Customs, Excise and Gold Tribunal - Ahmedabad
Indian Petrochemicals Corporation ... vs Commissioner Of Customs And Central ... on 11 October, 2006
Equivalent citations: 2007[5]S.T.R.201, [2007]9STT242
ORDER
R.K. Abichandani, J. (President)
1. The applicant has challenged the order of the Commissioner (Appeals) made on May 29, 2006, upholding the order-in-original by which demand of service tax amount of Rs. 3,07,129 was confirmed against which the amount of Rs. 43,953, which was paid on March 24, 2004 was appropriated with a direction that the remaining amount of Rs. 2,63,176 should be paid up by the applicant immediately and it was ordered to confirm the recovery of interest on the amount of Rs. 2,63,176.
2. The learned Counsel appearing for the applicant argued that as regards the invoice dated April 2, 2002 in respect of which an amount of service tax of Rs. 25,484 was demanded, the applicant was not liable to pay the tax because the amendment made on August 16, 2002 was not retrospective in nature and the recipient of service could not be held liable to pay service tax in respect of services received prior to that date. He further contended that as regards the services received by the applicant under the invoices dated December 18, 2002 and June 9, 2003, the applicant was not liable to pay service tax, since these services were received abroad and not in India. He also submitted that while passing the order-in-original, the Deputy Commissioner had relied upon the correspondence with the Department and the partial payment of service tax for not imposing penalty, and therefore, no extended period of five years could have been applied because, there was no suppression on the part of the applicant.
3. The learned authorised representative for the Department relied upon the reasoning of the authorities below for contending that the applicant was liable to pay service tax even in respect of the period prior to February 16, 2002 in view of the stipulation contained in the agreement, besides being liable for the subsequent two invoices the services under which were rendered in India as per the stipulation of the agreement. He contended that since the applicant had never disclosed the details regarding receipt of taxable services until the demand was submitted for compliance of the local audit report, the subsequent correspondence could not come to their rescue, and the extended period was rightly invoked.
4. It appears from the record that the applicant had made payment of invoice dated April 2, 2002 on October 4, 2002. Though the services were received prior to August 16, 2002, the liability to pay the service tax in respect thereof was squarely on the applicant in terms of the agreement. It was provided in Clause 4.5 that if the service provider (LUMMUS) is required by the relevant law to pay or collect any tax on account of this transaction, then such amount of tax shall be paid by the applicant to the service provider in addition to the lumpsum price. Under Clause 4.4 of the agreement, all payments were exclusive of taxes which were to be paid by the applicant. The applicant was required to forward original tax receipts evidencing payment of taxes. In this context, the learned authorised representative for the department placed reliance on the decision of the Kerala High Court in Commissioner of Central Excise, Thiruvananthapuram v. Kerala State Electricity Board reported in [2007] 5 VST 46 (Ker) : [2006] TIOL 245 (Ker) [HC] (ST), in which the High Court held in paragraph 11 of the judgment that, going by the agreement executed between the service provider and the receiver, it was clear that the responsibility of paying the service tax was on the service receiver. It is not disputed that even in the present case, in terms of the agreement, the recipient of service had undertaken to pay the tax payable by the provider. In the context of the contention that the services rendered under the two invoices dated December 13, 2002 and June 9, 2003 were not rendered in India and, therefore, were not liable to service tax, it appears from the contents of the work order that the feasibility study report at the end of study, which was to be made by collection of data by visiting India and the final payment was to be made on submission (Clause 7.2) of the work order. It was stipulated in Clause 7.4 thereof that these payments shall be exclusive of all applicable taxes of Government of India, which were to be borne by the applicant. The contention that under Clause 3.13 delivery was made in USA which constituted rendering of service in USA, it is clear that, the said clause related only to delivery of the report to courier or airline and such delivery to courier or airline, would not by itself amount to rendering services in USA, because, the submission of feasibility study report was required to be made to the applicant for its use in India as a stipulation for the final payment. Therefore, prima facie, the services were required to be rendered in India.
5. On the issue of invocation of the extended period of limitation, it cannot be contended from the fact that no penalty was imposed, that there was no suppression as found by the authorities below. The letters dated November 12, 2003 and April 23, 2004 were not sent by the applicant on its own, but the details were given thereunder on demand from the department for compliance of the local audit report. Under Section 80 of the Finance Act, 1994, no penalty shall be imposed on the assessee for any failure referred to in sections 76, 77 or 78 of the Act, if the assessee proves that there was reasonable cause for the said period. The imposition of penalty was dropped in the light of the said provision which has nothing to do with the invocation of the extended period. Therefore, the applicant has not made out a case for total waiver of pre-deposit for hearing the appeal.
6. Having regard to the facts and circumstances of the case, we, therefore, direct that there shall be interim stay of the impugned order on the applicant's depositing 50 per cent of the remaining amount of service tax payable under the impugned order, within eight weeks from today, failing which the appeal will stand dismissed. Post the matter for compliance report on December 14, 2006. The application stands disposed of accordingly.