Custom, Excise & Service Tax Tribunal
M/S. Kriti Nutrients Ltd vs Commissioner Of Central Excise on 10 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Service Tax Appeal No. 271 of 2012
Service Tax MISC Application No. 52066 of 2015
[Arising out of Order-In-Appeal No. IND/CEX/000/APP/ 433/2011 dated 16.11.2011 passed by Commissioner (Appeals) Customs & Central Excise, Indore (MP)]
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Mr. V Padmanabhan, Member (Technical)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
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Whether Their Lordships wish to see the fair copy of the Order?
Seen
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Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Kriti Nutrients Ltd. Appellant
Vs.
Commissioner of Central Excise Respondent
& ST, Indore (MP) Appearance:
Shri Ashutosh Upadhyay, Advocate for the Appellants Shri Sanjay Jain, AR for the Respondent CORAM:
Hon'ble Ms Archana Wadhwa, Member (Judicial) Hon'ble Mr. V Padmanabhan, Member (Technical) Date of Hearing/ Decision: 10.11.2016 FINAL ORDER NO . 55315/2016 Per Archana Wadhwa (for the Bench):
Demand of service tax stands confirmed against the appellant along with confirmation of interest and imposition of penalties on the ground that they were required to pay the same on reverse charge basis in respect of Foreign Agent Commission service so received by them during the period 2006-2007 to 2008-2009. The Show Cause Notice stands issued on 1.09.2010.
2. Ld. advocate appearing for the appellant submits that prior to 17.04.2006, when Section 66A was introduced in the Finance Act, 1994, the Hon'ble Bombay High Court in the case of National Ship Owners Association Vs. Union of India [2008-TIOL-633-BOM] has held that no service tax liability would fall upon the assessee in India on reverse charge basis and such liability would arise only with effect from 18.04.2006. As such, for the period prior to the said date, the issue is squarely covered by the decision of the Hon'ble Bombay High Court.
3. Learned Advocate assails the demand on limitation by submitting that in as much as the issue was the subject matter of litigation before various courts and was finally decided by Hon'ble Bombay High Court on 11.12.2008, the assessee was under bona fide belief that no service tax liability would fall upon them on reverse charge basis. He also draws our attention to the Boards circular No.36/4/2001-ST, dated 08.10.2001 clarifying that services provided outside limits of Indian territorial waters are not liable to service tax. The said circular was withdrawn by a subsequent Circular No.97/04/2007-ST, dated 10.05.2007, further clarifying that the services can be taxed in view of the Section 66A of the Finance Act, 1994 with effect from 18.04.2006 and Import of Service Rules introduced with effect from 19.04.2006. As such, learned advocate submits that since the circular was withdrawn only on 10.05.2007, they continued to entertain the belief that since the services of foreign commission agent were provided outside India, no service tax liability. However, he agrees that part of the demand would fall within limitation and is not contesting the same.
4. Learned Departmental Representative submits that though they were reflecting the payments made to their foreign buyers in their balance sheet, but the same were never made available to Revenue. He further submits that there is no reason to entertain the bona fide belief and Revenue is justified in invoking the longer period of limitation.
5. After appreciating the submissions made by both the parties, we fully agree with the learned advocate that the Board circular holding that services provided outside India are not taxable was withdrawn only on 10.05.2007. Otherwise also, we note that the fact that the service tax on reverse charge was recently introduced and its scope was not clear and entertained various doubts, requiring issuance of various clarifications by the Board. In the facts and circumstances of the case that the services were provided outside India and tax liability fell on the appellant on reverse charge basis, a bona fide belief entertained by the appellant was justified. Further, the appellant has been reflecting the payment of commission in their balance sheet in which case, it can be held that there was no suppression or mis-statement on the part of the assessee so as to avoid the service tax payment with a mala fide intention. Tribunal in its decision in the case of Kirloskar Oil Engines Ltd. Vs. CCE, Nasik [2004 (178) 998 (Tri.-Mumbai)] has held that balance sheet being a publicly available document, suppression of such information cannot be alleged and therefore, extended period was not invocable, interest not demandable and penalty not imposable under Sections 11A, 11AB and 11AC of Central Excise Act, 1994.
6. As such, we are of the view that longer period of limitation is not available to the Revenue and accordingly demand beyond the period of limitation is set aside with confirmation of demand falling within the limitation period. Accordingly, we remand the matter to the original adjudicating authority for quantification of demand falling within the normal period of limitation. As we have already held that there is no suppression or mala fide intention on the part of the appellant, the penalty imposed upon them is set aside in toto.
7. The appeal is disposed of in the above manner.
(pronounced in the open court )
( Archana Wadhwa ) Member(Judicial)
( V. Padmanabhan )
ss Member(Technical)
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