Case Law Details
C C Chokshi & Co Vs C.S.T. (CESTAT Ahmedabad)
The case of C C Chokshi & Co vs C.S.T. before the CESTAT Ahmedabad concerns the liability of service tax by C C Chokshi & Co as a subcontractor to the main contractor Deloitte Haskins and Sells. The main issue revolves around whether the demand for service tax is time-barred, considering the show cause notices that had previously been issued for the same service.
CESTAT, Ahmedabad held that once a notice has been issued on a particular issue the demand through fresh notice for the same period cannot be invoked.
Facts:
M/s. C C Chokshi & Co. (“the Appellant”) a Chartered Accountant firm provides services as a sub-contractor to the main contractor. The Appellant had not paid any service tax for the period 2005 – 2006 by relying on Circular No. F. No. 341/43/96- TRU dated October 31, 1996 which states that sub-contractor was not required to pay the service tax.
The Revenue department (“the Respondent”) issued Show Cause Notice demanding service tax on services provided to main contractor along with interest and penalty.
Before the CESTAT Ahmedabad, the Appellant contended that demand of Service tax is hit by limitation and the issues is already settled by the CESTAT, Ahmedabad vide an Order No. A/ 10305/2019 dated January 23, 2019 in favor of Appellant.
Issue:
Whether the Revenue Department can issue notice for the demanding duty for the period for already settled period?
Held:
The CESTAT, Ahmedabad in Service Tax Appeal No. 10024/2014- DB held as under: –
- Noted that, in the instant case there was no dispute of taxability on merit but only on applicability of bar of limitation.
- Observed that, Circular No. F. No. 341/43/96- TRU dated October 31, 1996 was in force and accordingly the Appellant was not required to pay the service tax being a sub-contractor. For this reason, also the Appellant had a bona fide belief that they are not liable to pay any service tax.
- Opined that, the Respondent was not prevented to issue the show cause notice for the subsequent period within a normal time period but cannot invoke extended period.
- Held that, the Appellant was not liable to pay service tax on the services provided as sub-contractors.
- Tribunal held that once on a particular issue the show cause notice has been issued, on the same issue for the subsequent period no extended period can be invoked as demand for the extended period do not sustain being time bar.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the chartered accountant service provided by the appellant as a subcontractor to the main contractor M/S. Deloitte Haskins and Sells is liable to service tax and whether the demand of Service tax is hit by limitation, in the fact that for the same service the show cause notices were also issued.
2. Ms. Shrayashree T, Learned counsel appearing on behalf of the appellant submits that the appellant is not contesting the taxability of the service, however, they have very strong case on limitation. She submits that entire demand in the present case is beyond the normal period. On the very same issue the appellant were issued show cause notices and in that case the Tribunal has dropped the demand on the ground of time bar vide Final Order No. A/ 10305/2019 dated 23.01.2019. Therefore, in the present case also the demand is not sustainable on limitation. She further submits that the issue was not free from doubt moreover, it was clarified in the favour of the appellant vide Circular No. F.No. 341/43/96- TRU dated 31.10.1996 according to which the appellant being sub-contractor is not liable to pay the service tax. Subsequently, when the larger bench in the case of Melange Developers Pvt. Ltd – 2020 (33) GSTL 116 (Tri. –LB) has decided the issue whereby the sub-contractor was made liable to pay service tax, the issue was resolved. Therefore, in this position there is no suppression of fact on the part of the appellant. Hence, the demand is time bar.
3. Shri G. Kirupanandan, Learned Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both sides and perused the records. We find that there is no contest of taxability on merit however, the appellant have strongly submitted that the demand is hit by limitation. In this regard we find that the appellant were issued other show cause notice and this tribunal has dropped the demand on limitation vide Order No. A/ 10305/2019 dated 23.01.2019 wherein the Tribunal has passed the following order:
“4. On careful consideration of submission made by both the sides and perusal of records, we find that the demand of Rs. 12,065/- was confirmed on the ground that though the service was provided prior to the introduction of service of CA service but the payment was received after introduction of the Service Tax. We are of the view that the Service Tax is leviable on the date of provision of service, the CA service was not taxable at the time of provision of service, even though the payment was received subsequent to the introduction of Service Tax. Accordingly, the demand of Rs. 12,065/- is set aside.
4.1. In regard to demand of 17,485/-, we find that there was a circular dated 31.10.1996, according to which the sub-contractor need not pay the Service Tax when the main contractor discharges the service tax on the gross value including the value of the service provided by the sub-contractor. In view of the circular, the bonafide belief entertained by the appellant is correct. Therefore, the demand of Rs. 17,485/- is hit by limitation and the same is set aside only on time bar without going into the merit of the case.
4.2. Demand of Rs. 86,625/- was raised on the service of management consultancy service which was admittedly exempted under notification 59/98-ST and by amendment notification 15/2002-ST. Though the exemption was withdrawn by inserting the explanation but that cannot be applied retrospectively. Therefore, during the relevant period before amendment dated 01/08/2002, the service provided by CA in respect of management consultancy services was exempted. Accordingly, the demand of Rs. 88,625/- is also set aside. Since, demand itself is not maintained, the penalty and interest are also not sustainable. The impugned order is modified to the above extent. The appeal is allowed.”
From the above decision in the appellant’s own case it is clear that the issue has been raised earlier also by the Revenue therefore, the activity of the appellant was very much known to the department, hence, the department was not prevented to issue the show cause notice for the subsequent period within a normal time period. It is also noted that during the relevant period i.e. 2005 -2006 , the board circular dated 31.10.1996 was in force and according to which the appellant was not required to pay the service tax being a sub-contractor. For this reason also the appellant had a bona fide belief that they are not liable to pay any service tax. The issue of limitation has been decided by the Hon’ble Supreme Court in the case of Nizam Sugars Factory vs. Collector of Central Excise – 2006 (197 ) ELT 465 wherein it was held that once on a particular issue the show cause notice has been issued, on the same issue for the subsequent period no extended period can be invoked as demand for the extended period do not sustain being time bar.
5. As per our above discussion and finding, the demand is clearly hit by limitation. Hence, the impugned order is set aside. Appeal is allowed with consequential relief, if any, in accordance with law.
(Pronounced in the open court on 03.08.2023)
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