Tanya Communications vs Commissioner Of Central Excise ...

[Arising out of Order-in-Appeal No. 32-2010 dated 02/09/2010 passed by CC&CE, Visakhapatnam-I]

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? No 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

TANYA COMMUNICATIONS #4, TSR COMPLEX, VISAKHAPATNAM.530004 Appellant(s)

Versus

Commissioner of Central Excise ,Customs and Service Tax VISAKHAPATNAM-I NULL CENTRAL EXCISE BUILDING PORT AREA VISAKHAPATNAM - 530035 ANDHRA PRADESH Respondent(s)

Appearance:

Shri Rajesh Kumar, CA HIRAGANGE & ASSOCIATES #1010, 1st floor(Above Corp.Bank) 26th Main, 4th T Block, Jayanagar, BANGALORE - 560041 KARNATAKA For the Appellant

Shri Geelani, Basha, Authorised representative 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. 21473 / 2015

Per : B.S.V. MURTHY

The appellant engaged in the activity of civil construction, erection and communication of cell tower since 2004. The appellant had entered into contracts with their clients which were composite in nature i.e. supply of material and labour. After verification of work orders, proceedings were initiated to demand service tax for the period 10/09/2004 to 31/03/2008. In the impugned order, the demand for service tax of Rs.21,71,025/- has been confirmed with interest and penalty equal to the tax demanded has been imposed. Penalty of Rs.1000/- under Section 77 of Finance Act, 1994 has also been imposed. The demand has been made under three categories of services viz. erection, commissioning and installation services, commercial and industrial construction service and works contract. For the period subsequent to 01/06/2007, the demand is under works contract and prior to that under the other two services.

2. The learned CA on behalf of the appellants submitted that the contracts executed involved transfer of material and VAT was paid and hence appellant was under a bona fide belief that they were not liable to pay service tax. The appellants started paying service tax from July 2007 and as per the advice of the Department, the appellant started paying service tax treating the services as works contract from 01/06/2007. He submits that the appellant entertained a bona fide belief prior to 01/06/2007 about non-liability and further the fact that there were judgments taking a view that works contract was not taxable prior to 01/06/2007 and finally a 5 Member Bench of the Tribunal by majority view decided that even prior to 01/06/2007, works contracts were liable to service tax in their respective categories. In view of the fact that there were several decisions taking a view in favour of the appellants prior to 01/06/2007, there was no liability to service tax. Hence, extended period could not have been invoked in this case. It was also submitted that Commissioner(Appeals) has confirmed the demand invoking extended period of limitation on totally new grounds which were not taken in the show-cause notice or in the OIO and hence the same is not sustainable.

3. We have considered the submissions. The submission that prior to 01/06/2007, there were decisions taking contrary views about liability of service tax on works contract is correct and matter came to be resolved by the decision of 5 Member Bench in March 2015 as submitted by the learned CA. In such a situation when there were decisions that works contract cannot be taxed prior to 01/06/2007, we cannot find fault with the appellant for not paying the tax prior to that period. For the subsequent period, apparently the appellants have fulfilled the obligations. We also consider that the claim of the learned CA that since the appellant had paid the entire amount of tax with full interest prior to issue of show-cause notice, the matter has to be treated as settled in terms of provisions of Section 73(3) of Finance Act, 1994 and no show-cause notice could have been issued is correct. Under the circumstances it is quite clear that demand could not have been issued invoking extended period and therefore the demand for the period beyond normal period as per the show-cause notice cannot be sustained and is set aside. Since the appellants started paying tax according to the submissions from 01/06/2007, penalty is also not imposable. In any case when the demand is for normal period and has been accepted, penalty is not imposable. In the result, the demand for normal period is upheld and penalty and the demand for extended period are set aside.

(Operative part of this order was pronounced On conclusion of the hearing)

JUSTICE G. RAGHURAM PRESIDENT

B.S.V.MURTHY TECHNICAL MEMBER Raja..

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