National Council For Cement And ... vs Commissioner Of Customs ,Central ...

[Arising out of Order-in-Appeal No. 83-2013 dated 13/07/2013 passed by Commissioner of Central Excise and Service Tax (Appeals), HYDERABAD-IV ]

For approval and signature:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 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? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes

National Council For Cement And Building Materials Ncb Bhavan, Old Bombay Road, Gachibowli, HYDERABAD - 500008 AP Appellant(s)

Versus

Commissioner of Customs ,Central Excise and Service Tax Hyderabad-iv POSNETT BHAWAN, TILAK ROAD, RAMKOTI, HYDERABAD, - 500001 ANDHRA PRADESH Respondent(s)

Appearance:

Shri Y. SREENIVASA REDDY C-403, KESHAVDALE, ANAND NAGAR COLONY, KHAIRATABAD HYDERABAD - 500004 ANDHRAPRADESH For the Appellant

Dr. A.K. Nigam, Addl. Commissioner(AR) For the Respondent

Date of Hearing: 01/09/2015

Date of Decision: 01/09/2015

CORAM:

HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER

Final Order No. 21804 / 2015

Per : ARCHANA WADHWA

After dispensing with the condition of predeposit of dues, we proceed to decide the appeal itself inasmuch as a very short issue is involved.

2. The appellant is a R&D organization under the Ministry of Commerce & Industry with a mandate to undertake and promote research and other scientific work connected with cement and building materials and also to impart training to skilled and unskilled labour in construction field. They are working no-profit; no loss basis.

3. Inasmuch as the definition of commercial training or coaching service as appearing in Section 65(105)(zzc) referred to only institutes engaged in such training on commercial basis, the appellant was not discharging any service tax liability on the understanding that since it is working on no profit; no loss basis and is not a commercial institute, there is no liability for payment of service tax. However the said definition was amended retrospectively w.e.f. 01/07/2010 by way of inserting an explanation to the effect that every institution, whether commercial or not, would be under an obligation to pay service tax, if it is imparting educational, vocational training. Consequently appellant got itself registered with the Service Tax Department under the said category w.e.f. 01/04/2010 after claiming exemptions in terms of certain notifications available to them.

4. In the above scenario, the appellant was issued a show-cause notice dt. 16/03/2011 raising the demand of Rs.21.03 lakhs for the period 2005-06 to 2009-10. The notice also proposed imposition of penalties upon the appellant. The notice culminated into an order passed by the original adjudicating authority vide which he invoked longer period of limitation confirming the demand along with interest. However as regards penalty, he observed as under:-

21.    In the instant case, I find that the assessees have entertained a doubt being a society and non-profit motive organization under the Administrative Control of Ministry of Commerce and Industry, Government of India and in view of numerous case laws that they are not liable for payment of service tax on the impugned services. The levy of service tax was concluded by way of insertion of Explanation with retrospective amendment to Section 65(105)(zzc) of the Finance Act, 1994. Therefore, it is just and reasonable for any service provider for non-payment of service tax during the period for which retrospective effects are given. Therefore, I am of the considered opinion that the instant case falls within the purview of Section 80 of the Finance Act, 1994. Accordingly, I hold that penalty as proposed in the notice in terms of Section 76, 77 and 78 are not imposable on the assessees and drop further proceedings.

5. The said order of the original adjudicating authority was put to challenge by the appellant before the Commissioner(Appeals). No appeal was filed by the Revenue against the said part of the order vide which the penalties were not imposed. However Commissioner(Appeals), on his own, issued notice to the appellant calling upon them to show-cause as to why penalties should not be imposed upon them. While passing the final order, Commissioner(Appeals) has observed as under:-

10. Regarding proposal for imposition of penalty under Sections 76, 77 and 78, the demand of service tax on service name commercial training and coaching confirmed based on explanation which inserted during 2010-11 with retrospective effect from 01/07/2003, and on various judicial pronouncements which were remanded by Honble Supreme Court in the light of the explanation. Moreover, the appellant paying service tax with effect from 01/04/2010, regularly i.e. after amendment to the exemption Notification No.24/2004-ST dt. 10/09/2004 vide Notification No.03/2010-ST dt. 27/02/2010.

10.1. From the foregoing, I do no find any malafide or suppression of fact with intent to evade payment of service tax in the instant case, thereby I withhold the proposal for imposing the penalties under Sections 76, 77 and 78 of the Finance Act, 1994, by extending the benefit under Section 80 of the Finance Act, 1994. In this regard, I placed reliance on the decision given by the Honble Supreme Court in the case of M/s. Star India Pvt. Ltd. Vs. Commissioner of Central Excise, Mumbai & Goa  2006(1) STR 73 (SC)  wherein held  statute  validation clause  Retrospective effect  while it is permissible for legislature to retrospectively legislate, such retrospectivity is not permissible to create an offence retrospectively  (para 7).

Accordingly he also did not impose any penalty.

6. The appellants have challenged the impugned confirmation of demand on the point of limitation by submitting that everything was known to the Revenue inasmuch as the appellant was paying service tax w.e.f. 01/04/2010 as also by drawing our attention to the correspondence entered into between the appellant and the Revenue in the year 2005, it stands pleaded that there cannot be any suppression on the part of the assessee, so as to justifiably invoke the longer period of limitation. Learned advocate has also submitted that in case of retrospective amendments, extended limitation of 5 years has been held to be inapplicable. For reference, he draws our attention to the decision of Honble Supreme Court in the case of Morarji Goculdas B&W Co. Ltd. Vs. UOI [1996(83) ELT 259 (SC)] and he also submits that where both the lower authorities held that there is no mala fide on the part of the assessee for the purpose of imposition of penalty, the extended period cannot be invoked inasmuch as the criteria for imposition of penalty as also for invocation of longer period is the same.

7. Learned AR appearing for the Revenue submits that with the retrospective amendment, the liability is created against the assessee and as such confirmation of demand against them is justified. He also submits that a part of the demand would fall within the limitation.

8. After considering the submissions made by both the sides, we find that there is no doubt that with the retrospective amendment to the definition of the service tax category, the liability would arise against the assessees. However such liability would be in accordance with the provisions of limitation. The Honble Supreme Court in the case of Morarji Goculdas B&W Co. Ltd. referred supra has clearly held that the demands in case of retrospective amendments has to be made within a period of 6 months from the date of the amendments and extended limitation of 5 years would be inapplicable. Otherwise also, we find that both the authorities below have held that there was no mala fide suppression on the part of the assessee, the invocation of longer period of limitation cannot be held justifiable inasmuch as the criteria for invocation of longer period is also mala fide misstatement or suppression of facts. As such, we find no justification for invocation of the longer period of limitation.

9. Inasmuch as a part of the demand may fall within the limitation period, we set aside the impugned order and remand the matter to the original adjudicating authority for examining the above fact. The appellant is also at liberty to raise the issue of applicability of exemption notifications, if any, in respect of the demands falling within the limitation period. Stay petition and appeal are disposed of in above manner.

(Order pronounced and dictated in open court)

ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER

Raja 6