Commissioner Of Customs & Ce, Goa vs Krupadeep Traders

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appeal No. ST/655, 656/10

(Arising out of Orders-in-Appeal No. GOA/CEX/GSK/59/2010 and GOA/CEX/GSK/60/2010 both dated 30.08.2010 passed by Commissioner of Central Excise Customs & Service Tax (Appeals), Goa)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

Commissioner of Customs & CE, Goa Appellant

Vs.

Krupadeep Traders Respondent

Appearance:

Shri A.B. Kulgod, Asst. (AR) for appellant Shri Dushyant Purekar, Advocate for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)

Date of Hearing: 20.07.2015 Date of Decision: 20.07.2015

ORDER NO Per: M.V. Ravindran

These two appeals are directed against Orders-in-Appeal No. GOA/CEX/GSK/59/2010 and GOA/CEX/GSK/60/2010 both dated 30.08.2010

2. Since the issue involved in these two appeals is common and the respondentassessee being the same, they are being disposed by a common order.

3. Heard both sides and perused the records.

4. Aggrieved by the impugned orders of the first appellate authority who has reversed the orders-in-original which has rejected the refund claims filed by the respondent  assessee Revenue filed these appeals.

5. Learned D.R. would draw our attention to the impugned order and submit that the respondentassessee has represented himself as a person paying the service tax liability on behalf of the Goods Transport Agency and that the goods i.e. Bauxite Ore are exported to an entity in Japan who is a Company incorporated under law. It is also his submission that there are no rules or notification objecting the payment of service tax by a proprietorship concern on behalf of the transport agency to whom they pay freight charges and that the assessee has correctly paid the service tax on behalf of their various transporting agencies for transporting Bauxite Ore. It is also his submission that the burden of service tax is already passed on to the overseas buyers hence granting of refund will amount to unjust enrichment. It is his submission that the first appellate authority has erred in observing that the amount credited by the department is in nature of deposit hence the question of time bar and unjust enrichment does not arise.

6. The learned Counsel appearing for respondent ssessee submits that they filed refund claims on the ground that they had by mistake paid the service tax liability under the category of Goods Transport Agency. It was the case of the respondent  assessee that they being sole proprietorship concern are not liable to pay service tax for Goods Transport Agency Service either as consignor or consignee. Learned Counsel would draw our attention to the Notification No.35/2004-ST dated 03.12.2004 which mandates discharge of service tax liability in cases where services were rendered by Goods Transport Agency. He would also submit that subsequently, the CBEC vide Circular No. 79/9/2004-ST dated 17.12.2004 clearly indicated that a person making payment towards freight would be liable to pay tax only in cases as enumerated in the Notification No.35/2004-ST. He would submit that the respondent  assessee herein being sole proprietorship concern is not liable to discharge the service tax on the services rendered by the Goods Transport Agency. To support his claim he produces sample copies of delivery challan. Referring to the same, he would submit that respondent  assessee has procured Bauxite Ore from the mines and delivered it to the respondent  assessee office at port of export which would mean that the transportation is from Udgir port to the Jaigad Port and being proprietorship concern is not like to discharge the service tax liability and mistake has done hence the amounts are claimed as refund from the department.

7. On consideration of the submissions made by both the sides and perusal of the records, we find that the issue is regarding the refund of an amount of service tax paid by the respondent-assessee on the services i.e. Goods Transport Agency; it is the case of the respondent-assessee before the first appellate authority that the amounts which have been paid were under mistake of law as they are not liable to pay such service tax. We find that the first appellate authority while holding in favour of respondent-assessee has held as under:-

I have examined the impugned order and contentions. The lower authority has conclusively held that In this case the goods transport agent was supposed to pay service tax.. Once the tax payer is clearly identified, it is the bounden duty of the department to recover the tax from that entity only. There is no indication in the impugned order as to why no investigation/show cause notice was issued to the goods transport agent. It is also not the case of the department that the goods transport agent has absconded or cannot be identified.

The appellant had paid the service tax due to a bonafide belief that they have to pay the same. But, when they realized that they were legally not bound to pay the same, they have applied for refund. It is also quite surprising to note that the department has accepted the amount without bothering to verify as to whether he is a service tax assessee as legally defined and whether he has paid the correct service tax. It is only when the refund claim is filed that the department is trying to ascertain the basic data. It is futile to reason the There are no rules or notifications objecting from payment of service tax by the individual directly on behalf of transporting agencies for transporting agencies for whom they are rendering the freight charges. The Honble Supreme Court has amplified as to what is the basis for any tax in Pratibha Processors vs. UOI reported in 1996 (88) ELT 12 S.C. Tax  Meaning of  Tax is an amount payable as a result of the charging provision  It is a compulsory extraction of money by a public authority for public purposes, the payment of which is endorsed by law.

Once it is held that the appellant was not liable to pay the service tax, the amount taken by the department is only in the nature of a deposit and the question of time-bar does not arise. Infact, there ought to have been a suo-motu refund, in all fairness. The Honble apex court has in Kuil Fire Works Industries v. CCE reported in 1997 (95) ELT 3 S.C. held Exemption (or for that matter any tax benefit)  Assessee cannot be made to suffer on account of illegal act of department authorities  This principle pleaded for by assessee before Supreme Court and conceded to by Addl. Solicitor General representing the Department  1991 (51) ELT 185 (S.C.) relied on.

Since the amount retained by the department is an unauthorized deposit, the question of unjust enrichment also does not arise. The department will be liable for payment of interest also in terms of Honble Apex Courts decision in Pratibha Processors vs. UOI reported in 1996 (88) ELT 12 S.C. where it has been held that Interest in tax matters  Meaning of  Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable  Levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date, thus essentially it is compensatory and different from penalty, which is penal in character

Further, in Sandvik Asia Ltd. v. Commissioner of Income Tax  I, Pune reported in 2006 (196) ELT 257 (S.C.) it has been held that : Interest  Delay in payment of interest on refund  Tax can only be in accordance with law, hence in case of collection of excess tax or withholding of any amounts from an assessee without authority of law, revenue must compensate assessee - This compensation includes interest on interest wrongfully withheld, irrespective of absence of any statutory provisions granting same  Sections 237, 240, 244, 244A of Income Tax Act, 1961. 

7.1 As against the above reproduced findings, the Revenues appeals do not evidence any other contrary decision to the fact that respondent-assessee is sole proprietorship concern. We have perused the sample of delivery challan produced by the learned Advocate which we reproduce:-

7.2 It can be seen from the above reproduced specimen challan that respondent-assessee had issued delivery challan for transit of Bauxite Ore to respondent-assessee office at Jaigadh port. It is very clear from the above said challan that transportation of Bauxite Ore was undertaken by Goods Transport Agency on behalf of the respondent-assessee who is a sole proprietorship firm. If that be so, we find that CBEC in Circular No.79/9/2004-ST dated 17.12.2004 has clarified on the issue which is in this appeal. We reproduce paragraph 4.4 from the Boards Circular.

4.4 Notification No. 35/2004-Service Tax, dated 3rd December, 2004 prescribes that the person making payment towards freight would be liable to pay the service tax, in case the consignor or the consignee of the goods transported is one of the following,-

(i) Factory registered under or governed by the Factories Act;

(ii) Company established by or under the Companies Act;

(iii) Corporation established by or under any law;

(iv) Society registered under Societies Registration Act or similar law;

(v) Co-operative society established by or under any law;

(vi) Dealer of excisable goods, registered under the Central Excise Law; or

(vii) Any body corporate established, or a partnership firm registered, by or under any law.

7.3 It can be seen from the reproduced clarification that a person making payment towards freight would be liable to pay the service tax in case the consignor or consignee of the goods transported falls in one of the category as enumerated herein above. It is undisputed that the respondent-assessee does not fall under any of the category as mentioned herein above. Accordingly we find that the impugned orders of the first appellate authority is correct and sustainable and do not require any interference.

8. In view of the facts and circumstances of the case we hold that the impugned orders are correct and legal and reject the appeals.

(Dictated in Court)

(Raju) Member (Technical) (M.V. Ravindran) Member (Judicial)

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