2020 (7) TMI 357 - AT - Service Tax

Tribunal allows appellant to present new evidence and grounds on works contract.

M/s. GANNON DUNKERLEY & CO. LTD. Versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX (ADJ), NEW DELHI

The Tribunal granted the appellant permission to introduce additional grounds and submit evidence related to the argument concerning a 'works contract.' ... Principles of Natural Justice - CENVAT Credit wrongly availed - prayer made in the application is that the applicant may be permitted to add certain grounds as also file related documents and to grant an opportunity to the applicant to urge the said grounds at the time of hearing of the appeal - extended period of limitation - interest and penalties - scope of Rule 10 of the 1982 Rules - HELD THAT:- If the appellant has not taken a ground, he cannot be permitted to urge or be heard in support of the ground not taken unless leave is granted by the Tribunal. The Supreme Court in JUTE CORPORATION OF INDIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER [1990 (9) TMI 6 - SUPREME COURT] examined the powers of Appellate Assistant Commissioner under section 251 of the Income Tax Act. After noticing that the Appellate Assistant Commissioner, while hearing an appeal against the order of assessment has the power to confirm, reduce, enhance or annual the assessment, the Supreme Court noticed that the Appellate Assistant Commissioner has further been empowered to remit the case to the Assessing officer for making a fresh assessment. Thus, the Supreme Court observed that the Appellate Assistant Commissioner is entrusted with wide powers. It is in this context, that the Supreme Court examined whether the Appellate Assistant Commissioner had jurisdiction to permit raising of additional grounds for assailing the order of the assessment. The Supreme Court observed that there is no reason as to why the appellate authority cannot modify the assessment order on an additional ground not taken before the Income Tax Officer in the absence of any provision in the Act placing restrictions on the powers of the Appellate Authority in entertaining additional grounds - There is no difficulty in permitting the appellant to urge additional legal grounds relating to exemption notification and vagueness of the show cause notice. So far as the limitation is concerned, a ground had already been taken in the memorandum of appeal and additional grounds are sought to be added to substantiate the main ground. Thus, this additional ground can also be permitted to be urged. Whether the Tribunal should permit the appellant to adduce documents/evidence in support of its plea that the activity carried out by the appellant would fall under the category of ‘works contract’, which was not leviable to service tax before 01 June, 2007? - HELD THAT:- It is a fact that there were conflicting decisions, even of Larger Benches, as to whether the activity of the nature contemplated under ‘works contract’ would be leviable to service tax prior to 01 June, 2007 and it is only in the year 2015 that the Supreme Court in COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] determined that it would not be leviable to service tax prior to 01 June, 2007 - It would, therefore, be appropriate to permit the appellant to raise this issue by way of additional ground and also permit the appellant to produce document / evidence in support thereof, more particularly when there is no restriction in law and indeed none has been pointed out, in raising this plea at this stage. Thus, leave can be granted to the appellant to raise an additional ground on the issue relating to ‘works contract’ and also to permit the appellant to produce the evidence / documents in support of this plea - the appellant is granted leave to raise additional grounds in the application in regard to the issues discussed above and also to produce evidence/ documents in support of the plea relating to ‘works contract’. Application allowed. Issues Involved:1. Demand of service tax on advances received prior to 10 September 2004.2. Disallowance of CENVAT credit on invoices addressed to allegedly unregistered premises.3. Alleged short-payment of service tax for the periods October 2005 to March 2006 and 2006-2007.4. Alleged delay in payment of service tax from 2004-05 to 2007-08.5. Invocation of the extended period of limitation.6. Imposition of interest and penalties.7. Admission of additional grounds and documents in the appeal.Detailed Analysis:1. Demand of Service Tax on Advances Received Prior to 10 September 2004:The appellant received advances of Rs. 8,88,75,470/- before 09 September 2004 for construction services to be rendered after 09 September 2004, when the service became taxable. The Commissioner confirmed a service tax demand of Rs. 90,65,298/- on these advances. The appellant contended that no service tax is payable on advances received prior to the taxable date under construction services.2. Disallowance of CENVAT Credit on Invoices Addressed to Allegedly Unregistered Premises:The Commissioner disallowed CENVAT credit amounting to Rs. 24,53,229/- (Rs. 14,31,667/- utilized for payment of service tax) for the period 23 February 2006 to 13 February 2007, arguing that the invoices were addressed to unregistered premises. The appellant argued that they correctly availed CENVAT credit as per the CENVAT Credit Rules, 2004.3. Alleged Short-Payment of Service Tax:For the periods October 2005 to March 2006 and 2006-2007, the Commissioner confirmed demands of Rs. 79,18,607/- and Rs. 1,58,24,365/-, respectively, for alleged short-payment of service tax. The appellant asserted that there was no short-payment during these periods and thus, the confirmation of demand is unsustainable.4. Alleged Delay in Payment of Service Tax:The Commissioner confirmed a demand of Rs. 16,45,973/- for alleged delays in payment of service tax from 2004-05 to 2007-08. The appellant sought to contest this demand, arguing that interest was not payable.5. Invocation of the Extended Period of Limitation:The appellant contended that the extended period of limitation could not be invoked in their case. This ground was already taken in the memorandum of appeal, and additional grounds were sought to substantiate the main ground.6. Imposition of Interest and Penalties:The appellant argued that penalties could not be imposed and that the department failed to discharge its burden of proving taxability. They also claimed entitlement to the benefit of the exemption notification dated 10 September 2004 for any demand of tax prior to 10 September 2004.7. Admission of Additional Grounds and Documents in the Appeal:The appellant sought leave to add new grounds and file related documents, including work orders, bills, other contracts, VAT assessment orders, and work assessment orders. They argued that the activities carried out were in the nature of a 'works contract,' on which no service tax could be levied prior to 01 June 2007, as clarified by the Supreme Court in the Larsen & Toubro Ltd. case.The Tribunal examined the relevant provisions of the Finance Act, 1994, and the Customs, Excise and Service Tax Appellate Tribunal Procedure Rules, 1982. It noted that under Rule 10, the appellant could urge additional grounds with the Tribunal's leave, and under Rule 23, the Tribunal could permit the production of additional evidence if necessary.The Tribunal allowed the appellant to raise additional grounds, particularly the legal ground relating to 'works contract,' and to produce supporting documents/evidence. The Tribunal granted six weeks for the appellant to file a separate application stating these grounds and the additional evidence.Conclusion:The Tribunal granted the appellant leave to raise additional grounds and produce evidence/documents in support of their plea relating to 'works contract.' The appellant was directed to file these grounds and additional evidence within six weeks. The application was accordingly allowed.