TaxTMI 
TaxTMI 
2018 (3) TMI 1288
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....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 franchisee service on the same issue by the Department can be held to be....
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....rvice 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 circular that similar would be the situation in case of continuing services. By continuing se....
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....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 was enacted by the Parliament on 14-5-2003 and as per Chapter V pertaining to Indirect taxes, few changes and merge....
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....he 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, the registration applied for shall be deemed to have been granted." "83. Application of certain provisions of Act (1 of 1944). - The provisions of the following sections of the Centra....
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....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 27th 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 under : "(105) "taxable service" means any service provided. (zzc) to any person, by a commercial training or coaching centre in relation to commercial training or coaching; 11. Counsel for the appellant has further taken....
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....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 workable in the present situation. (vi) However, we find force in the submission of Id. Advocate that the present case relates to interpretation of the provisions of law and the imposition of penalty and extended period of limitation are not warranted. 10 In view o....
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..... 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 has been expressly conferred by Article 142 of the Constitution which allows this Court to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. In exercise of this power, this Court has often denied the relief claimed despite holdi....
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.... 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.R. 459 (Tri.-Del.)] the Tribunal has observed as under :- "10. For a harmonious construction of the relevant provisions it is necessary to quote them. They are quoted below : '65(105) "taxable service" means any service provided or to be provided' - as defined in the various clauses. "66. Charge of ....
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....eceipt 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 30th day of June, 2011 or where the invoices are issued up to the 30th day of June, 2011, the point of taxation shall, at the option of the taxpayer, be the date on which the payment is received or made as the case may be." 19. He has also relied on the decision of the Supreme Court in the case of Padmini Products v. Collector of C.Ex. [1989 (43) E.L.T. 195 (S.C.)] wherein it has been held as under :- "Shri V. Lakshmi Kumaran, learned Counsel for the appellant drew our attention to the observations of thi....
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....d 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 pay duty or take out a licence is not necessarily due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision. Shri Ganguly, appearing for the Revenue, contended before us that the appellants should have taken out a licence under Rule 1....
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....ribunal 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 respondents Mr. Kinsuk Jain and Mr. Anuroop Singh supported the order of the Tribunal and contended that in view of the clarification which has been issued, the services which are rendered after 1-7-2003 are required to be under the taxing statute. 21. Mr. Jain has specifically emphasized on clauses 16 & 17 in Appeal No.12/2009 which reads as under :- "16. The plea of the assessee, that Service Ta....
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....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 exemption for the first time in respect of parts of power driven pumps to be used in the factory for manufacture of pumps but clarified the position and made the position explicit which was implicit. For the foregoing reasons, in our opinion, the appeals deserve to be allowed and are allowed accordingly. Deposit, if any, made by the appellant in pursuance of the order passed by the authorities below will be refunded to it." 24. H....
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....d 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 needs a bit of elaborate discussion. I find that even in the Show Cause Notice dated 12-52004 it was clearly brought out that the appellant did not declare the taxable value collected prior to 1-7-2003 in respect of "Franchise Service" rendered on or after 1-7-2003 in their ST-3 returns. Indeed the appellant did not supply the information in this regard even when sought by the department vide letter dated 13-11-2003 and it was only when they were summ....
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....fore, 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 Lacs was raised on the noticee, on account of non-payment of tax in the category of Commercial and Coaching Centre and thereafter was dropped in part by the Joint Commissioner on account of the fact that the show cause notice has wrongly categorized the service as Commercial Coaching Center services and further the service provider in the given case is franchisor. The said order-in-original was challenged before the Commissioner (Appeals) on merits as well as on applicabilit....