C.C.E., Raipur (C.G.) vs M/S. Prakash Industries Ltd

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Appeal No.ST/64/2006-CU[DB]

[Arising out of Order-in-Appeal 125/RPR-I/2005, dated 21.10.2005 passed by the C.C.E.(Appeals), Raipur-I]

C.C.E., Raipur (C.G.) Appellant

Vs.

M/s. Prakash Industries Ltd. Respondent

Appearance

Ms. Suchitra Sharma, DR - for the appellant

Ms. Preeti Khiwani, Advocate

Ms. Anchal Grewal, Advocate - for the respondent

CORAM: Honble Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

Final Order No.53012/2015, dated 03.09.2015

Per Mr. R.K. Singh :

Appeal is filed against Order-in-Appeal dated 21.10.2005, which set aside the Order-in-Original dated 17.01.2005 in terms of which service tax demand of Rs.6,45,227/- along with interest and penalties was confirmed under GTA service on the ground that the respondent did not pay the service tax although it paid the freight in relation to transportation of goods by road. The period of dispute in this case is 16.11.1997 to 01.06.1998. The service tax has been demanded under reverse charge mechanism. In this case, show cause notice was issued on 15.11.2002, while Section 117 (i) of the Finance Act, 2000 provided that any action for the period 16.07.1997 to 16.10.1998 was required to be taken before the Finance Bill, 2000 got assent of the Hon'ble President of India which was given on 12.05.2000 and therefore, show cause notice was not maintainable. Ld. Commissioner (Appeals) cited the judgement of CESTAT in the case of CCE Vs. EID Parry (India) Ltd. [2004 (117) ECR 670 (Tri.)] in support of that.

2. Revenue has contended that the liability of service tax on the respondent was cast vide amendment in Rule 2 of the Service Tax Rules, 1994 which made the service receiver liable to service tax. A Sub-clause (xvii) was inserted in clause (d) after sub-clause (xi) in Rule 2(i) of the Rules with effect from 16.11.1997, which reads as under:-

(xvii) In relation to services provided by a goods transport operator, every person who pays or is liable to pay the freight either himself or through his agent for the transportation of goods in a goods carriage.

Although Supreme Court in the case of Laghu Udyog Bharti Vs. Union of India [1999 (112) ELT 365 (SC)] declared that Rule 2(d)(xii) and (xvii) of the Rules ultra vires, the levy of the service tax on the service receiver during the period 16.11.1997 to 01.06.1998 was re-validated by Sections 116 and 117 of the Finance Act, 2000 by making amendment in Sections 65, 66 and 67 of Finance Act, 1994 and the levy was further validated by Sections 158 and 160 of the Finance Act, 2003. Rule 7A inserted in the Rules by Service Tax (Amendment) Rules, 2003 with effect from 14.05.2003 for the relevant period reads as under:-

Rule 7A. Notwithstanding anything contained in rule 7, an assessee, in case of service provided by-

a. Goods Transport Operator for the period commencing on and from the 16th day of November, 1997 to the 2nd day of June, 1998; and

b. Clearing and forwarding agents for the period commencing on and from the 16th day of July, 1997 to the 16th day of October, 1998

Shall furnish a return within a period of six months from the 13th day of May, 2003 in form ST-3B alongwith copy of Form TR-6 in triplicate, failing which the interest and penal consequences as provided in the Act shall follow.

3. Ld. Advocate for the respondent stated that on the date the show cause notice was issued, Revenue had no legislative competence to do so.

4. We have considered the contentions of both sides. Rule 2(1)(d)(xii) and (xvii) of the Service Tax Rules, 1994 was held to be ultra vires by Supreme Court in the case of Laghu Udyog Bharti Vs. Union of India (supra). The re-validation done by Section 117(i) of Finance Act, 2000 provide that any action for the period 16.11.1997 to 01.06.1998 was required to be taken before the Finance Act, 2000 got assent by the Hon'ble President of India, which was on 12.05.2000. Further re-validation only took place vide Finance Act, 2003. It is thus obvious on 15.11.2002, when the show cause notice was issued, Revenue lacked the competence to do so. As has been held by CESTAT in the cases of CCE Vs. EID Parry (India) Ltd. (supra), Vishnuram Textiles Pvt. Ltd. [2005 (119) ECR 195 (Tri.)] and CCE Vs. Vaidvambigai Textile Mills Ltd. & Others [2005 (120) ECR 193 (Tri.)], the show cause notices which were issued after 12.05.2000 were not sustainable.

5. In the light of the foregoing analysis, we do not find any merit in the appeal of Revenue and therefore the same dismissed.

(Justice G. Raghuram)

President

(R.K. Singh)

Member (Technical)

SSK

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