P.Muneyya , Contractor vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No. 50 & 51/2010 (T) ST dated 13/08/2010 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Guntur.]

For approval and signature:

HON'BLE SHRI JUSTICE G. RAGHURAM, PRESIDENT HON'BLE SHRI B.S.V.MURTHY, 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? Yes 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

P.MUNEYYA , CONTRACTOR M/S. ZUARI CEMENTS LTD YERRAGUNTAL P.O CUDDAPAH DIST AP. Appellant(s)

Versus

Commissioner of Central Excise, Customs & Service Tax TIRUPATI 9/86-A, BEHIND WEST CHURCH COMPOUND, AMARAVATHI NAGAR, M.R.PALLI  517 502. AP Respondent(s)

Appearance:

C.H. VENKATESWARA RAO 5-21-104,2/18, Brodiept, GUNTUR - 522002 AP For the Appellant

Mr. G. Shiril Saraj, DR For the Respondent

Date of Hearing: 27/05/2015

Date of Decision: 27/05/2015

CORAM:

HON'BLE SHRI JUSTICE G. RAGHURAM, PRESIDENT HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER

Final Order No. 21449-21450 / 2015

Per : B.S.V.MURTHY

In both the appeals the issue involved is same. In one of the appeals, the impugned order covers extended period and the second order is for the subsequent period. Therefore both the appeals are taken together and a common order is passed.

2. The main issue to be decided is whether the activity undertaken by the appellant falls under outdoor catering service for M/s. Zuari Cement Ltd or not. We also have to consider whether the claim of the appellant that appellant acted as a pure agent and therefore no liability is attracted. Besides this, the eligibility of the appellant for SSI exemption and correctness of invocation of extended period for confirming the demand has also to be considered.

3.1 Appellant had entered into an agreement with M/s. Zuari Cement Ltd. According to the agreement, the appellant was to provide catering services and for this purpose agreement provided for appointment of Cook and Asst. Cook and helpers, etc. for which the appellant was paid the wages of the staff and a margin against the wages and also a lump sum amount. This would show that the agreement is for providing catering services in the factory premises of M/s. Zuari Cement Ltd. and the claim of the appellant that appellant was not acting as an outdoor catering cannot be accepted. According to Clause 76(a) of Section 65 of the Finance Act, 1994 outdoor caterer means a caterer engaged in providing services in connection with catering at a place. Therefore the classification adopted by the Revenue is correct.

3.2 Coming to the second issue as to whether the appellant can be considered a pure agent, the claim of the appellant is that the tokens are issued by the management to the employees and those tokens are collected by the appellant and food items are provided. The space is also provided to the appellant. This is the basis on which the learned counsel pleaded that appellant has to be considered as a pure agent. According to Explanation (1) to Rule 5 for the purposes of sub rule (2), Pure Agent means a person who 

(a) enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service;

(b) neither itends to hold nor holds any title to the goods or services so procured or provided as pure agent of the recipient of service;

(c) does not use such goods or services so procured; and

(d) receives only the actual amount incurred to procure such goods or services.

The contract between the two parties does not provide that appellant will act as a pure agent. In fact, there is clear finding of the lower authorities that appellant received not only the wages but additional margin for the wages and further a lump sum amount for acting as a contractor have been made. In such circumstances, we cannot say that appellant has acted as a pure agent.

3.3 As regards SSI exemption, we find that the Commissioner (A) has incorporated a table year-wise in the impugned order and has come to the correct finding that appellant is not eligible for SSI exemption.

3.4 In view of the fact that agreement itself provided that service tax will be extra and further the appellant did not follow any procedure and did not file the returns, we cannot say that extended period could not have been invoked.

4. In the result, we are unable to consider any of the submissions made by the appellant favourably. Therefore, the demand for service tax is upheld. As regards penalty, we find that the lower authorities have not extended the benefit of 25% of penalty if entire amount of service tax and interest thereon is paid and penalty to the extent of 25% is deposited within 30 days of the receipt of the order. Therefore we consider it appropriate that appellant deserves an opportunity to deposit the entire amount of service tax, interest thereon and penalty to the extent of 25% within 30 days from the date of receipt of this order. In such a case, the balance penalty of 75% need not be paid. The appeals are disposed of in above terms.

(Operative portion of the order was pronounced in open court on 27.5.2015.)

JUSTICE G. RAGHURAM PRESIDENT

B.S.V.MURTHY JUDICIAL MEMBER

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