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2011 (8) TMI 1036
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....03,50,906 10,40,64,667 1,62,86,239 12.24% 19,93,4 36 F.Y. 09-09 13,87,33,258 11,88,99,426 1,98,33,831 12.36% 24,51,462 TOTAL 49,93,998 2. Intra-port transportation of ores in terms of agreements with M/s. T.M. International Logistic Ltd., subsidiary of M/s. TISCO : Period during which services were rendered Inland transportation charges realized by the assessee (Rs.) Inland transportation charges incurred by the assessee (Rs.) Service charges (Rs.) [(2)-(3)] Gross rate of Service Tax Gross Service Tax payable (Rs.) (1) (2) (3) (4) (5) (6) F.Y. 04-05 58,86,449 51,89,243 6,97,207 10.2% 71,394 F.Y. 05-06 1,72,88,595 1,50,60,361 22,28,234 10.2% 2,27,280 F.Y. 06-07 1,99,40,961 1,75,36,530 24,04,431 12.24% 2,94,302 F.Y. 07-08 1,90,11,843 1,65,29,968 24,81,875 12.36% 3,06,760 F.Y. 08-09 1,86,75,356 1,66,06,478 20,68,878 12.36% 2,55,713 TOTAL 11,55,449 3. &nb....
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....nbsp; Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to "manufacture" within the meaning of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944). Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "commission agent" means any person who acts on behalf of another person and causes sale or pur....
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....ervice; .............. (zzl) to any person, by other port or any person authorised by that port in relation to port services, in any manner; 65A. (1) For the purposes of this chapter, classification of taxable services shall be determined according to the terms of the sub-clauses (105) of section 65; (2) When for any reason, a taxable service is prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows : (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable; (c) when a scrvice cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally mer....
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....ing into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment." 6. Section 73(1) of the Finance Act, 1994 provides as follows : "73. (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short levied or short paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) wilful mis....
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....but before expiry of five years, is subject to finding of fraud, collusion, wilful misstatement, suppression of facts or contravention of any provisions of Chapter V or of the Rules made thereunder, with intent to evade payment of service tax by the person chargeable with service tax or his agent. In no circumstances can jurisdiction to issue a show cause notice be exercised after expiry of five years from the relevant date. The demand in the impugned show cause notice of Rs. 71,394/- on account of intra-port transportation of ores in the Financial Year 2004-2005 is ex facie barred by limitation as five years had elapsed from the relevant date. 12. The petitioner has, by its letter dated 7th June, 2010, a copy of which has been annexed to the writ petition, given a detailed reply to the show cause notice, inter alia contending that the impugned show cause notice was barred by limitation, in view of Section 73(1) of the Finance Act, 1994. 13. Mr. J.K. Mittal appearing on behalf of the petitioner submitted that all the claims were barred by limitation as the conditions precedent for invocation of the extended period of limitation as provided in the proviso to Section ....
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....l stage without examining the contention of the writ petitioner that the show cause notice was without jurisdiction. 20. In this case too, a challenge has been thrown to the jurisdiction of the concerned respondent to issue a show cause notice, after expiry of the period of limitation stipulated in the proviso to Section 73 of the Finance Act, 1994. 21. It is well established that the question of limitation is a question of jurisdiction in the sense that an authority has no jurisdiction to issue a show cause notice which is barred by limitation. In the State of Punjab v. Bhatinda District Cooperative Milk P Union Ltd. reported in 2007 (217) E.L.T. 325 (S.C.) = (2007) 11 SCC 363, the Supreme Court held that the question of limitation being a jurisdictional question, a writ petition challenging the validity of a notice of revision of an order of assessment of sales tax, on the ground of the same being barred by limitation, would be maintainable, notwithstanding an alternative statutory remedy. 22. It is well-established that where the jurisdiction of an authority depends upon a preliminary finding of fact, this Court in exercise of its writ jurisdiction is ent....
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....e an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequences. ............... ............... The expression "reason to believe" postulates belief and the existence of reasons for that belief. The belief must be held in good faith: it cannot be merely a pretence. If it be asserted that the Income Tax Officer had reason to believe that income had been under-assessed by reason of failure to disclose fully and truly the facts material for assessment, the existence of the belief and the reasons for the belief, but not the sufficiency of the reasons, will be justiciable. The expression therefore predicates that the Income Tax Officer holds the belief induced by the existence of reasons for holding such belief. It contemplates existence of reasons on which the belief is founded, and not merely a belief in the existence reasons inducing the belief; in other words, the Income Tax Officer must....
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....petitioner and seized various records relating to service tax, including computer data. 34. It appears that the petitioner received a letter dated 29th August, 2006 from the office of the Assistant Commissioner, of Service Tax, Dhanbad alleging that conversion charges for conversion of coal into coke attracted service tax under the category of 'business auxiliary service'. 35. By a letter dated 30th October, 2006, the petitioner informed the Assistant Commissioner that conversion of coal into coke amounted to manufacture and was thus exempted from service tax in view of the proviso to Section 65(19) of the Finance Act, 1994. 36. Thereafter the petitioner received another letter dated 30th October. 2008 from the Commissioner of Central Excise and Service Tax, Ranchi alleging that conversion of coal into coke constituted 'business auxiliary service'. The petitioner by its letter dated 12th November, 2008 replied to the aforesaid letter of the Commissioner of Central Excise and Service Tax, refuting the contention that conversion of coal into coke constituted business auxiliary service. 37. By a letter dated 9th March, 2007 the Superintendent of Central....
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....94 on the vague allegation that the petitioner had not paid appropriate service tax, not disclosed relevant details to the Department and had as such taken all material steps to suppress pertinent facts wilfully, with the sole intention of evading service tax. 46. Apart from the aforesaid vague, omnibus allegation of steps to suppress pertinent facts, with intention of evading payment of service tax, there is nothing in the impugned show cause notice with regard to how the proviso to Section 73(1) of the Finance Act, 1994 has been invoked. 47. The period of limitation for issuing a show cause notice is one year from the relevant date. The expression "relevant date" has not been defined in the Finance Act, 1994 as amended till date. On a reading of the various provisions of the Finance Act, 1994 as amended from time to time and the Rules framed thereunder the expression 'relevant date' would have to be construed as the date on which the tax was payable. 48. Under Rule 6 of the Service Tax Rules, 1994 as they stood at the material time, service tax was to be paid to the credit of the Central Government by the 5th day of the month following the calendar month i....
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....riod of limitation, the contravention must be coupled with intent to evade payment of service tax. 55. A show cause notice issued upon invocation of the extended period of limitation as provided in the proviso to Section 73(1) on the ground of contravention of Chapter V cannot be sustained in law, unless the authority issuing the show cause notice is able to demonstrate intention to evade payment of Service Tax on the part of the assessee. 56. No case has been made out in the impugned show cause notice of any fraud, collusion or misrepresentation. There is a vague assertion of suppression of facts and contravention of Chapter V with intent to evade payment of Service Tax. 57. In Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut reported in (2005) 1 SCC 745 = 2005 (188) E.L.T. 149 (S.C.), the Supreme Court held that mere failure to declare does not amount to wilful suppression. There must be some positive act on the part of the assessee. The judgment in Anand Nishikawa (supra) has been followed by the Supreme Court in Commissioner of Excise, Aurangabad v. Bajaj Auto Ltd. reported in 2010 (260) E.L.T. 17 (S.C.) cited by Mr. J.K. Mittal appeari....
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....g that intra-port transportation services provided by the petitioner to M/s. T.M. International Logistic Ltd. within the Paradeep Port constituted taxable service under the category of 'Port Services' and/or 'cargo handling services'. 64. In reply to the aforesaid communication, the petitioner gave a reply contending that the intra-port services rendered by the petitioner did not constitute port service since the petitioner was neither port nor authorized by the port. 65. Rendering of service which constitutes 'port service' under Section 65(105)(zn), as amended, could not have constituted a business auxiliary service. Had services of such nature constituted business auxiliary service, there would not have been any need to amend the definition of port services. Moreover, the petitioner would not have been registered as service provider in relation to 'port services'. 66. The facts disclosed in the pleadings and/or documents annexed thereto, which are matters of record, clearly reveal that there was confusion, as to whether Service Tax was payable at the material time for the service of conditions precedent for exercise of jurisdiction to issue a show cause n....
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....iliary service. 73. However, the service tax authorities were aware that the petitioner was rendering the service of getting coking coal of TISCO converted into conversion of coke into coal, inter-port services and service of processing of pyroxenite. As pointed out by Mr. Mittal, in the impugned show cause notice, it is admitted that the petitioner is registered under mining services and has been paying service tax on processing of pyroxenite since 1st June, 2007. The activities are covered under Section 65(105)(zzy), that is, mining services which have been made taxable only with effect from 1st June, 2007. 74. An activity which amounted manufacture having been excluded from the definition of 'business auxiliary services' there may have been doubt as to whether conversion of coke into coal on behalf of clients constituted taxable service. Moreover, Service Tax Authorities were also not sure of the exact Clause of Section 65(19) into which the activity of conversion of coke into coal on behalf of clients would fall at the material time, and accordingly did not specify the clause. 75. The correspondence on record reveals that there was also confusion with re....