Case Law Details
M/s. Butchaiah & Associates Vs Commissioner Of Central Tax (CESTAT Bangalore)
As per the exemption Notification No. 6/2005-ST dated 01.03.2005, there is a condition which is to be complied with by the service provider and as per the condition, the provider of taxable service has an option not to avail the exemption and such exemption once exercised in a financial year, shall not be withdrawn during the remaining part of the year. In the present case, we find that this condition has been violated by the appellant and therefore, the Commissioner (A) has rightly come to the conclusion that the appellant is not entitled to the refund amount of 24,614/-.
FULL TEXT OF THE CESTAT JUDGMENT
The present appeal is directed against the impugned order dated 28.02.2008 passed by the Commissioner (Appeals), whereby the Commissioner (A) has rejected the appeal of the appellant and upheld the Order-in-Original.
2. Briefly the facts of the present case are that the appellant is a Chartered Accountant and is a proprietary concern who is engaged in providing management and financial services after retirement from service. He rendered the services to three clients during the year 2006 but there is no dispute with regard to Service Tax in reference to Syndicate Bank and Bg SE Financial Ltd. The dispute in the present case only relates to Subhash Kabini Power Corporation Ltd. (SKPCL) which engaged the appellant as a financial advisor for a specified assignment and the letter of engagement dated 10th April, 2006 states that the appellant shall be paid a professional fees of Rs. 55,000/- per month inclusive of all taxes and duties from the date of joining of his service subject to deduction of tax at source and other statutory deductions as applicable. The appellant resigned from the said engagement on 21st August, 2006 with effect from 30th September, 2006 but he has paid the Service Tax liability as an abundant caution and thereafter, he filed a refund claim for Rs.24,614/- on the ground that total value of the services for the said period was within the threshold limit of exemption of Rs.4,00,000/- vide Notification No. 6/2005-ST dated 01.03.2005. The original authority rejected the said refund on the ground that the appellant had not opted to avail the said exemption but had chosen to pay Service Tax in the beginning of the year and that the appellant had charged the Service Tax to their clients, collected and paid the same during the year 2006-07 in respect of the two customers and in the case of 3rd customer i.e. M/s SKPCL, they had not separately shown the Service Tax in the bills inasmuch as the total consideration was inclusive of all taxes as per the agreement and in the circumstances, the appellants claimed that they had not collected the Service Tax from the customers, which was not accepted by both the authorities below.
3. Heard both the parties and perused the material on record.
4. Learned Counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law on the same issue. He further submitted that the word “inclusive of all taxes and duties” does not mean deduction of tax at source and not Service Tax and that they have an option to avail the small scale exemption at any time of the year. He further submitted that the adhoc amounts paid by him are advance deposit as an abundant caution and not payment of Service Tax, as observed by both the authorities. He further submitted that the benefit of threshold limit is to help the small scale service providers and through erroneous interpretation cannot be denied to the genuine small scale service providers. He further submitted that the learned Commissioner (A) has laid more emphasis on the Notification No. 6/2005 and the mistaken presumption that Service Tax is deemed to have been collected separately.
5. On the other hand, the learned AR defended the impugned order and submitted that the Commissioner (A) has considered all the submissions made by the appellant and has rightly come to the conclusion that the appellant has violated the vital condition/substantial requirement of the said exemption Notification No. 6/2005-ST dated 01.03.2005 which reads as under:
(a) The provider of taxable service has the option not to avail the exemption and such option once exercised in a financial year shall not be withdrawn during the remaining part of the year.
5.1 The learned AR further submitted that the appellant has clearly violated the condition mentioned in the Notification and therefore, he is not eligible to claim such exemption for the later part of the same financial year. In respect of his submission, the learned AR relied upon the decision of the Tribunal rendered in the case of Choudhary Cotton Ginning & Pressing Factory vs. Commissioner of Central Excise, Jaipur-I: 2018 (8) G.ST.L. 210 (Tri. – Del.).
6. Heard both the parties and perused the material on record.
7. After considering the submissions of both the parties and perusal of the material on record, we find that as per the exemption Notification No. 6/2005-ST dated 01.03.2005, there is a condition which is to be complied with by the service provider and as per the condition, the provider of taxable service has an option not to avail the exemption and such exemption once exercised in a financial year, shall not be withdrawn during the remaining part of the year. In the present case, we find that this condition has been violated by the appellant and therefore, the Commissioner (A) has rightly come to the conclusion that the appellant is not entitled to the refund amount of 24,614/-. Further, we find that in the case of Choudhary Cotton Ginning & Pressing Factory cited supra, the Division Bench of this Tribunal in paragraph 3 and 4 has held as under:
“3. In this case the appellant is a small scale service provider and opted for the exemption provided under Notification No. 6/2005-ST dated 01.03.2005 as amended by Notification No. 4/2007-ST dated 01.02.2007. However, the appellant opted to pay the Service Tax on the taxable service during the period April, 2007 to June, 2007. However, for the subsequent period in the same financial year i.e. July, 2007 to March, 2008, it had opted for the benefit of exemption provided under the said notification. The notification dated 01.02.2007 in clear and unambiguous terms provides that the provider of taxable service has the option not to avail the exemption and pay Service Tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year. In this case, since the appellant had opted for payment of Service Tax at the beginning of the financial year, as per the mandates of the said notification, it cannot change the option during the middle of the financial year, opting for the benefit provided under the said notification.
4. Therefore, I do not find any infirmity in the impugned order. Accordingly, the appeal filed by the appellant is dismissed.”
8. Further, we find that the ratio of the above said decision is applicable in the facts and circumstances of the present case and therefore, by following the ratio of the said decision, we are of the view that there is no infirmity in the impugned order which is upheld by dismissing the appeal of the appellant.
(Order was pronounced in Open Court on 29/06/2018.)
