Case Law Details
Shri Bakthiyar Ahmed Vs CCE & ST (CESTAT Chennai)
Activities carried out by the appellant fall within the definition of Commercial or Industrial Construction Service. However, the definition was applicable only to a commercial concern up to 01.05.2006. Since the appellant was an individual service provider, he will not be covered within the term “commercial concern” as has been clarified by the CBEC vide its Circular No. 59/8/2003 dated 20.06.2003 and 62/11/2003-ST dated 21.08.2003. Consequently, the levy of service tax cannot be sustained for the period up to 30.04.2006, and is set aside.
With effect from 01.05.2006, the definition stands amended and has been made applicable to “any person”. Consequently, the appellant will be liable for making payment of service tax w.e.f. 01.05.2006. Since the appellant has failed to take out registration or failed to file statutory returns, the Revenue is fully justified in raising the demand by invoking the extended period of limitation available under Section 73. Hence, the demand of service tax w.e.f. 01.05.2006 is sustained.
FULL TEXT OF THE CESTAT JUDGMENT
The present appeal challenges the Order-in-Appeal No.8/2010 dated 24.02.2010. The demand covered the period 2004-05 to 2006-07. The appellant was engaged in providing “Construction Service and Commercial or Industrial Construction service”. During the period under dispute, the appellant failed to take out registration nor made any payment of service tax even though they have provided such construction service to various customers. The department obtained the details of the service provider and SCN dated 19.11.2007 was issued to them. Both the authorities below raised the demand of service tax amounting to Rs. 13,34,107/- as well as interest and penalty. Aggrieved by the decision, the present appeal has been filed.
2. In this connection, we heard the Ld. Advocate, Ms. S. Sridevi for the appellant and the Ld. AR, Shri R. Subramaniyam, AC, for the Revenue.
3. The Ld. Advocate submitted that prior to 01.05.2006, the definition of construction service was made applicable only for service rendered by “a commercial concern”. The appellant was an individual and cannot be considered as a commercial concern. However, with effect from 01.05.2006, the definition covered “any person”. The appellant did not pay service tax on the basis of a bonafide belief that the individual was not liable for payment of service tax and hence she prayed that the Revenue was not justified in raising the demand by invoking the extended period of time limit under Section 73. Finally, she submitted that the entire service tax demand has already been paid along with interest before issuance of SCN.
4. The Ld. AR justified the impugned order, He submitted that the Revenue was justified in invoking the extended period of limitation since the appellant has failed to take out registration for long time after the definition was amended.
5.1 After hearing both sides and on perusal of records, we note that the activities carried out by the appellant fall within the definition of Commercial or Industrial Construction Service. However, the definition was applicable only to a “commercial concern” up to 01.05.2006. Since the appellant was an individual service provider, he will not be covered within the term “commercial concern” as has been clarified by the CBEC vide its Circular No. 59/8/2003 dated 20.06.2003 and 62/11/2003-ST dated 21.08.2003. Consequently, the levy of service tax cannot be sustained for the period up to 30.04.2006, and is set aside.
5.2 With effect from 01.05.2006, the definition stands amended and has been made applicable to “any person”. Consequently, the appellant will be liable for making payment of service tax w.e.f. 01.05.2006. Since the appellant has failed to take out registration or failed to file statutory returns, the Revenue is fully justified in raising the demand by invoking the extended period of limitation available under Section 73. Hence, the demand of service tax w.e.f. 01.05.2006 is sustained.
5.3 It is also seen that the service tax demand along with interest has already been discharged by the appellant even prior to the issuance of SCN dated 19.11.2007. Consequently, the department is not justified in imposing penalties. Since this is a fit case for waiving the penalties, we do so by taking recourse under Section 80 of the Finance Act, 1994.
6. In the result, demand up to 30.04.2006 is set aside, but sustained for the period from 01.05.2006. Penalties are also set aside. The appeal is allowed with consequential reliefs, if any.
(Order dictated and pronounced in the open Court)
