BENGALURU IN THE INTEREST OF
JUSTICE AND EQUITY.
THIS CEA COMING ON FOR ADMISSION, THIS DAY,
S.G.PANDIT J., MADE THE FOLLOWING:
CEA.No.59/2017
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ORDER
The revenue is in appeal, challenging the final order No.20240/2017 dated 13.02.2017 passed by the CESTAT, South Zonal Bench, Bengaluru (hereinafter referred to as 'the Tribunal' for short), by which, the Tribunal has held that the demand made by the authorities is time barred.
The brief facts of the case are that -
A notice dated 13.06.2001 was issued to the respondent to show cause as to why the service tax amounting to Rs.1,29,11,330/- on the consignment agency commission paid by the respondent M/s.BST Ltd., to M/s.BPL for the period July 1997 to March 1998 should not be demanded under the provisions of Finance Act, 1994 (hereinafter referred to as 'the Act' for short); and as to why penalty and penal interest should not be imposed. It is alleged that the respondent which is engaged in the manufacture of radio cassette recorders had used the services of M/s.BPL as the consignment agent for selling their products during the period from 16.07.1997 to 31.03.1998 by entering into an agreement for marketing their CEA.No.59/2017 -3- goods. Further it is alleged that, M/s. BPL had received the commission of Rs.26,05,90,591/- from the respondent M/s. BST Ltd.
The respondent filed reply to the above said show- cause notice vide their letter dated 21.01.2002, inter alia, contending that M/s.BPL was Clearing and Forwarding agent and duly got registered under the Finance Act, 1994 and discharged the legitimate levy of service tax on the taxable services on the value of clearing and forwarding operations. Further, they also contended in their reply that demand is barred by time and they are not liable to pay service tax any further.
The Deputy Commissioner of Central Excise who had issued show-cause notice by his order dated 29.12.2003 confirmed the demand of Rs.1,28,98,156/- being the balance service tax payable by the respondent and confirmed the interest at the applicable rate on the said amount. Aggrieved by the said order passed by the Deputy Commissioner of Central Excise, the respondent filed appeal before the Commissioner of Central Excise (Appeals), Bangalore CEA.No.59/2017 -4- (hereinafter referred to as 'the Appellate Authority') in Appeal No.23/2004. The Appellate Authority by its order dated 14.07.2004 allowed the appeal. While allowing the appeal, the Appellate Authority relying upon decision of M/s.Mahavir Generics vs. CCE, Bangalore of the CEGAT (2004 - TIOL - 344 - CESTAT-DEL) held that all activities carried on by Clearing and Forwarding agent would not automatically be taxable under the category of Clearing and Forwarding.
The revenue, being aggrieved by the said order of the Appellate Authority filed appeal before the Tribunal in ST/72/2004-DB contending that the Appellate Authority was not right in placing reliance on the decision of CEGAT in the case of M/s.Mahavir Generics which is subsequently over- ruled. The Tribunal, by its order dated 13.02.2017, without going into any other issues dismissed the appeal on the ground that demand is time barred and invocation of extended period under the proviso to Section 73 of the Finance Act, 1994 is not justified. The revenue is before this Court in this appeal challenging the above order of the Tribunal.
CEA.No.59/2017-5-
Heard the learned counsel for the appellant and learned counsel for the respondent. Perused the appeal papers.
Learned counsel for the appellant submitted that the Tribunal erred in dropping the demand as time barred, as the respondent-assessee had suppressed the facts from the Department and rightly extended period was invoked under Section 73 of the Act. Further, learned counsel for the appellant contends that Section 73 of the Act empowers to raise demand if there is omission or failure on the part of the assessee to disclose wholly or truly all material facts.
The Service Tax demand is for the period from 16.07.1997 to 31.03.1998 against the respondent. Admittedly, show-cause notice is issued on 13.06.2001. Section 73 of the Act stipulates that where any service tax has not been levied or paid or has been short-levied or short-paid, the demand could be made within eighteen months from the relevant date. In the case on hand, as stated above, the service tax is demanded for the period ending 31.03.1998 whereas show-cause notice is issued on CEA.No.59/2017 -6- 13.06.2001, much beyond the statutory period. The contention that the proviso to Section 73 empowers extension of period upto five years and demand notice issued on 13.06.2001 is well within the proviso to Section 73 of the Act cannot be accepted on the facts of the present case.
Section 73 of the Act reads as follows:
"73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded - (1)Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to who such tax refund has erroneously been made, requiring him to show cause why he should pay the amount specified in the notice;
Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of
-
(a) fraud; or
(b) collusion; or
(c) willful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, CEA.No.59/2017 -7- by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words eighteen months, the words, "five years" had been substituted.
Explanation:- Where the service of the notice is stayed by an order or a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years, as the case may be."
The above provision is clear as to under what circumstances extended period would apply. That is, where the service tax has not been levied or paid or short-levied or short-paid by reason of fraud or collusion or willful mis- statement or suppression of facts or contravention of any of the provisions or of the rules with an intent to evade payment of service tax. But, in the case on hand, the show-cause notice dated 13.06.2001 does not remotely indicate any of the above circumstances under which, time to demand would get extended. On perusal of show-cause notice, it is seen that there is no allegation with regard to fraud, collusion, willful misstatement, suppression of fact nor contravention of any provisions or rules to evade payment of service tax. The ingredients of Section 73 of the Act are conspicuously absent in the show-cause notice. Hence, we CEA.No.59/2017 -8- are of the opinion that the Tribunal has rightly rejected the appeal filed by the revenue and no ground is made out to interfere with the order passed by the Tribunal.
Accordingly, the CEA is dismissed.
Sd/-
CHIEF JUSTICE Sd/-
JUDGE mpk/-* CT:SK