Commnr. of Central
Excise, Vadodara-I Vs. M/S. Gujarat Carbon & Industries Ltd. [2008] INSC
1371 (18 August 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1618 OF 2005 Commissioner
of Central Excise, Vadodara-I ....Appellant Versus M/s Gujarat Carbon &
Industries Ltd. ....Respondents WITH
Civil Appeal No. 1077 of 2006 Civil Appeal No. 1173 of 2006 Civil Appeal No.
3172 of 2007 Civil Appeal No. 3464 of 2006 Civil Appeal No. 3556 of 2007 Civil
Appeal No. 3557 of 2007 Civil Appeal No. 3558 of 2007 Civil Appeal No. 3565 of
2007 Civil Appeal No. 3629 of 2007 Civil Appeal No. 6424 of 2005 Civil Appeal
No. 7144 of 2005 Civil Appeal No. D. No.10930 of 2006
Dr. ARIJIT PASAYAT,
J.
Civil Appeal No.
D.No.10930/2006
1.
Delay
condoned. Appeal Admitted.
2.
In
these appeals common points are involved and therefore they are disposed of by
this common judgment.
3.
Challenge
in each case is to the judgment of various Benches of Customs, Excise &
Service Tax Appellate Tribunal (in short `CESTAT'). The respondents in each
case had engaged the services of transport operators. They were in other words
availers of service and not service providers. The Central Excise Authorities
issued notice asking them to explain as to why penalty should not be imposed
upon them under the provisions of Sections 76 and 77 of Chapter V of the
Finance Act, 1994 for alleged contravention of the provisions of Sections 70,
76 and 81 of the said Chapter and as to why interest should not be recovered
from them for delayed payment of service tax as provided under the aforesaid
Act.
Relying on a decision
of this Court in Laghu Udyog Bharti & Ors. v. Union of India (1999 (112)
ELT 365) the show cause notice was dropped. In the said case, it was held that
service availers are not required to pay service tax under the provisions of
the Finance Act. In some cases the orders were reviewed under Section 84 of the
said Act on the ground that Section 117 of the Finance Act, 2000 validates
retrospectively the provisions of sub-clause (xii) of clause (d) of sub-rule
(1) of Rule 1 of Service Tax Rules, 1994. As a sample case, we refer to the
factual scenario of Civil Appeal No.1618 of 2005. The factual scenario is that
Commissioner was of the view that according to Section 117 of the Finance Act,
2000 notwithstanding anything contained in any judgment, decree or order of any
court, tribunal or other authority , sub-clause (xii) and sub-clause (xvii) of
clause (d) of sub-rule (1) of Rule 2 of the Service Tax Rules, 1994 as they stood
immediately before the commencement of the Service Tax (Amendment) Rules, 1998
shall be deemed to be valid as if the said clause had been in force at all
material times. In view of the aforesaid retrospective amendment, the order of
the Deputy Commissioner was reviewed. A show cause notice was issued seeking to
review the order. After considering the reply of the respondent-assessee the
Commissioner demanded service tax on the gross amount of transport charges paid
by it to the goods transport operators excluding insurance charges during the
period 16.11.1997 to 1.6.1998 along with interest for delayed payment of
service tax required to be paid under the Finance Act, 1994.
4.
The
Tribunal referred to Section 73 of the Finance Act which reads as follows:
"Section 73 (a)-
The Assistant Commissioner of Central Excise or, as the case may be, the Deputy
Commissioner of Central Excise has reason to believe that by reason of omission
or failure on the part of the assessee to make a return under Section 70 for any
prescribed period or to disclose wholly or truly all material facts required
for verification of the assessment under Section 71, the value of taxable
service for that quarter has escaped 4 assessment or has been under assessed,
or any sum has erroneously been refunded, or (b) notwithstanding that there has
been no omission or failure as mentioned in Clause [a] on the part of the
assessee, the Assistant Commissioner of Central Excise or, as the case may be
Deputy Commissioner of Central Excise has, in consequence of information in his
possession, reason to believe that the value of any taxable service assessable
in any prescribed period has escaped assessment or has been under-assessed, or
any sum has erroneously been refunded, he may, in cases falling under Clause
(a), at any time within five years, and in cases falling under Clause (b), at
any time within six months from the date for filing the return, serve on the
assessee a notice and proceed to assess or reassess the value of the taxable
service."
5.
The
Tribunal referred to a decision in the case of L.H. Sugar Factories Ltd. v.
CCE, Meerut-II (2004 (165) ELT 161) where under similar circumstances the show
cause notice was issued. It was held that during the relevant period Section 73
takes in only the case of assessees who are liable to file return under Section
70. The liability to file return is cast on the assessees only under Section
71-A which was introduced in the Finance Bill, 2003. Thus, during the period in
question no notice could have been issued under Section 73 for non filing of
return under Section 70. According to the Tribunal, the service receiver was
not required to file any return under Section 70 of the Finance Act, 1994 prior
to 2003. The Tribunal accordingly quashed the order demanding service tax from
the respondents-service availers. Similar view has been expressed in the
connected cases.
6.
According
to learned counsel for the revenue, the view of CESTAT is clearly
unsustainable, because of retrospective operation of the provisions.
7.
Learned
counsel for the respondents on the other hand supported the respective
judgments of the Tribunal.
8.
It
is to be noted that in an identical case in Commissioner of Central Excise,
Meerut-II v. L.H. Sugar Factories Ltd. and Ors. (2005 (13) SCC 245), this Court
agreed with similar conclusions of the Tribunal. In the said case, the
conclusions of the Tribunal were as follows:
"The above would
show that even the amended Section 73 takes in only the case of assesses who
are liable to file return under Section 70.
Admittedly, the
liability to file return is cast on the appellants only under Section 71A. The
class of persons who come under Section 71A is not brought under the net of
Section 73. The above being the position show cause notices issued to the appellants
invoking section 73 are not maintainable."
9.
In
view of what has been stated in L.H. Sugar's case (supra) we do not find any
merit in the present appeals which are accordingly dismissed.
.........................................J.
(Dr. ARIJIT PASAYAT)
..........................................J.
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