Shairu Gems Diamonds Pvt. Ltd Vs Commissioner of Service Tax-IV (CESTAT Mumbai)
CESTAT find that the learned Commissioner at paragraph 2 has referred to the show cause notice dated 21.08.2012 having been issued to the appellant, seeking confirmation of service tax demand for the period 2008 to 2012. He has also recorded that the said show cause notice issued by the department so far has not been adjudicated and that this earlier show cause notice is not being taken up for adjudication in his impugned order. We find that the legal provisions under Section 73 of the Finance Act, 1994 provide for recovery of service tax that has not been levied or paid or that has been short-levied or short-paid or erroneously refunded. The sub-section (1) of Section 73 provide for issue of show cause notice for the normal period as well as for extended period under certain prescribed situations. Further sub-section (1A) provide for issue of notice, subsequent to issue of any notice under sub-section (1), for the subsequent period in the form of a statement, and the same shall be deemed to be service of notice on the noticee, as the grounds relied upon are one and the same for both the notices. We also find that the show cause notice dated 01.11.2013 relevant to the impugned order, in para 7 specifically state as follows:
“7. The grounds, facts, evidences and legal provisions enumerated in the show cause cum demand notice bearing No.409/Commr./2012-13 issued by the Commissioner of Service Tax-I, Mumbai under F. No. V/Service Tax/HQ/AE/B/245/11/3240 dated 21.08.2012 for the period 01.04.2008 to 31.03.2012 demanding service tax of Rs.57,58,493/- are equally applicable in the present case. Therefore, this show cause notice cum demand notice is issued in terms of Section 73(1A) of the Finance Act, 1994.”
Thus, under such circumstances, we are perplexed as to how the earlier show cause notice dated 21.08.2012 issued to the appellant on same set of facts has not been adjudicated so far and the present show cause notice issued on 01.11.2013 alone has been adjudicated in the impugned order. Since, the first show cause notice dated 21.08.2012 has considered the aspects of liability for payment of service tax by the recipient of service consequent upon analysis of the statutory provisions, relied upon documents in the original investigation, the same in our considered view was required to be adjudicated at the first instance and the subsequent follow up show cause notices issued thereafter to be adjudicated at later stage. We are of the considered opinion that present matter arising out of the impugned order dated 25.01.2016 should be remanded to the original authority for passing of speaking order in respect of both the earlier show cause notice dated 21.08.2012 for the initial period of 01.04.2008 to 31.03.2012 as also the subsequent show cause the notice dated 01.11.2013 which was issued for subsequent period of 01.04.2012 to 31.03.2013.
Therefore, by setting aside the impugned order, the appeal is allowed by way of remand to the original authority with a direction to adjudicate both the show cause notices referred (supra) and pass a speaking order as per provisions of law.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Briefly stated, the facts of the case are that M/s Shairu Gems Diamonds Pvt. Ltd. (formerly M/s Shairu Gems), Mumbai, the appellants herein are engaged in the business of manufacturing and sale of cut and polished diamonds. During the disputed period 201213, the Service Tax Commissionerate-I, Mumbai, had initiated show cause notice proceedings on the ground that the appellants have remitted foreign currency to companies based outside India, and certain services have been rendered to the appellant by such foreign companies in the course of purchase of rough diamonds. According to the department, the appellants had received Business Auxiliary Service from M/s. Bonas & Co. Ltd., London and had paid them commission in foreign currency for services received from outside India; the appellant had also paid in foreign exchange against receipt of the taxable service namely Business Support Service from M/s Diamond Trading Company, United Kingdom (DTC Ltd.) for purchase of diamonds. Since, those overseas service providers have no offices in India, the appellants were liable to pay service tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 read with Rule 3(iii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Since, the appellant did not discharge the service tax liability as a recipient of such services in India, the department issued the show cause notice on 01.11.2013, seeking for confirmation of the service tax demands along with interest and for imposition of penalties. The matter arising out of the show cause notice dated 01.11.2013 was adjudicated by the learned Commissioner of Service Tax-IV, Mumbai vide impugned order dated 29.01.2016, wherein service tax demand of Rs.40,07,544/- was confirmed along with interest. The said order has imposed late fees for delayed filing of returns. However, the impugned order has dropped the proposals initiated in the show cause notice for imposition penalties under Section 76, 77 ibid. Feeling aggrieved with the impugned order, insofar as it has confirmed the service tax demands, the appellants have preferred these appeals to the Tribunal.
2. Learned Advocate appearing for the appellants, at the outset, submits that on an identical set of facts for the earlier period i.e., April 2008-March 2012, the department had issued the show cause notice on 21.08.2012, seeking for confirmation of the service tax demand along with interest and penalty. He submitted that the same notice issued by the department had so far has not been adjudicated upon by the competent authority. Thus, he submitted that since both the show cause notices were issued concerning the same set of facts, the original authority should adjudicate upon the first show cause notice, instead of the subsequent follow up show cause notice issued subsequently for the later period. Accordingly, learned Advocate prayed for remanding the matter to the original authority, with a direction to adjudicate both the show cause notices and for passing of a single adjudication order thereon as per law.
3. On the other hand, learned Authorized Representative appearing for the Revenue reiterated the findings recorded in the impugned order and further submitted that since the service receiver was liable to pay service tax as per the amended provisions under the service tax statute, the impugned order passed by the department in confirming service tax demand on appellant is proper and justify.
4. Heard both sides and examine the records.
5. On perusal of the impugned order dated 29.01.2016, we find that the learned Commissioner at paragraph 2 has referred to the show cause notice dated 21.08.2012 having been issued to the appellant, seeking confirmation of service tax demand for the period 2008 to 2012. He has also recorded that the said show cause notice issued by the department so far has not been adjudicated and that this earlier show cause notice is not being taken up for adjudication in his impugned order. We find that the legal provisions under Section 73 of the Finance Act, 1994 provide for recovery of service tax that has not been levied or paid or that has been short-levied or short-paid or erroneously refunded. The sub-section (1) of Section 73 provide for issue of show cause notice for the normal period as well as for extended period under certain prescribed situations. Further sub-section (1A) provide for issue of notice, subsequent to issue of any notice under sub-section (1), for the subsequent period in the form of a statement, and the same shall be deemed to be service of notice on the noticee, as the grounds relied upon are one and the same for both the notices. We also find that the show cause notice dated 01.11.2013 relevant to the impugned order, in para 7 specifically state as follows:
“7. The grounds, facts, evidences and legal provisions enumerated in the show cause cum demand notice bearing No.409/Commr./2012-13 issued by the Commissioner of Service Tax-I, Mumbai under F. No. V/Service Tax/HQ/AE/B/245/11/3240 dated 21.08.2012 for the period 01.04.2008 to 31.03.2012 demanding service tax of Rs.57,58,493/- are equally applicable in the present case. Therefore, this show cause notice cum demand notice is issued in terms of Section 73(1A) of the Finance Act, 1994.”
Thus, under such circumstances, we are perplexed as to how the earlier show cause notice dated 21.08.2012 issued to the appellant on same set of facts has not been adjudicated so far and the present show cause notice issued on 01.11.2013 alone has been adjudicated in the impugned order. Since, the first show cause notice dated 21.08.2012 has considered the aspects of liability for payment of service tax by the recipient of service consequent upon analysis of the statutory provisions, relied upon documents in the original investigation, the same in our considered view was required to be adjudicated at the first instance and the subsequent follow up show cause notices issued thereafter to be adjudicated at later stage. We are of the considered opinion that present matter arising out of the impugned order dated 25.01.2016 should be remanded to the original authority for passing of speaking order in respect of both the earlier show cause notice dated 21.08.2012 for the initial period of 01.04.2008 to 31.03.2012 as also the subsequent show cause the notice dated 01.11.2013 which was issued for subsequent period of 01.04.2012 to 31.03.2013.
6. Therefore, by setting aside the impugned order, the appeal is allowed by way of remand to the original authority with a direction to adjudicate both the show cause notices referred (supra) and pass a speaking order as per provisions of law. Needless to say, that opportunity of personal hearing should be granted to the appellant before deciding both the show cause notices.
7. In the result, the appeal is allowed by way of remand.
