M/S. Jain Enterprises vs Commissioner Of Customs, Central ...
- CitationAPPEAL NO. ST/89900/13
Ratio decidendi
The rule this decision rests on
The penalties under Sections 76, 77 and 78 of the Finance Act, 1994 may be waived under Section 80 where the assessee entered into the impugned transaction under a bona fide belief that its services fell outside the taxable category, as shown by the terms of the work order and the description of the work supporting that classification; the existence of such a bona fide belief is a reasoned ground for invoking Section 80. Where the assessee has not contested the confirmed service tax demand and interest and has paid them, the tax and interest are maintained and only the penalties are open to waiver under Section 80.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No. NGP/EXCUS/000/APPL /863/13-14 dtd. 27/9/2013 passed by the Commissioner (Appeals), Central Excise & Customs, Nagpur]
For approval and signature:
Honble Mr Ramesh Nair, Member (Judicial)
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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 : 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? =======================================================
M/s. Jain Enterprises, : Appellants
VS
Commissioner of Customs, Central Excise & Service Tax, Chandrapur : Respondent
Appearance
None for the Appellants Shri. S.R. Nair, Examiner, (A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 1/7/2015 Date of decision: 1/7/2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Appeal No. NGP/EXCUS/000/APPL/863/13-14 dtd. 27/9/2013 passed by the Commissioner (Appeals), Central Excise & Customs, Nagpur, wherein Ld. Commissioner (Appeals) upheld the order in original dated 28/3/2013 and rejected the appeal of the appellant.
2. The fact of the case is that the appellant M/s. Jain Enterprises, proprietary firm, engaged in providing services which according to them are falling under the head of Supply of Tangible Goods to M/s Murli Industries Limited (Cement Unit), Naranda, Korpana, Dist Chandrapur and duly registered under the category Supply of Tangible Goods as defined under Section 65(12) of the Finance Act, 1994 vide registration No. AGXPB9930DST001 dated 15/12/2009. On scrutiny of the balance sheet of M/s. Murli Industries Limited (Cement Unit), it has been observed that they have incurred expenditures to the tune of Rs. 24,33,419/- on account of taxable services received by them from the appellant who have provided excavation work to them that falling under taxable category of Site formation & clearances, excavation and earth moving and demolition in terms of sub clause (97a) of Section 65 (105)(zzza) of Finance Act, 1994. It was also observed that the appelant has not taken registration with the Department during the relevant period and not paid service tax on the services of site formation and clearances, excavation and earth moving and demolition which became taxable w.e.f. 16/6/2005. The period involved in the present case is 2007-08 and 2008-09. On these observations the Revenue issued show cause notice which culminated into adjudication order wherein demand of service tax amounting to Rs. 3,00,771/- was confirmed, interest under Section-75, penalties under Section 76, 77 and 78 were also imposed. Appellant aggrieved by the said order filed appeal before the Commissioner (Appeals), who upheld the order-in-original rejecting the appeal of the appellant, therefore appellant is before me.
2.1 The appeal filed by the appellant is only for waiver of penalties on the ground that they were under bonafide belief that Services as per the work order, they have given vehicle on hire to the client therefore the service covered under supply of tangible goods which were taxable service at the relevant time however they discharged service tax liability alongwith interest.
3. When the matter was called for hearing, none appeared on behalf of the appellant nor any request for adjournment was found on record, therefore I proceed to decide the matter on merit after considering the ground of appeal in the appeal memo.
4. Shri S.R. Nair, Ld. Examiner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that services provided by the appellant is not of supply of tangible goods whereas it is for site clearances and loading and unloading relating to the excavation of site clearances, therefore it is correctly classifiable under the site formation and clearances and excavation and earth moving and demolishing which is taxable w.e.f. 16/6/2005, therefore service tax is very much payable. Knowingly the nature of service, the appellant has not taken registration and not discharged service tax. He submits that client of the appellant M/s. Murli Industries Limited (Cement Unit) on query from the department vide their letter 29/9/2010 replied that from the work order, party has not supplied tangible goods but carried escalation work only, therefore it is very well known to the appellant that the work involved is classifiable under taxable services therefore bonafide belief cannot be entertained by the appellant, hence the penalties are correctly imposed by the original authority and upheld by the Commissioner (Appeals).
5. I have carefully considered the submissions made by Ld. AR and perused the records and grounds of appeal.
6. I find that it is the submissions of the appellant that they had bonafide belief that their services are of supply of tangible goods which was not taxable at the relevant time, therefore they have not taken registration and not discharged the service tax. They referred the purchase order. On going through the purchase order, I find the details of work allotted to the appellant by their client which is as:
Charges for New Tipper Rear discharge 10 tonner (You provide 3 Nos. of new 10 Ton Capacity Rear Discharge tippers) against this charges is also fixed Rs. 42,500 PER TIPPER.
From the above work order and description of the work, it shows that work order was for number of tippers and charges for supply of number of tippers. The charges also fixed for each tipper. From these details I agree that anybody can have belief that services falls under head of supply of tangible goods. Therefore the appellants submission that they entertained bonafide belief regarding the classification of the services, found reasonable. Moreover the appellant, though, in my prima facie view, the issue on merit also contentious, without contesting the demand they discharged entire service tax liability alongwith interest. They only sought waiver of penalties in this appeal.
6.1 Taking into consideration above facts and nature of service provided by the appellant, I agree with the appellant that entertainment of bonafide belief by the them is proper and they have made out a case for waiver of penalties by invoking Section 80. I therefore waive penalties imposed under Section 76, 77 and 78. Since appellant have not contested the service tax demand and interest confirmed and paid by them, the same is maintained. Appeal is allowed.
(Dictated in court)
Ramesh Nair Member (Judicial)
sk
5 ST/89900/13
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