Case Law Details
Modest Infrastructure Limited Vs Commissioner of Central Excise (CESTAT Ahmedabad)
The case of Modest Infrastructure Limited Vs Commissioner of Central Excise before the CESTAT Ahmedabad involves allegations of tax evasion and jurisdictional disputes. The key matter of contention revolved around the perceived non-payment of service tax and misdeclaration of service value by the appellant, Modest Infrastructure Limited, as per the Department’s understanding.
Analysis
In the initial assessment, the Department demanded a significant sum from the appellant for non-payment of service tax under the head “Steamer Agent service” and misdeclaring the value of management, maintenance, and repair service. The appellant contested these charges, arguing that their Mumbai office, which executed the transactions in question, was independently registered with the Service Tax authorities, and had regularly filed service tax returns. Hence, the appellant claimed the show-cause notice issued by Commissioner of Central Excise & ST, Bhavnagar to be without legal jurisdiction.
The appellant also contested the categorisation of their services, asserting that the chartering of ships and tugs did not fall under “Steamer Agent service”. They further disputed the Department’s claim concerning the misdeclaration of service value under management, maintenance, and repair service.
Upon reviewing the arguments and documents, the CESTAT Ahmedabad concluded that the issue of jurisdiction was not adequately addressed by the Adjudicating Authority. The Tribunal found that the appellant’s Mumbai office was indeed separately registered and had issued the disputed invoices. Therefore, it set aside the original order and remanded the case back to the Adjudicating Authority for fresh adjudication.
Conclusion: The ruling of the CESTAT Ahmedabad in Modest Infrastructure Limited Vs Commissioner of Central Excise underscores the need for thorough examination of jurisdictional aspects in tax matters. The case highlights the importance of understanding the registration and tax obligations of different branches of a company operating independently. The verdict also emphasises that all submitted documents and arguments should be properly considered before passing an adjudicatory order. This case will likely serve as a reference point for future cases involving similar jurisdictional disputes.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the matter are that the Revenue is of the view that the appellants have shown income under the head “Income Charter Hire” during the Financial Year 2004-05, 2005-06, 2006-07. As per the Income Tax return filed by the appellant, the department is of the view that from the scrutiny of the record of the service tax return, the appellant have not paid service tax on the amount recovered from charter/ hire of ships, tugs and others. Thus, on the first count demand of Rs. 47,46,297/- has been demanded under the head Steamer Agent service. It is also found from the comparison of the income shown by the appellant in their Income Tax returns and in the ST-3 returns. Department is of the view that appellant have misdeclared the value of management, maintenance and repair service and thereby evaded service tax of Rs. 10,09,717/-. Accordingly, a show cause notice dated 05.10.2020 was issued which has been adjudicated by order-in-original dated 15.04.2013 and the charges involved in the show cause notice have been confirmed.
2. Learned Advocate appearing on behalf of the appellant contended that the show cause notice has been issued without jurisdiction as the Mumbai office of the appellant is separately registered with the Mumbai office of Service Tax authorities. The Mumbai office of the Company has been regularly filing service tax returns for the activities undertaken by the Mumbai office and since the show cause notice covers all the transaction of the Mumbai office and invoices issued at the Mumbai office in the impugned show cause notice, the impugned order-in-original ab-initio without legal jurisdiction and therefore, needs to be set-aside.
2.1 Learned Advocate has also contended that service of charting of ships and tugs does not fall under the category of Steamer Agent service. The demand under Management, Maintenance and Repair service have also been contested by them showing that the value of taxable service has been correctly declared by them as part of the value and the same has also been included in the previous year’s turn-over as invoice has been raised in that Financial Year though the income is realized later-on.
2.2 Learned Advocate has also taken us through various documents and we have been presented with invoices issued by their Mumbai office. We have also been shown the registration that the Mumbai office is registered for various services and they have also been filing returns regularly for the services under taken by them.
3. We have also heard the learned Departmental Representative and have also gone in details of the impugned order-in-original.
4. After hearing both the sides and considering the record, we are of the view that the Adjudicating Authority has not dealt with the issue of jurisdiction with regard to the services provided by the appellant’s Mumbai office for ships and tugs. Prima-facie the documents which have been produced before us indicate that Mumbai office is separately registered and invoices for charting of ships and tugs have been issued by them. Therefore, the issue of jurisdiction needs to be decided by the Adjudicating Authority afresh.
5. Thus, we remand back the matter for fresh adjudication with the direction that all the documents submitted by the appellant needs to be considered and a fresh order needs to be passed. We also keep all the other issues open i.e. the issue of Management, Maintenance and Repair to be agitated by the appellant before the Adjudicating Authority afresh.
6. In view of above, we set-aside the impugned order-in-original and allow the appeal by way of remand to the Adjudicating Authority for de-novo adjudication.
(Pronounced in the open court on 05.07.2023)
