2013 (4) TMI 18 - AT - Service Tax

Tribunal Upholds Commissioner's Jurisdiction in Tax Dispute

NILACHAL IRON & POWER LTD. Versus COMMISSIONER OF C. EX. & ST., JSR

NILACHAL IRON & POWER LTD. Versus COMMISSIONER OF C. EX. & ST., JSR - 2012 (28) S.T.R. 472 (Tri. - Kolkata) Issues Involved:Jurisdiction of Commissioner, Applicability of Service Tax, Limitation on DemandJurisdiction of Commissioner:The applicant argued that the Commissioner in Jamshedpur lacks jurisdiction to issue and decide the show cause notice as the service was rendered in Kolkata. However, the Revenue contended that the issue of jurisdiction was not raised before the Commissioner during the adjudication proceedings, creating difficulty in determining where the services were actually rendered. The Tribunal found that jurisdiction is a mixed question of law and facts, which should have been raised earlier. The Tribunal disposed of the stay application on a prima facie basis, noting that the department became aware of the non-payment of service tax during a visit to the applicant's factory in 2008, and the applicant had not disputed the jurisdiction of the Commissioner until now. The Tribunal directed the applicant to deposit 25% of the confirmed Service Tax amount within eight weeks, with the balance amount and penalties waived and recovery stayed during the appeal.Applicability of Service Tax:The applicant received commissions from finance companies for mobilization of mutual fund units, arguing that the service falls under the reverse charge mechanism and no service tax is payable. The Revenue contended that the applicant marketed mutual funds on behalf of distributing companies and thus cannot claim the reverse charge mechanism. The Tribunal held that the services were rendered to distributors, not mutual fund companies directly, and thus the reverse charge mechanism may not apply. The Tribunal found that the applicant failed to establish a prima facie case for total waiver of pre-deposit of the dues.Limitation on Demand:Regarding the limitation on demand, the Revenue argued that the facts of rendering services against commission came to light during a visit to the factory and scrutiny of records in 2008. The Tribunal noted that the adjudicating authority had given a finding on the extended period of limitation, which requires detailed analysis during the appeal hearing. The Tribunal did not find any financial hardship pleaded by the applicant and directed them to deposit 25% of the confirmed Service Tax amount within eight weeks to avoid dismissal of the appeal.In conclusion, the Tribunal considered the jurisdiction issue, applicability of service tax, and limitation on demand in detail, ultimately directing the applicant to make a partial deposit of the confirmed Service Tax amount while waiving the balance and penalties during the appeal process. The Tribunal emphasized the importance of following legal guidelines and balancing the interests of the Revenue in such matters.