TaxTMI 
TaxTMI 
2018 (3) TMI 1288
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....and beyond authority delegated u/s. 37B of the Central Excise Act, 1944, in giving interpretation and authority to collect tax prior to the date of levy, contrary to the provisions of Sections 66, 67, 68, 69 of the Finance Act, 1994, read with Rules 4 and 6 of the Service Tax Rules, 1994?" D.B. Central Excise Appeal No.12/2009 admitted on 16-3-2009 "Whether the clarification dated 5-11-2003 issued by Tax Research Unit (TRU) was ultra vires, null and void and beyond authority delegated u/s. 37B of the Central Excise Act, 1944, in giving interpretation and authority to collect tax prior to the date of levy, contrary to the provisions of Sections 66, 67, 68, 69 of the Finance Act, 1994, read with Rules 4 and 6 of the Service Tax Rules, 1994?" D.B. Central Excise Appeal No.18/2013 admitted on 28-9-2016 "Whether Service Tax can be levied on the amount received prior to date of levy when registration and invoice could not be raised to collect indirect tax and provisions of Provisional Collection Act were not applicable and Section 66 of the Act imposed the levy w.e.f. 1-7-2003? Whether treatment of service under the head of Commercial Coaching Centre and ....
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....ided is taxable tax has to be paid on its value. Section 67 also clarifies value of service as the amount charged for the taxable service by the service provider. In other words, an amount becomes value of taxable service only when it has a nexus with the service provided. That is the reason why the expression used in rule 6 is "value of taxable services" and not amount. The implication is that the tax has to be paid on the value of taxable services attributable to the service provided in a month/ quarter as and when it is received. Thus, rule 6(1) cannot be read in isolation. When read along with the provisions of the Act, it becomes clear that where the value of taxable Service Tax has to be paid on the value of service attributable to the relevant months/quarter which may be worked out on pro rata basis. 3. In this context, attention is invited to para 2.3.1 of circular No.59/8/2003, dated 20-6-2003 wherein it was clarified that in view of the notification 11/2003-S.T., dated 20-6-2003, no Service Tax would be payable where maintenance contracts are entered into before 1-7-2003, provided the invoices are raised and paid prior to 1-7-2003. It was further mentioned in the circu....
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.... force from a date to be notified later on." (ii) Vide Para 170 of Finance Minister's speech in the Union Budget 2003, intention of legislature was very clear on the subject of increase in rate from 5 per cent to 8 per cent and that the levy of tax on the new services will be effective from notified date. The relevant para 170 is reproduced below : "I propose to enhance the general Service Tax rate from 5 per cent to 8 per cent, and also impose Service Tax on 10 new services. While the increase in the tax rates will come into effect on enactment of the Finance Bill, the levy of tax on the new services will take effect from a date to be notified. (iii) Vide explanatory memorandum to the Finance Bill, it was very clear that the intention of legislature was to Tax the new levies only from the notified date and also at the rate of 8 per cent while is clear in Para 9 of the memorandum. Further, the intent of legislature is also clear from the fact that they have not introduced the provisions of Provisional Collection of Taxes Act of 1931 which are intentionally applied on Excise and Customs Duty which are the mother Acts of Service Tax. (iv) That the Finance Bill w....
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....e month immediately following the said quarter. (2) The assessee shall deposit the Service Tax liable to be paid by him with the bank designated by the Central Board of Excise and Customs for this purpose in Form TR-6 or in any other manner prescribed by the Central Board of Excise and Customs. "Rule 4 : Registration : (1) Every person liable for paying the Service Tax shall make an application to the concerned Superintendent of Central Excise appointed under Rule 3 in Form S.T.-1 for registration within a period of thirty days from the date on which the Service Tax under section 66 of the Finance Act, 1994 (32 of 1994) is levied : Provided that where a person commences the business of providing a taxable service after such service has been levied, he shall make an application for registration within a period of thirty days from the date of such commencement. (5) The Superintendent of Central Excise shall after the due verification of the application form grant a certificate of registration in Form S.T.-2 within seven days from the date of receipt of the application. If the registration certificate is not granted within the said period, ....
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....e sake of brevity not reproduced but is marked as Annexure 4 to the appeal and enclosed herewith." 9. He further contended that the Tribunal while considering the matter has observed as under :- "(b) Service Tax was not payable on advance receipt during the relevant period, as there was no provisions in the Finance Act, 1944 or the Service Tax Rules for recovery of the tax against advance receipt. He drew the attention of the Bench various provisions of Finance Act, 1994 and Rules. He relied upon the Board Circular F. No.B-1/6/2005-TRU, dated 27^th July, 2005. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of CIT v. Srinivas sethy, reported in 1981 (128) I.T.R. 294 (SC). (d) By Board Circular No.B.11/1/2002-TRU, dated 1-8-2002, it is clarified that no Service Tax will be payable on membership fee already collected, prior to the date on which new Service Tax on "clubs and fitness centres" has come into force; He submits that the said circular is similarly applicable in the present case." 10. He further contended that in Section 65(105) "Taxable Service" came to be amended and further since there was a lacuna, the amendment made reads as u....
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....e statement of the common law or in the interpretation of statutes. Usually, if invariably, such an Act contains a preamble, and also the word 'declared' as well as the work 'enacted', (approved by the Supreme Court in Central Bank of India v. Their Workmen, AIR 1960 SC 12). (11) An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a Statute is curative or merely declaratory of the previous law, retrospective operation is generally intended. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. In view of the above discussions, we find that subsequent amendment of provisions would not change the dimension of the appellant's case. (iv) The learned Advocate stated that in the taxing statute, the levy and collection provision constitute an integral code, if the machinery provisions fail, levy cannot be enforced. There is no quarrel on this proposition. But, in the instant case, there is machinery provision relating to collection of tax, in our view, which would be ....
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....issioner of Central Excise, Bangalore v. Mysore Electricals Industries Ltd. reported in MANU/SC/8687/2006 : 2006 (204) E.L.T. 517 (S.C.). In the said judgment, this Court held that a beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively. Thus, when the circular is against the assessee, they have right to claim enforcement of the same prospectively. 3. In view of the submission made by the learned Counsel for the appellant and also of the judgment of this Court in C.A. No.4484/05 (supra), the appellant is liable to pay the duty from 29-8-1990 i.e. from the date of issue of the show cause notice and not from 1-3-1990 as ordered by the Tribunal." 17. He has also relied on the judgment rendered by the Supreme Court in the case of Somaiya Organics v. State of Uttar Pradesh : [2001(130) E.L.T. 3 (S.C.)] wherein it has been held as under : "In the ultimate analysis, prospective overruling, despite the terminology, is only recognition of the principle that the court moulds the reliefs claimed to meet the justice of the case justice not in its logical but in its equitable sense. As far as this country is concerned, the power....
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....39 of the U.P. Excise Act, 1910. This would clearly be the position as a result of the Court having declared relevant provisions of the U.P. Act as being ultra vires insofar as it enables the imposition of excise duty on industrial alcohol. For the aforesaid reasons, C.A. No.4093 of 1991 is allowed. Civil Appeal No.2853 of 2001 is dismissed. It is declared that the vend fee realised by the States is not to be refunded to the appellants and, at the same time, the State cannot collect any vend fee for the period prior to 25th October, 1989 or thereafter notwithstanding that notices of demand may have been issued or recovery proceeding initiated. Parties to bear their own costs. While I respectfully concur with the reasoning and conclusions reached by my learned brother KIRPAL, J., I wish to add my views on an aspect of the prospective over-ruling which was sought to be effected by the decision of the Constitution Bench of this Court in Synthetics and Chemicals Ltd. and Others v. State of u.p. and others, 1990 (1) SCC 109. 18. He has also relied upon order of the Tribunal wherein while taking a contrary view in the case of M/s. Vigyan Gurukul v. C.C.E., Jaipur [2012 (25) S.T.....
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.... say that the appellant should not have paid tax in advance. So we do not find it proper to rely on this explanation to conclude that the rate of tax as prevalent at the time of providing service (This date itself is not a clear date in this case) will apply. We are of the view that during the relevant time the rate that was applicable at the time of receipt of value of service will apply in a case where the assessee chose to pay tax on the advance amount received. 13. We also take note that provisions in Rule 4(b)(ii) and Rule 9 of the new Point of Taxation Rules, 2011 as amended by Notification 25/2011-S.T., dated 30-3-2011 have the same effect as our conclusion. For convenience Rule 9 of the said Rule is reproduced below : "9. Transitional Provisions. - Nothing contained in this sub-rule shall be applicable, - (i) where the provision of service is competed; or (ii) where invoices are issued prior to the date on which these rules come into force : Provided that services for which provision is completed on or before 30^th day of June, 2011 or where the invoices are issued up to the 30^th day of June, 2011, the point of taxation shall, at the ....
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....bunal reduced the penalty, Counsel for the appellants contended before us that in view of the trade notices which were referred to by the Tribunal, there is scope for believing that agarbaties were entitled to exemption and if that is so, then there is enough scope for believing that there was no need of taking out a licence under Rule 174 of the said Rules and also that there was no need of paying duty at the time of removal of dhoop sticks, etc. Counsel further submitted that in any event apart from the fact that no licence had been taken and for which no licence was required because the whole duty was exempt in view of Notification No.111/78, referred to hereinbefore, and in view of the fact that there was scope for believing that it was exempt under Schedule annexed to the first notification, i.e., 55/75, being handicrafts, the appellants could not be held to be guilty of the fact that excise duty had not been paid or short-levied or short-paid or erroneously refunded because of either any fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder. These ingredients postulate a positive act. Failure to....
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....provisions of Section 11 A of the Act. There were no materials from which it could be inferred or established that the duty of excise had not "been levied or paid or short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder. The Tribunal in the appellate order has, however, reduced the penalty to Rs. 5,000/- and had also upheld the order of the confiscation of the goods. In view of the fact that the claim of the Revenue is not sustainable beyond a period of six months on the ground that these dhoop sticks, etc. were not handicrafts entitled to exemption, we set aside the order of the Tribunal and remand the matter to the Tribunal to modify the demand by confining it to the period of six months prior to issue of show cause notice and pass consequential orders in the appeal on the question of penalty and confiscation. The appeal is allowed to the extent indicated above and the matter is, therefore, remanded to the Tribunal with the aforesaid directions. This appeal is disposed of accordingly." 20. Counsel for the respondent....
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....llant to pay excise duty. The learned counsel for the appellant is also right in relying upon a decision of this Court in Collector of Central Excise, Shillong v. Wood Craft Products Ltd., [1995] 3 SCC 454]. In that case, this Court held that a clarificatory notification would take effect retrospectively. Such a notification merely clarifies the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing Notification No.46/94 of March 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied, the Central Government issued a clarificatory Notification No.95/94 on April 25, 1994. It was not a new notification granting exem....
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....e been issued to end the dispute between the parties." 25. In third Appeal No.18/2013 Mr. Singhi, mainly contended that there is suppression of fact that they are also having a right of Frenchizee and it was not disclosed. In that view of the matter it is contended that the show cause notice issued on 27-7-2006 was within limitation and the contention which has been raised by the appellant regarding the statute, the period cannot be extended in view of the suppression of the material fact : 26. He has also taken us to para 7 at page 74 and para 7 at page 80 which reads as under : "As regards the question of time bar, the appellant has contended that the department knew about it in 2004 as is evident from the earlier show cause notice on 12-5-2004 demanding Service Tax on the same amount under "Commercial Coaching Services" which was confirmed under "Franchise Service" and the Order-in-Original 18/ST/2005, dated 7-6-2005 confirming the same was set aside vide Order-in-Appeal dated 27-9-2005 because "Franchise Service" was not even mentioned in the show cause notice and the said Order-in-Appeal was upheld by CESTAT vide order no.729/06-SM(BR), dated 4-5-2006. This point need....
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....cision of Tribunal in the case of Paro Food Products - [2005 (184) E.L.T. 50 (Tri.- Bom.)] is also of no avail because the proceeding under appeal relating to taxability remained unchallenged while the single bench had no jurisdiction to sit in appeal over a classification issue and also when Service Tax demand involved was Rs. 22,48,432/and the appellant has presently only challenged exercise of power without challenging legality of taxation. Therefore, adjudication by the impugned order is upheld and tax demand of Rs. 5,27,018/- is confirmed which shall follow interest." 27. Mr. Sameer Jain has strongly relied on clause 2 at page 64 which reads as under : "2. That the show cause notice is barred by limitation as the charge of withholding of material information with an intent to evade payment of duty is factually and legally incorrect and in fact the said charge is only invoked to cover up delay on the part of department itself, because : (i) As per ST-2 issued by the department itself, the word franchisee services are duly disclosed on the registration certificate. (ii) In the departmental show cause notice dated 12-5-2004, a demand of Rs. 22.48 Lac....