Custom, Excise & Service Tax Tribunal
Vascon Engineering Pvt. Ltd vs Cce, Chandigarh on 5 April, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Date of Hearing : 5.4.2013 For Approval & Signature : Honble Mr. Justice G. Raghuram, President Honble Mr. Sahab Singh, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Department Authorities? Service Tax Appeal No. 793 of 2008 (Arising out of Order-in-Appeal No. 408/CE/CHD/2008 dated 8.8.2008 passed by the Commissioner of Central Excise, Chandigarh) Vascon Engineering Pvt. Ltd. Appellant Vs. CCE, Chandigarh Respondent
Appearance:
Shri Prasad Paranjape, Advocate & - for the appellant Ms. Rajeshwari K.G., Advocate Shri Amresh Jain, D.R. - for the respondent Service Tax Appeal No. 648 of 2008 [Arising out of Order-in-Appeal No. 408/CE/CHD/2008 dated 6.8.2008 passed by the Commissioner of Central Excise, Chandigarh] CCE, Chandigarh Appellant Vs. M/s Vascon Engineers Pvt. Ltd. Respondent Appearance:
Shri Amresh Jain, D.R. - for the appellant
Shri Prasad Paranjape, Advocate & - for the respondent
Ms. Rajeshwari K.G., Advocate
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
F. Order No. 56002-56003/2013 dated 5.4.2013
Per Sahab Singh :
These are two appeals- one filed by M/s Vascon Engineering Pvt. Ltd (hereinafter referred to as assessee) and second by the Revenue are against the same Order-in-Appeal No. 408/CE/CHD/2008 dated 6.8.2008.
2. Brief facts of the case are that the assessee is registered for service tax under Commercial and Industrial Construction and Residential Complex Construction Service with effect from 10.9.2004 and 16.6.2005 respectively. It was observed by the department that assessee received an amount of Rs.76,13,064/- on account of Maintenance and Repair of immovable property of their client M/s Cipla Ltd., Baddi during the period May 2006 to December 2006. It was contention of the Department that services provided by the assessee falls under Category of Management, Maintenance and Repair service and is taxable with effect from 1.5.2006. Abatement of 67% of taxable value availed by the assessee under Notification No. 1/2006 dated 1.3.2006 is applicable to Commercial and Industrial Construction Service only and not to Management, Maintenance and Repair service. Accordingly, a Show Cause Notice demanding service tax of Rs.5,24,493/- short paid by them was issued. Notice was adjudicated by Joint Commissioner who vide his Order-in-Original No. 1/2008 dated 29.1.2008 confirmed the service tax along with interest. Penalties under Section 76 and Section 78 were also imposed on the assessee. Assessee filed an appeal before Commissioner (Appeals) who vide the impugned order set aside the penalty imposed under Section 76 of the Act and penalty imposed under Section 78 of the Act was reduced to 25% of tax ;amount. Assessee has challenged this order before this Tribunal in the present appeal. Revenue has also challenged the impugned order on the ground of reduction of penalty.
3. Ld. Advocate for assessee submits that they are engaged in activity of construction of buildings and are covered under Commercial and Industrial Construction service and also doing repairs of buildings. Repairs of building is covered under Section 65(25) of the Finance Act and not under 65(64) of the Act as contested by Revenue. He fairly submits that since amount is small and they have paid the service tax along with interest as early in Feb. 2008, they are not contesting service tax but there is no case for imposition of penalty on them. He submits since there are two interpretations about classification of service under 65(25b) and 65(64) there is reasonable cause for failure of payment of service tax and benefit of Section 80 of the Finance Act is applicable to them.
4. On the other hand, ld. DR submits that original authority has rightly imposed the penalty equal to tax amount and it was not proper for Commissioner (Appeals) to reduce it to 25% of tax amount.
5. After hearing both sides, we find that assessee was paying service tax under category of Commercial and Industrial Construction and Residential Complex Construction Service prior to 1.5.2006. Service tax on maintenance and repairs was also being paid by them under Section 65(25) of the Finance Act after availing abatement of 67% under Notification No. 1/2006 dated 1.3.2006, Revenue demanded service tax short paid by them under Maintenance and Repair under Section 65(64) of the Finance Act.
6. As ld. Advocate for assessee not contesting the demand of service tax as amount is small and tax along with interest already paid by them, we are not going into question of classification of Maintenance and Repair activity involved in this appeal.
7. We find that assessee was under bona fide belief that maintenance and repair of building was covered under Section 65(25)(b) and service tax was being paid by them. We are therefore of the view that there is reasonable cause for not paying service tax short paid by them and benefit of Section 80 of the Finance Act 1994 is available to the assessee. Accordingly, we set aside the penalty confirmed by the Commissioner (Appeals) and consequently reject the Revenues appeal.
8. Revenues appeal is rejected and assessees appeal is allowed in respect of penalty only.
(Pronounced in Court) (Justice G. Raghuram) President (Sahab Singh) Member (Technical) RM 2