CESTAT, AHMEDABAD BENCH
Gujarat State Seeds Certification Agency
Commissioner of Central Excise, Ahmedabad
ORDER NOS. A/807/WZB/AHD of 2012
& S/944/WZB/AHD of 2012
APPLICATION NO. ST/S/782 OF 2011
APPEAL NO. ST/380 OF 2011
JUNE 5, 2012
M. V. Ravindran, Judicial Member
This stay petition is filed for the waiver of pre-deposit of amount of service tax of Rs. 53,91,867/- with interest and penalties imposed under Section 76 of the Finance Act, 1994.
2. The issue involved in this appeal is regarding service tax liability on the appellant under the category of ‘Technical Inspection and Certification Service’ provided by them for the period from October 2004 to March 2006.
3. After hearing both the sides for some time on the stay petition, we find that the appeal itself could be disposed of at this juncture as the issue involved lies in a narrow compass. Hence, after allowing the stay petition, we take up the appeal itself for disposal.
4. Learned counsel would draw our attention to the letter dated 01.08.2006 issued by the office of the Commissioner of Service Tax, Ahmedabad to the appellant, wherein it is mentioned that the activity of seed testing and certification carried out by the appellant would not be covered under service tax. He would also draws our attention to the letter dated 27.10.2006 wherein, the very same office reversed stand and held that the appellant is liable to pay service tax on the gross amount received by them towards the value of seed certification service. Learned counsel would also draw our attention to the inquiry initiated by the DGCEI, Ahmedabad and their letter dated 27.05.2010 indicating that the investigation or inquiry prior to registration is not being inquired any further. Learned counsel would also draw our attention to the notification No. 10/2010-ST dated 27.02.2010 wherein the exemption has been granted to the activity or service of certification of seeds.
5. Learned SDR reiterates the finding of the adjudicating authority.
6. We have considered the submissions made at length by both the sides and perused the record.
7. The issue involved in this case is whether the appellant’s services during the period October 2004 to March 2006 towards the testing of the seeds would fall under the category of ‘Technical Inspection Services’.
8. It is undisputed that the appellant is a State Government entity and has been providing services of testing and certifying the quality of the seeds in the State. We find that the appellant was informed on 01.08.2006 by the office of the Commissioner of Service Tax that their activities would not fall under the category of services rendered and they would not be covered under the Service Tax. The letter dated 01.08.2006 is reproduced:-
Office of The Commissioner of Service Tax
5th Floor, Central Excise Bhawan, Ambawadi Ahmedabad-380015
F. No: STCM-104/Tech/Misc/2005/132
Date: August 1, 2006
Sub: Service Tax-II
On a perused of the Memorandum of Association of the Agency submitted along with the application for centralized registration, it is observed that the Agency has been established under Section 8 of the Seeds Act, 1866 to discharge the functions entrusted to a certification Agency under Sections 9 And 10 of the Seeds Act, 1966.
It is also observed that the Agency has been carrying out the testing and certification of goods in discharge of the obligations under the Seeds Act, 1966. Since the functions carried out in discharge of any statutory obligation is not considered as a service, the activity of seed testing and certification carried out by the Agency would not be covered under Service Tax.
The clarification issued vide letter of over number dated 24.1.2006 stands withdrawn.
9. The said letter has been withdrawn by the authorities on 27.10.2006 stating that the appellant would be required to pay service tax on the services rendered. Be that as it may, we find that the show cause notice was issued to the appellant on 13.04.2010 for the period October 2004 to March 2006. In our view, since the department itself has taken a stand that the appellant’s services would not fall under the category of services of Technical Inspection and Certification Services, invocation of larger period by the authorities seems to be not in consonance with the law. We find that the show cause notice is blatantly time-barred and on this ground itself, we set-aside the impugned order and allow the appeal of the appellant. Impugned order is set-aside and appeal is allowed.