M/S. Nagar Palika Parishad vs Commissioner Of Customs &

[Arising out of Order-In-Appeal No. MRT-EXCUS-001-APP-015-14-15 dated 25/04/2014 passed by Commissioner (Appeals) Customs, Central Excise and Service Tax, Meerut I ]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see 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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Nagar Palika Parishad Appellants

Vs.

Commissioner of Customs & Respondent

Central Excise, Service Tax Meerut I

Appearance:

Shri Ankur Jain, Advocate for the Appellants

Ms. Ranjana Jha, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 20.1.2015

FINAL ORDER NO. A/ 50274 /2015-ST(SM)

Per Ashok Jindal :

The appellants is in appeal against the impugned order confirming demand of Service Tax for the period 2007 to 2012 under the category of renting of immovable property service.

2. The facts of the case are that the appellant is Nagar Palika Parishad, Muzaffarnagar. They have leased out shops which owned by Nagar Palika Parishad. The levy of Service Tax came into effect with effect from 1.6.2007 on renting of immovable property. Therefore, the show cause notice dated 3.7.12 was issued to the appellant as they were not paying the service tax on the Lease Rent received by them for renting out the shops. The adjudicating authority confirmed the demand and also imposed various penalties under section 76, 77 and 78 of the Act. The said order was challenged by the appellant before Commissioner (Appeals) who dropped the penalty under Rule 76, 77 of the Act holding that there was no mens rea involved in the present case but confirmed the Service tax liability. Aggrieved by the said order, appellant is before me.

3. Learned Counsel for the appellant submits that in this case, the show cause notice is issued by invoking extended period of limitation and as the learned Commissioner (Appeals) held that there is no mens rea involved, therefore the extended period of limitation is not invokable. In these circumstances, demands confirmed by invoking the extended period of limitation are to be set aside. To support this contention, he relied on the decisions of Honble Bombay High Court in the case of Saswad Mali Sugar Factory Ltd. vs. CCE, Pune III [2013 (08) LCX0116] and CCE vs Indian Institute of Chem Tech [2011(11) LCX0093].

4. On the other hand, the learned AR opposed the contention of the learned Counsel and submits that the levy of renting of immovable property was effective from 1.6.2007 and the appellant has taken a plea that they were not aware of the said levy is applicable on them but under the bonafide belief that they were not required to pay tax on leasing of shops and hiring of shops. But as shops have been leased out, so they were required to pay the service tax and they can not take the benefit of their ignorance, therefore extended period of limitation is invokable. She further submits that appellant has not given the information to the department voluntarily. It is only during the course of audit and intelligence, department came to know about it.

5. Heard both sides and considered the submissions.

6. In this case, penalty under section 76 and 78 have been dropped by Commissioner (Appeals) with the following observations:

5.11 The next issue for consideration is whether the penalty is imposable upon them in terms of Section 76, 77 and 78 of the said Finance Act. In this regard, I find that the appellant are government body empowered under provision of Constitution of India and exercising these powers as entrusted through State Government, hence there appears no mens rea involved in the present case. Therefore, I refrain from imposing mandatory penalty in terms of Section 78 of the Finance Act and hold that the appellant is not liable to mandatory penalty under the provisions of Section 78 of the Finance Act. Since the penalty under Section 78 is not imposable therefore penalty under section 76 also shall not be imposed upon them. However, since they have contravened the provisions of Section 69 of the Act ibid, as they have not registered themselves with the department, therefore penalty under Section 77 of the said Finance Act is imposable upon them.

According I order as under:..

7. As said finding of the learned Commissioner (Appeals) has attained finality, wherein it has been held that there is no mens rea involved in the present case, therefore, relying on the decision of Bombay High Court in the case of Saswad Mali Sugar Factory Ltd.(supra), I hold that the extended period of limitation is not invokable. Therefore, demands confirmed by invoking the extended period are set aside. In these terms, the appeal is partly allowed.

(dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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