TaxTMI 
TaxTMI 
2025 (1) TMI 896
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....on as this Hon'ble Court may deem it fit quashing the impugned Order-In-Original NO.BEL-EXCUS-000-COM-BKK-006-2018-19 (ST) passed on 23.10.2018 and issued on 05.11.2018 by respondent No. 3 (Annexure-'A') as being in abuse of jurisdiction, wholly arbitrary, illegal and untenable in law, as well as being in violation of Articles 14, 19(1)(g) and 141 of the Constitution of India. (b) Issue a writ of mandamus, or any other such writ order or direction, holding and declaring that the provisions of Section 35F of the Central Excise Act, 1944 is wholly arbitrary, ultra-vires and violative of Article 14 of the constitution and thus unenforceable. (c) In the alternative, and without prejudice to the foregoing reliefs prayed for; issue a writ of mandamus or any other such writ, order or direction as this Hon'ble Court may deem fit dispensing with the requirement to pre-deposit of 7.5% (ten percent) of the demand of tax made under the order-in-original NO.BEL-EXCUS-000-COM-BKK-006-2018 19 (ST) passed on 23.10.2018 and issued on 05.11.2018 by respondent No. 3 (Annexure-'A') otherwise required to be made under the provisions of Section 83 of the Finance Act, 1994, read with Se....
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....rayer No.(b) made in W.P.No.102458/2019 and W.P.No.108984/2015 and prayer No.(c) made in W.P.No.102040/2017 with regard to the challenge to Section 35F of the Central and Excise Act, 1944, as being arbitrary. Hence, the contention of the petitioners regarding the same raised in the writ petitions is not been considered in this order in view of the said submission. 5. The petitioner in the aforementioned writ petitions has called in question the orders-in-original passed by respondent No. 3/Commissioner, the details of which are as under: Sl.No. Writ Petition No. Order-in-Original No. Date of the order Period 1. W.P.102458/2019 No. 6/2018-19 23.10.2018 From April-2016 to June-2017 2. W.P.108984/2015 No. 7/2015-16 03.06.2015 From April-2012 to March-2013 3. W.P.102040/2017 No. 26/2016-17 28.11.2016 April-2013 to March-2014 No. 83/2016-17 28.12.2016 From Oct-2005 to March-2006 No. 84/2016-17 28.12.2016 From April-2006 to Sept-2006 6. The relevant facts in a nutshell leading to the present writ petitions are that the petitioner in the aforementioned writ petitions carries on the business of retreading t....
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....the said orders having become final, the relief sought for by the petitioner with regard to the said order-in-original bearing No. 83-84/2016-17 dated 28.12.2016 is liable to be granted and the said orders are required to be quashed. 11. It is the primary contention of the petitioners/assessee that VAT having been discharged, the demand of the respondents/revenue of service tax on the same value, on the ground that notwithstanding the tax paid to the State, service tax also ought to be paid to the Union as such goods consumed in retreading are not sales, is ex-facie untenable and that the revenue/Union of India cannot tax a component of a deemed sale, which is within the exclusive domain of the State Legislature and falls in Entry 54 of List-II of the Schedule-VII of the Constitution of India. 12. In the said context, it is relevant to note that the Hon'ble Supreme Court in the case of Commissioner of Central Excise & Customs Kerala v. Larsen and Toubro Limited 2015 (39) S.T.R. 913 (S.C.), after referring to its earlier judgment in the case of Gannon Dunkerley & Company & others v. State of Rajasthan & others (1993) 1 SCC 364 has held as follows: "15. A reading of th....
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....4, it is clear that any charge to tax under the five heads in Section 65 (105) noticed above would only be of service contracts simpliciter and not composite indivisible works contracts. 16. At this stage, it is important to note the scheme of taxation under our Constitution. In the lists contained in the 7th Schedule to the Constitution, taxation entries are to be found only in lists I and II. This is for the reason that in our Constitutional scheme, taxation powers of the Centre and the States are mutually exclusive. There is no concurrent power of taxation. This being the case, the moment the levy contained in a taxing statute transgresses into a prohibited exclusive field, it is liable to be struck down. In the present case, the dichotomy is between sales tax leviable by the States and service tax leviable by the Centre. When it comes to composite indivisible works contracts, such contracts can be taxed by Parliament as well as State legislatures. Parliament can only tax the service element contained in these contracts, and the States can only tax the transfer of property in goods element contained in these contracts. Thus, it becomes very important to segregate the tw....
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....s stated as follows: "(ii) I confirm and order for recovery of the differential Service Tax of Rs. 4,31,67,951/- (Rupees Four Crores Thirty One Lakhs Sixty Seven Thousand Nine Hundred and fifty one only) (inclusive of cesses), under "Works Contract Service" under section 65B(54), under Section 73(1) of the Finance Act, 1994" (emphasis supplied) 17. Hence, it is clear that the Commissioner at paragraph 23 has recorded a finding that the activity of the petitioner does not come under "works contract". However, while confirming the order for recovery of the differential services tax, the commissioner has levied the same under "works contract" under Section 65-B (54) under Section 73 (1) of the Finance Act. 18. It is clear from the aforementioned that the order passed by the Commissioner is ex-facie untenable as being mutually contradictory, as has been noticed above. 19. It is relevant to note that the Hon'ble Supreme Court vide order dated 18.01.2017 passed in Civil Appeal No.641/2012 in the case of Safety Retreading Company (P) Ltd has also considered Civil Appeal No.6375-6376/2014 in the petitioner's own case. In the said case, the matter having been deci....
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....uate and satisfactory proof in this regard is forthcoming from the assessee. On the very face of the language used in Section 67 of the Finance Act, 1994 we cannot subscribe to the view held by the Majority in the appellate Tribunal that in a contract of the kind under consideration there is no sale or deemed sale of the parts or other materials used in the execution of the contract of repairs and maintenance. The finding of the appellate Tribunal that it is the entire of the gross value of the service rendered that is liable to service tax, in our considered view, does not lay down the correct proposition of law which, according to us, is that an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30%. 12. No dispute has been raised with regard to the assessment of the appellant on its turnover under the local/State Act, insofar as payment of value added tax on that component (70%) is concerned. A reading of the show cause notice dated 24th January, 2008 would go to show that the entire thrust of the Department's case is the alleged liability of the appellant - assessee to pay service tax on the gross value. In ....
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....service provided, appears to be an afterthought, even on examination of the same on merits we have found it to be wholly unsustainable. 14. We, therefore, in the light of what has been discussed above, set aside the majority order of the appellate Tribunal dated 14th October, 2011 and hold that the view taken by the learned Vice President of the appellate Tribunal is correct and the same will now govern the parties. All reliefs that may be due to the appellant - assessee will be afforded to it forthwith and without any delay. All amounts, as may have been, deposited pursuant to the order(s) of this Court shall be returned forthwith to the appellant, however, without any interest. Bank guarantee furnished insofar as the penalty amount is concerned shall stand discharged. The appeal is allowed in the above terms." (emphasis supplied) 20. It is clear from the said judgment that the Hon'ble Supreme Court has authoritatively pronounced that the petitioner/assessee is liable to pay the service tax only with respect to the service component under the State Act. The Hon'ble Supreme Court has specifically set aside the finding of the Appellate Tribunal ....
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....als which formed the subject matter of sale/deemed sale. Further, in this case, the petitioner had produced on record documentary proof that sale/deemed sale component corresponding to 70% of the gross value, the petitioner was in fact assessed to and levied sale tax/VAT to the local Sales Tax/VAT Authorities. The petitioner also adduced documentary proof regarding payment of such local sales tax/VAT to the State Authorities. As regards this position, in fact, there is no dispute whatsoever. Rather, express cognizance of this aspect has been taken by the Commissioner in paragraph 37 of the impugned order dated 14 October, 2016. In such circumstances, therefore, there was absolutely no justification on the part of the Commissioner in denying the petitioner the benefit of exemption dated 20 June, 2003. 22. Incidentally, it is necessary to note that the contention very similar to the one now raised by Ms. Dessai, was also raised before the Hon'ble Apex Court in the case of Safety Retreading Co. (P) Ltd. (supra). There, the Learned Additional Solicitor General of India had contended that there was no evidence forthcoming from the assessee that the value of goods or the par....
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....nder consideration is squarely covered by the judgment of the Hon'ble Supreme Court in the case of Safety Retreading Company (P) Ltd3. Hence, the contention of alternative remedy raised by the Revenue is untenable and accordingly rejected. 25. As noticed herein above, the petitioner has furnished copies of tax invoices maintained by it, wherein the petitioner has indicated the value of the material and labour charges separately and as also indicated that in respect of the value of the materials the tax has been paid to State Government and with respect to the value of the labour charges the service tax has been paid to the Union Government. The said invoices have also been submitted to the tax authorities in the State Government and the State has passed re-assessment orders under KVAT Act. 26. It is further relevant to note here that a similar fact situation was considered by the Hon'ble Supreme Court in the case of Safety Retreading Company (P) Ltd as also by a Division Bench of the Bombay High Court in the case of Tyresoles India Pvt. Ltd., . The Hon'ble Supreme Court, as noticed above has clearly held that no dispute has been raised in the show cause notice (as....