Cce, Allahabad vs Gupta Studio

Date of Hearing/Order: 06.08.2015

(Arising out of Order-in-Appeal No.36-ST/ALLD/2009 dated 9.6.2009 passed by the CCE (Appeals), Allahabad)

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

Honble Ms.Sulekha Beevi C.S., Member (Judicial)

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? no 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? yes

CCE, Allahabad Appellant

Vs.

Gupta Studio Respondent

Present for the Appellant: Shri Govind Dixit, DR

Present for the Respondent: Shri Khemchand Gupta, Proprietor

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

Honble Ms.Sulekha Beevi C.S., Member (Judicial)

FINAL ORDER NO.52723/2015

PER: R.K.SINGH

Revenue is in appeal against Order-in-Appeal dated 9.6.2009 which observed that the appellant is entitled to the benefit of section 80 of Finance Act, 1994 as there was no malafide on the part of the respondent and with that finding, remanded the case to the primary adjudicating authority to re-compute the demand after considering the threshold exemption limit etc.

The primary adjudicating authority had confirmed the demand of Rs.30,416/- for the period May, 2003 to January, 2006 under photography service on the ground that the appellant did not pay service tax on the gross amount received for rendering service.

2. Revenue has contended that the Commissioner (Appeals) has not given any basis to give finding that there was no malafide on the part of the respondent and therefore section 80 is not invokable.

3. Shri Khemchand Gupta (the respondent) who came for hearing from Sonebhadra (U.P.) stated that he did not have any facility of photo developing and printing and did not have any employee. He got the photographs developed and printed through other processing labs which charged him processing and developing charges alongwith service tax. He also stated that his entire income from photography upto 1.3.2005 was Rs.1,27,490/- and from 1.3.2005 upto 31.3.2006 it was was Rs.23,322/- and after that upto 30.6.2006 it was Rs.1,71,985/-. He is a poor old man and was not aware of service tax liability at all and there was no question of malafide on his part.

4. We have heard the contention of Revenue and given our anxious attention to the facts of this case. We find that Notification No.6/2001-ST dt.9.7.2001 which was operational during the relevant period states as under:-

Exemption to still photography by photography studio or agency which is other than a Commercial concern- In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided to a customer in relation to still photography by photography studio or agency [other than a Commercial concern] from the whole of the service tax leviablle thereon under section 66 of the said Finance Act.

2. This notification shall come into force on the 16th day of July, 2001.

CBEC circular No.37/5/2001 dated 27.12.2001 clarified the scope of the above notification (No.6/2001-ST) as under:-

In regard to still photography Notification No.6/2001-ST., dated the 9th July, 2001, has been issued. Accordingly, service providers who are registered under various State/Municipal laws relating to shop and establishments or any other laws of State which is in force for the time being for carrying out commercial activity only are liable to service tax. Individual professional photographers and other providing still photography service, but who do not have fixed place of business as a shop or office and who are not registered under these enactments will not be liable to pay service tax. In essence, service tax is payable by shops and studios, processing and developing labs, etc. and not by the individual photographers.

5. It is not in dispute that the respondent was an individual photographer who was providing photography service by clicking photographs and getting them developed and printed outside. It is not the case of Revenue that he was registered under State or Municipal law relating to shop and establishment or any other laws of State for carrying out commercial activity. So Shri Gupta qualified for coverage within the scope of Notification No.6/2001-ST when read with CBEC circular dated 27.12.2001 making the demand unsustainable.

6. Also the entire demand for the period May,2003 to January, 2006 is only Rs.30,416/- and as per the SCN the gross amount received was Rs.3,80,205/- for the entire period of demand. For the period 1.3.2005 onwards Shri Gupta was also eligible for small scale exemption under Notification No.6/2005-ST. Indeed, when Shri Khemchand Gupta, old, emaciated, wizened and tired from an arduous overnight rail travel from Sonbhadra with his ailing wife in tow stood up during hearing to say that he was not aware of the service tax liability, that he was an individual barely able to eke out a bare subsistence living by clicking photographs which he got developed and printed from others who charged him including service tax, that he came once earlier also for hearing and then, after a pause, with his voice choking, lips quivering and hands trembling in a fold added that he would not be able to make any more visits to attend the hearing for health and financial reasons, it seemed that honesty and truth personified in a state of helplessness were crying for justice and, in the process, though unintended, putting the system (to which we too belong) to shame (for want of a better world) that an appeal should come from Revenue before CESTAT against Commissioner (Appeals) order merely because the Commissioner (Appeals) granted benefit of section 80 of the Finance Act, 1944 for waiving penalty in a case where the impugned demand was a paltry Rs.30,416/-. [In our view Commissioner (Appeals) failed to do full justice when he only allowed the benefit of section 80 of Finance Act, 1994.] In the show cause notice only the following three lines are written to invoke suppression/ extended period-

Whereas the party have suppressed the material fact from the department by not getting themselves registered in due time under the Service Tax Act and by not paying due tax for the taxable services provided by them thus making themselves liable for penalty u/s 78 of the Act.

There is no need to parade familiar list of Supreme Courts judements ( like in the case of Chemphar Drugs & Liniments -2012-TIOL-266-SC-CX, Gopal Zarda Udyog-2005-TIOL-123-SC-CX-LB) to hold that in this case in the absence of any evidence to the effect that the act of not taking registration and not paying tax was deliberate, extended period cannot be invoked. Consequently the demand pertaining to the period 1.5.2003 to 28.2.2005 is clearly barred by time as the show cause notice was issued in the month of October, 2006. (and w.e.f.1.3.2005, the appellant is eligible for small scale exemption under Notf.No.6/2005-ST). Thus, not only the appeal of the revenue is devoid of any merit, the demand itself needs to be set aside. Accordingly, in the circumstances of this case, we dismiss Revenues appeal and also set aside the impugned demand alongwith penalty.

(Dictated and Pronounced in the open court)

(SULEKHA BEEVI C.S.) (R.K.SINGH)

MEMBER (JUDICIAL) MEMBER (TECHNICAL)

mk

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