Shreehari Associates (P) Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No.ST/90060/14

(Arising out of Order-in-Original No.61/ST/Commr/2014 dated 15/09/2014 passed by Commissioner of Central Excise, Customs & Service Tax, Aurangabad)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. 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 :Yes 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? ========================================

Shreehari Associates (P) Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Aurangabad

Appearance:

Shri.Abhay P Kolte, Advocate for appellant Shri.R.K.Das, Asst. Comm. (AR), for respondent

CORAM:

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

Date of Hearing : 03/03/2015 Date of Decision : 03/03/2015

ORDER NO

Per: M.V. Ravindran

1. This appeal is directed against order-in-original number 61/ST/COMMR/2014 dated 15/09/2014.

2. The relevant facts that arise for consideration are that the appellant herein was visited by the officers of the Department and on investigation carried out, the revenue officers more specifically DGCEI regional unit came to a conclusion that the appellant herein having undertaken construction of Baramati High-Tech Textile Park and National Sports Stadium has rendered the services of construction of residential complex. Coming to such a conclusion, a show cause notice was issued to the appellant directing him to show cause as to why service tax as calculated be not demanded from them along with interest and as to why penalty be not imposed on them. Appellant contested the show cause notice on merits as well as on limitation. The adjudicating authority did not agree with the contentions of the appellant and after following the due process of law confirmed the demands raised along with interest as also imposed penalties.

3. Learned Counsel appearing on behalf of the appellant would take us to the entire show cause notice as well as the impugned order. He would submit that the adjudicating authority has erred in confirming the demand inasmuch as that he has not considered the detailed submissions made by the appellant in its correct perspective. He would submit that the show cause notice issued by the additional Director General, DGCEI is without jurisdiction. He would also submit that the appellant had sought the cross examination of the persons who had recorded a statement which is used against the appellant in this show cause notice. He would submit that the adjudicating authority dismissed the request for cross examination summarily. He would then draw our attention to the merits of the case and submit that the appellant had constructed a High-tech Textile Park at Baramati and the Sports Complex for Municipal Council. He would submit that the such contracts for construction of textile Park and the sports complex was awarded to the appellant based upon the International competitive bidding process which was called for by the authorities.

It is also the submission of the learned Counsel that the high-tech textile Park was developed under the scheme as formulated by the Ministry of Textile, Government of India and hence service tax is not payable. It is his further submission that the issue involved in this case is blatantly time barred. He would draw our attention to the letter dated the October 2008 as filed by them to the Commissioner of Central Excise and Customs, Aurangabad seeking the advice as to the applicability of service tax to the activity undertaken by them. He would submit that the learned Commissioner did not respond to such a letter. He would also then draw our attention to the various ST returns filed by them with the authorities and submit that the ST returns indicated that amounts received by them for these works were shown as being exempted. He would also submit that the authorities did not question the amounts which were indicated by them in their service tax returns and hence the extended period as invoked by the show cause notice is incorrect. To supplement this argument, he would also take us through the audit reports which were filed by the audit party of the Department after auditing their records for the period in question.

He would categorically submit that the said audit reports were not handed over to the appellant but had to be procured from the Department under the provisions of right to information act. He would submit that the entire demand is hit by limitation.

4. Learned departmental representative to on the other hand would draw our attention to the findings recorded by the adjudicating authority. He would submit that the adjudicating authority has clearly recorded that the appellant had provided taxable services of commercial and industrial construction and has come up with the improper plea that the services provided by them to High-tech Textile Park are exempted. He would submit that the appellant did not produce any notification or authority exempting such services. He would submit that the statement of director of Baramati High-tech Textile Park clearly indicates that the tender which were awarded to the appellant were inclusive of service tax and the appellant was required to pay the same. It is his submission that the assessee herein despite being in knowledge that they are to pay the service tax liability on the activity undertaken by them, did not do so, hence the extended period was correctly invoked. He would also submit that the adjudicating authority has recorded that the contract signed by the appellant with the authorities was inclusive of all taxes and hence they were aware of the fact that the consideration received by them was inclusive of service tax despite this they did not discharge the tax liability. He would also submit that the appellant had undertaken construction of residential complexes also.

5. Learned Counsel in rejoinder would draw our attention to the Annexure wherein demands have been raised as annexed to the show cause notice and submit that the demand is in respect of the construction activity undertaken by the appellant for High-tech Textile Park and Auditorium building for Municipal Council from April 2008 to March 2012.

6. We have considered the submissions made at length by both sides and perused the records. On perusal of the records, it transpires that the issue involved in this case is regarding the demand of service tax liability on the appellant under the category of commercial or industrial construction services.

7. It is undisputed that the appellant herein had constructed High-Tech Textile Park and one Auditorium-cum-Sports Complex. It is also undisputed that these construction activity was awarded to the appellant under a successful International bidding process. It is also undisputed that the appellant herein was registered with the service tax authorities.

8. In our considered view, the show cause notice dated 18/10/2013 as issued by DGCEI Mumbai-V is to be seen from the angle of limitation as the said show cause notice invokes the extended period for demanding the service tax liability from the appellant. On perusal of the records we find that the appellant herein has vide letter dated 29 September 2008 had informed the Commissioner Central Excise and Customs as under:-

We registered with Central Excise department under Service Tax provisions under category of Industrial or Commercial Construction Services. Our Service Tax Registration No. is AAHC27405BST001. We have also paid Service Tax for construction of a sugar factory. Now our new projects of constructions are in progress. These new projects are:

i) High Tech Textile Park  This is co-operative basis and aided by Central Government (some %). For complication of this project it will take more than a year

ii) Construction of Sports Complex  This sports complex is under state Government authorities. This may require one year for completion.

The payments of these projects at each stage are yet to be finalized. We request your honour to advice us as to whether any service tax liability will attract at our end or any exemption is available for such services also category of service may also be advised.

We request you to give us suitable directions in these cases so as to enable us to take appropriate action in the matter

9. It can be seen from the above reproduced letter which was received by the office of the Commissioner of Central Excise and Customs on 3rd October 2008, seeks a specific direction from the Commissioner as to whether the activities undertaken by the appellant would fall under service tax liability and are eligible for any exemption. We find from records that the office of the Commissioner of Central Excise and Customs, Aurangabad did not respond to such letter nor any further correspondence was entered with the appellant on this matter. We also note from the records that the service tax returns which needs to be filed by an assessee, in this case the appellant, clearly indicates that the appellant had been keeping the Department informed about the amounts received by them which according to him would fall under the category of exempted services. These service tax returns were accepted by the Department and no question were raised nor any clarification was sought from the appellant. On a specific query from the bench, learned Counsel would submit that there was no query from the revenue authorities on the returns which were filed by the appellant. In our considered view, if the revenue authorities were informed about the activities that the appellant is willing to undertake and seeking the clarification whether such activity would fall under the service tax liability or not, and also subsequently indicating in the service tax returns the amounts received by them towards such exempted services, the question of suppressing any material facts from the Department would not arise lead.

10. Yet another angle to entire case would be that the records maintained by the appellants was audited by the audit wing of the Central Excise and Customs Department on 5th on 15 October 2008 to 18 October 2008, 7 and 24 September 2 013. The said audit reports which were produced before us, indicate that the appellant had given all their records for auditing to the authorities and the said audit report does not contain any findings that the appellants activity of construction of high-tech work and the sports complex would fall under the category of construction of commercial complexes and the appellant is liable to discharge the service tax liability on the amounts received by them. It is to be presumed that departmental officers had access to all the records maintained by the appellants during the audit. If the revenue authorities did not raise any queries when the records were audited, then the show-cause notice issued in October 2013 invoking the extended period for demanding the service tax liability for the period April 2008 to March 2012, is in our considered view blatantly time barred, as it cannot be said that appellant had suppressed any information let alone vital information from the Department with intention to evade tax. In our view the service tax liability confirmed against the appellant is blatantly time barred and the impugned order to that extent is totally incorrect and is liable to be set aside.

11. Since were holding that the impugned order is liable to be set aside on the limitation itself, were not recording any findings on the question of merits and as also various other points raised by both sides. In view of the foregoing, the said aside the impugned order and allow the appeal with consequential relief, if any.

(Pronounced in Court)

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

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