M/S. Khare & Tarkunde Infrastructure ... vs Cce Nagpur

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II

APPEAL NO. ST/322/10  Mum

(Arising out of Order-in-Original No. 02/ST/2010/C dated 11.5.2010 passed by the Commissioner of Central Excise & Customs, Nagpur)

For approval and signature:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical)

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?

M/s. Khare & Tarkunde Infrastructure Pvt. Ltd. : Appellant

Versus

CCE Nagpur

Respondent

Appearance

Shri G.L. Deshpande, Advocate for appellant Shri S.V. Nair, Supdt (A.R.) For Respondent

CORAM:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical)

Date of Hearing : 11.03.2015 Date of Decision : 11.03.2015

ORDER NO.

Per : M.V. Ravindran This appeal is directed against order-in-original No. 02/ST/2010/C dated 11.5.2010.

2. The relevant facts that arise for considerations are appellant herein were undertaking construction activity during the period 2004-05 to 2008-09. Appellant were awarded with contract for construction of (1) Cotton Market under Technology Mission on Cotton, (2) Grain Market Yard for APMC and (3) Shopping cum Commercial Complex and Departmental Store for Nagar Parishad. Appellants did not discharge the service tax liability on the amounts received by them while executing the above said contract. During scrutiny of records, it was noticed that the service tax liability needs to be discharged by the appellant. Accordingly, show-cause notice dated 16.10.2009 was issued to the appellant. Appellant contested the show-cause notice and submitted that they have already discharged the service tax liability along with interest and sought leniency in imposition of penalties. Adjudicating authority appropriated the amount deposited by the appellant against the confirmed demands as also imposed interest and penalties.

3. Learned Counsel appearing on behalf of the appellant would draw our attention to the written submissions made during the course of hearing and submits that the entire amount of service tax liability was discharged by them on 08.06.2009 and show-cause notice was issued on 16.10.2009. He would submit that the appellant had bonafide belief that construction of Cotton Market, Grain Market Yard and Shopping cum Commercial Complex and Departmental Store for Nagar Parishad could not be taxable as these constructions were for Government agencies. He would submit that the appellant is seeking waiver of penalties imposed due to these reasons.

4. Learned D.R. reiterated the findings of the adjudicating authority.

5. We have considered the submissions made at length by both the sides and perused the records. There is no dispute that the appellant is liable to pay service tax on the amounts received by them for executing the contract of construction of Cotton Market, Grain Market Yard and Shopping cum Commercial Complex and Departmental Store for Nagar Parishad. To that extent we uphold the impugned order which confirmed the demand of service tax along with interest.

5. As regards the submission made by the learned Counsel on the imposition of penalties, we find that the provisions of Section 73(3) of the Finance Act, 1994 as were in the statute during the relevant period when the show-cause notice dated 16.10.2009 issued needs to be considered; as appellant have discharged the entire service tax liability along with interest as has been ascertained by the Central Excise Officers i.e. audit party. In our view, provisions of Section 73(3) very clearly lays down that if service tax liability and the interest thereof is discharged on the direction of the Central Excise Officers, there is no need to issue show-cause notice. Adjudicating authority should have applied these provisions in the case in hand. We find a strong force in the contentions raised by the learned Counsel that they were under bonafide belief that the construction activity which was undertaken by the appellant was in respect of Government appointed statutory body hence tax liability may not arise. In our view the appellant could have entertained a bonafide belief that the activity undertaken by the appellant may not be covered under the tax net. In our considered view, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994. By invoking the said provisions of Section 80 of the Finance Act, 1994, we set aside the penalties imposed by the adjudicating authority under various sections. Appeal is disposed of as indicated here-in above.

(Dictated in open Court)

(P.R. Chandrasekharan) Member (Technical)

(M.V. Ravindran) Member (Judicial) nsk ??

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