TaxTMI 
TaxTMI 
2015 (7) TMI 819
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....Larger Bench of this Tribunal and, therefore, does not require further elaboration by the undersigned. Accordingly, as far as the first issue is concerned, I agree with Member (Technical) that works contract can be vivisected even prior to 1.6.2007 and the service portion discernible in the contract can be subjected to levy of service tax. 2. The second issue is relation to limitation of time bar. Member (Technical) in his order has held that limitation of time bar does not apply except in the case of contract pertaining to Chennai Petroleum Corporation Ltd. based on the decision of the Hon'ble High Court of Gujarat in the case of Neminath Fabrics Pvt. Ltd. reported in 2010 (256) ELT 369 (Guj.) and the Larger Bench decision of this Tribunal in the case of Usha Rectifier Corporation reported in 2001 (130) ELT 485, or the demand is time barred as held by Member (Judicial) as elaborated in para 8.1 and 8.2 of his order. The case was heard at length on 27.3.2015 and 22.5.2015. 3. The learned senior counsel for the appellant's main contention is that none of the conditions prescribed under proviso to Section 73 exist in the present case and, therefore, invocatio....
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.... furnished to the Revenue. He submitted that Member (Technical) has taken the view that the relevant contracts were furnished only vide letter dated 10.2.2005, overlooking the fact that the contract copies were furnished as early as November/December 2003 and subsequently as and when called for by the Revenue and importantly, copies of all the contracts were furnished on 10.2.2005. Thus the assumption of suppression in view of alleged non-submission of contracts is contrary to facts. The learned senior counsel also submitted a table indicating date-wise the copies of the contracts submitted. The learned counsel submitted that in respect of CPCL contracts, the proceedings were initiated by the Chennai Commissionerate. These were later on dropped. It was submitted that CPCL was audited by the Central Excise Audit staff and they in turn raised queries about the duty payment to be made by L&T and alter on, a show cause notice was issued and which was dropped by the Assistant Commissioner vide his order dated 18.1.2005. The learned senior counsel further submitted that the reference made to the third Member proceeds on misconception and assumption that the appellant has collected servic....
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....(Tri-Ahmd), - para 4 & 5; (xii) A. Rathinam, Prop. Michael Match Works vs. CCE reported in1992 (60) ELT 451 (Tri)- para 17; (xiii) Cadila Laboratories Pvt. Ltd. vs. CCE, Vadodara reported in 2003 (152) ELT 262 (SC) - para 23; (xiv) Supreme Industrties vs. CCE, Mumbai - V reported in 2005 (191) ELT 316 (Tri-Mumbai) - para 3. Another contention of the learned counsel was that the very fact that there was divergent views of various forums, no mens rea can be alleged. He submitted a list of 53 judgments which were passed between 4.6.2003 to 26.8.2014, where a view has been taken that in a situation where divergent views are expressed by various forums, no mens rea can be alleged. It was further submitted that it is settled law that where divergent views are expressed on a question by various forums, then the assessee cannot be imputed with mens rea an essential ingredient to invoke the extended period as could be seen from the following judgments:- (i) Jaiprakash Industries Ltd. vs. CCE Chandigarh reported in 2002 (146) ELT 481 (SC)- para 8; (ii) CCE, Trichy vs. Grasim Industries Ltd. reported in 2005 (183) ELT 123 (SC) - para 20; (iii) Mentha & Allied Products ltd. vs. CCE repo....
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....onstitution has been amended was not brought to the notice of the Tribunal by the learned Counsel for the assessee in that case and this has led to pronouncement of incorrect decision by the Tribunal and the said decision has led to many other cases whether the similar view was taken based upon the judgment in the case of Daelim Industrial Co. Ltd. The learned special counsel further submitted that after the aforesaid constitutional amendment in a series of decisions, the apex court has held that indivisible works contract can be split up and part of it can be subjected to tax - be it sales tax or service tax or any other tax. The learned special counsel further submitted that the Constitutional Bench of the Hon'ble Supreme Court in the case of Builders' Association of India vs. UOI reported in 1989 (2) SCC 645, in para 36 of its judgment has clearly held so. This judgment was earlier to the judgment of the Tribunal in Daelim case and before introduction of installation and commissioning service, in the said judgment, the apex court has stated that after the 46 th amendment to the Constitution, it has become possible for the States to levy, sales tax on the value of go....
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....rom all the cited judgments, it can be safely concluded that the claim of Bona fide belief of the appellant is just a ploy to avoid payment of service tax. Belief can be said to be bona fide only when it is formed after all reasonable considerations are taken into account. Similalry in the case of Winner Systems vs. CCE&C, Pune reported in 2005 (191) ELT 1051 (T), it has been held by the Tribunal that blind belief cannot be a substitute for bona fide belief. It was further submitted that the six contracts involved in the present case are as under:- Sr. No Name of the Customer Contract No. or LOA Reference Date of Contract/LOA 1 Chennai Petroleum Corp. Ltd., Chennai 1027/W/110 04/02/2002 2 Indian Oil Corp Ltd., - MSQ Mathura PJ/MR-DHDT-MSQ/28 21/04/2003 3 ONGC/EIL-MNW Mumbai High North Water Injection Cum Gas compression Platform- Project of ONGC EIL/L&T/MNW/2002 13/09/2003 4 ONGC-N9/10 Well Platform MR/OW/MM/N9&N10/WPP/05R/2002 10/10/2003 5 ONGC-9WWLL Platforms Projects MR/OW/MM/9WPP/09/2003 02/04/2004 6 Mangalore Refinery Pvt. Ltd. MRPL/PMG/TENDER/2004/001/LOA 10/10/2004 A perusal of each of the contract would show price break up for suppl....
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....ehicles. The learned special counsel also quoted this Tribunal's judgment in the case of Dewas Metal Sections Ltd. vs. CCE, Indore reported in 2015 (319) ELT 104 (T), particularly para 6. It was also submitted that this Tribunal in the case of Chemfab Alkalis Ltd. vs. CCE reported in -E/667/2007/MAS, in para 6 of its order, held that it cannot be a case of anybody that since all the excise units are being audited by the department from time to time, extended period of limitation will not apply in respect of any unit. Such an interpretation would render the relevant legal position regarding application of extended period of time totally redundant and hence cannot be accepted. The learned special counsel further submitted that the Hon'ble Gujarat High Court in the case of Neminath Fabrics Pvt. Ltd. reported in 2010 (256) ELT 369 (Guj.), has held that merely because the department had acquired knowledge of the irregularities of the assessee, the suppression would not be obliterated. Similar view has been taken by the Tribunal in the case of Usha Rectifier Corporation (I) Ltd. vs. CCE reported in 2001 (130) ELT 485 (T). In the case of Positive Packaging....
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....urt, the period of such stay shall be excluded in computing the aforesaid period of "eighteen months" or five years, as the case may be." Invocation of extended period of limitation is a mixed question of facts and law. A single fact may change the conclusion in either way. It is, therefore, very important to carefully examine the facts and thereafter apply the relevant provisions of law. One important thing in this case is that service tax on installation and commissioning service was for the first time introduced with effect from 1.7.2003. Service tax on consulting engineering service was introduced in 1998. The consulting engineering service is being mentioned by me as a large number of judgments that have been quoted by the learned senior counsel for the appellant are relating to consulting engineering service and not the installation and commissioning service. Most of the arguments extended are the ones which resulted in the incorrect judgment in the case of Daelim Industrial Co. Ltd. (supra) of this Tribunal, which was with reference to consulting engineering service. It is important to note that the appellant normally enters into a what is called as lump sum turnkey (LSTK) ....
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.... A-3 proforma schedule of prices (as on 3.1.2002), it is mentioned that the service tax would be nil due to the fact that service tax is not applicable to services rendered in the Exclusive Economic Zones, Territorial waters, Continental Shelf and other maritime zones of India as per Ministry of Finance Circular No. 36/4/2001-CX dated 8.10.2001. It would thus been seen from the schedule price, it is not disputed that the service tax is leviable but is not applicable in the present case due to the reason that the work is being executed on the high seas where service tax was not applicable at the relevant time. 6.2 The third contract is between ONGC Ltd. and the appellant and is relating to N-9 & N-10 Well Platforms Project. In respect of the said contract, the appellant has produced a sheet relating to changes in laws and regulations and a scanned copy of the sheet is enclosed herewith:- It will be seen from the said document at Sr. No. 5 that the appellant is very clear that service tax is applicable and the rate is 5% which is to be increased to 8% from a date to be notified by the Government as far as design and engineering is concerned. For commissioning and installation servi....
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....ot bring to the notice of the Tribunal the crucial fact that after the said judgment, the Constitution of India has been amended and a clause (29A) was inserted under Article 366 mandating that indivisible works contract could be split up and part of it could be subjected to tax. Since this crucial fact was not brought to the notice of this Tribunal, this Tribunal gave a decision in line with the Hon'ble Supreme Court's decision in the case of Associated Hotels of India (supra). It is also important to note that strangely learned counsel for the appellant in that case did not quote the Hon'ble Supreme Court's decisions which were subsequent to the amendment to the Constitution, but before the said decision of the Tribunal. These were also not brought to the notice of the Tribunal. Some of the important decisions in this category are Builders Association of India (supra) and Associated Cement Companies Ltd. (supra). After the judgment in the case of Daelim Industrial Co. Ltd. in 2003, the appellant started taking the stand that their lump sum turnkey projects are composite contracts and cannot be vivisected and, therefore, no service tax can be levied under the categ....
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....eclare the questioned transactions in its ST-3 returns. The Commissioner has also observed that if it had really carried any bona fide doubt about the taxability of 'Installation and Commissioning Service', it could have shown it as exempted service in ST-3 returns filed by it from time to time and by not doing so, it has certainly suppressed the material fact from the Department. 7.3 I note that the appellant has got the registration for the consulting engineering service much before 2003 and for the said service in march 2004 (even though it became taxable w.e.f. 1.7.2003) but did not indicate in the periodical returns the details relating to installation and commission service. It is also seen that in 2005, the format of ST-3 returns were amended and the appellant was specifically required to indicate the details of the exempted service. Even if the appellant was having any belief that their activity is not taxable, the least that was expected was to indicate the details in the said column. I entirely agree with the contention of the special counsel for the Revenue that in the self-assessment regime, it is the responsibility of the assessee to correctly assess the duty ....
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....ce to an issue, it cannot be said that information in that document is known to that authority for all the time to come and for all purposes. I observe in this case most of the letters and contracts during 2003-2005 were provided in connection with the consulting engineering service. Letter dated 21.3.2003 is between ONGC and EIL and before the introduction of the installation and commissioning service. Letter of August 2003 is with reference to service tax authorities at Chennai and not of Mumbai. Letter dated 18.10.2003 is again relating to consulting engineering service and speaks of stay granted and not of final decision. Sr. No. 4 is again with reference to consulting engineering service. The enquiries and discussions were relating to taxability with reference to consulting engineering service and not with reference to erection, commissioning and installation service. From December 2004 onwards that the department started investigation about the non-payment of service tax relating to erection, commissioning and installation service and letters written thereafter cannot help the appellant. Discussions and submissions of details are, therefore, of no consequence. It is to be not....
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....ure during the impugned period. The appellant has failed to declare in the said return the complete particulars with regard to the services rendered to the foreign advertisers. Therefore, the ratio of the decision of the hon'ble apex court in the case of Madras Petrochem Ltd. (supra) relied upon by Revenue would squarely apply. In the said decision, the hon'ble apex court had held as follows:- "14. The proposition of law as laid down is not in dispute. We find in the present case as aforesaid, a clear finding was recorded that the petitioner was aware and was obliged to file RG 1 Register, gate passes and also of clearances in the RT 12 returns by disclosing the particulars which was not done in the present case. The finding recorded in this case, especially in the background that this was a case of self removal procedure in which there is obligation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain....
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....there was system of self assessment under which an assessee was required to self assesses his duty liability and file ER 1 return to the Jurisdictional Central Excise Officer. In our view, in terms of the system of the self assessment, an assessee was expected to disclose all the facts which were necessary to enable the assessing officer to verify as to whether the self-assessment tax is correct or not and failure to disclose any fact which was necessary to enable the assessing officer to ascertain the correctness of the self assessed tex would amount to suppression of the relevant facts. The suppression of fact or contravention of the Provisions of the Central Excise Act, 1944 or of the rules made there under with intent to evade the payment of duty is a state of mind which has to be ascertained from the circumstances of the case. In this case, since the fact of recovery of extra inventory cost from M/s Bajaj Auto under debit notes had not been disclosed in the ER-I returns, it has to be inferred that the short payment was on account of suppression of fact on the part of the assessee and, hence, the longer limitation period has been correctly invoked and penalty under section 11AC....
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....ather than individual goods/equipments like IC engines. The plea of bona fide belief is, therefore, unacceptable. It is also pertinent to note that, by virtue of the amendment of the definition under Section 65(64) of the Act, maintenance or repair of "properties whether immovable or not" by any person under a contract or agreement was also squarely covered by the new definition with effect from 1.5.2006 and that the engines and other parts of a motor vehicle are also within the meaning of "properties whether immovable or not". This clause vide Section 65(64)(i)(b) of the Act does not distinguish between a motor vehicle and its components. This legal provision which came into force with effect from 1.5.2006 was, indisputably, known to the appellant and therefore they cannot be heard to say that, on account of the exclusion clause contained in the definition, they bona fide believed that they were not liable to pay service tax on maintenance or repair of IC engines or other parts of motor vehicle. It is not in dispute that the activity of rebuilding, reconditioning, restoration and servicing of IC engines and other parts (of motor vehicles), received from authorised service stations....
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.... fide. In the system of self assessment under Rule 6 of the Central Excise Rules, 1944, in which the Assessee himself assesses the duty payable by him on the goods cleared during a month and the role of assessing officers is to scrutinize the return filed by the Assessee containing detailed information about the duty self assessed, it is the responsibility of the Assessee to furnish full and complete information and if he is availing of some exemption which is subject to fulfillment of certain conditions, he is expected to state clearly in the return as to whether he fulfills the conditions or not. Simply mentioning in the ER-1 Returns about availment of some conditioned exemption notification without mentioning anything about fulfillment of the condition of the notification would amount to wilful suppression of facts if subsequently, it is found that the condition of exemption notification had not been fulfilled. 9.4 In the case of Senor Metals P. Ltd. vs. CCE & ST, Rajkot reported in 2014 (308) ELT 491(T), vide para 7, the Tribunal held as follows: "7. So far as time barred nature of the demand is concerned, Ld. Advocate appearing on behalf of the appellant argued that the....
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.... of the contracts to the Department in November/December 2003. Therefore, there was no suppression of any fact on the part of the appellant. However, I find that copies of the relevant contracts were submitted only in 2005 and 2007 vide its letters dtd. 10/02/2005, 07/08/2007 and 08/08/2007 respectively. I find that in the case of CCE, Calicut vs. Steel Industries Kerala, Ltd. - 2005 (188) ELT 33 (T), in para 3 of its order, the Tribunal has held as follows: "3. We find that in the case of Maruti Udyog Ltd. v. CCE, New Delhi 2001 (134) ELT 269, the Tribunal has upheld the invocation of the extended period of limitation when assessees did not declare waste and scrap of iron and steel and aluminium and availment of credit thereon either in their classification list or modvat declaration or in the statutory records. The Tribunal held that the theory of universal knowledge cannot be attributed to the department in the absence of any declaration..." The ratio of the above decision is also applicable to the present case inasmuch as the appellant did not disclose the details of value of taxable service, service tax payable and the gross amount charged in the ST-3 returns. Therefore....
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.... After this constitutional amendment in various judgments, the Hon'ble Apex Court has held that indivisible Works Contracts can be split up and part of it can be subjected to tax. The following judgments of the Hon'ble Apex Courts are worth mentioning in this regard. (i) Builders Association of India vs. UOI - 1989 (2) SCC 645 (ii) Associated Cement Co. Ltd. vs. Commissioner 2001 (128) ELT 21 (SC). 11. I also note that the appellant has quoted a large number of judgment to bring about the point that there were divergent views of various forums. As mentioned earlier that a large number of such judgments are based upon Daelim Industrial Co. Ltd. judgment of this Tribunal, which ignored a very important fact relating to insertion of clause (29A) to Article 366 of the Constitution of India. The various views expressed after 2007, to my mind, are irrelevant to the issue in hand as the period involved in the present show cause notice is upto 2007 and appellant could not have known such judgments in 2003 onwards and in view of this position, in my considered view, the other judgments quoted by the senior counsel are not relevant to decided the issue here. I have also gone throu....