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2020 Supreme(Gau) 146
GAUHATI HIGH COURT
Suman Shyam, Hitesh Kumar Sarma, JJ.
Commissioner, Gst And Central Excise - Appellant
Versus
Bsnl Panbazar, Guwahati-1. - Respondent
C.Ex.App. 12 of 2019
Decided On : 12-02-2020
Mr. S C Keyal, for the Appellant; Mr. V K Chopra, for the Respondent
The central legal point established in the judgment is that the Appellate Tribunal's jurisdiction to carry out assessment of tax liability is limited, and deficiencies in the Show Cause notice can impact the validity of the demand for service tax.
Headnote:
Central Excise Act - Service Tax - Section 35G - Summary of Acts and Sections: Central Excise Act, 1944 - Sections 35G, 73(1)(a), 74, 75, 78 - The judgment discusses the provisions of the Finance Act, 1994 and the Central Excise Act, 1944, particularly focusing on the assessment and recovery of service tax, including the determination of taxable services, interest, and penalty. The court's decision was influenced by the interpretation of 'taxable services' under Section 65 of the Finance Act, 1994 and the jurisdiction of the Appellate Tribunal under Section 35C of the Central Excise Act, 1944.
Fact of the Case:
The appellant challenged the judgment and order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) regarding the demand of service tax from Bharat Sanchar Nigam Limited (BSNL) for the period from 01-12-1997 to 31-03-2000. The Commissioner of Central Excise confirmed the demand and imposed a penalty, which was appealed by both the respondent and the appellant.
Finding of the Court:
The court found deficiencies in the Show Cause notice and the assessment of tax liability by the CESTAT. It held that the CESTAT's independent assessment of tax liability was impermissible in law and set aside the impugned order dated 13-12-2018. The court also directed the appellant to issue a fresh Show Cause notice, specifying and excluding 'non-taxable' services from the gross receipt, and allowed the respondent to avail procedural safeguards.
Issues: The issues revolved around the correctness of the demand for service tax, the jurisdiction of the CESTAT to carry out assessment of tax liability, and the deficiencies in the Show Cause notice.
Ratio Decidendi: The court held that the CESTAT's independent assessment of tax liability was impermissible in law and set aside the impugned order dated 13-12-2018. It also directed the appellant to issue a fresh Show Cause notice, specifying and excluding 'non-taxable' services from the gross receipt.
Final Decision: The impugned order dated 13-12-2018 was held to be unsustainable in the eye of law and was set aside. The Show Cause notice dated 28-03-2003 was also interfered with, and the appellant was directed to issue a fresh Show Cause notice.
JUDGMENT
Suman Shyam, J. - Heard Mr. S.C. Keyal, learned ASGI appearing for the appellant. We have also heard Mr. V.K. Chopra, learned counsel appearing for the respondent.
2. The judgment and order dated 13-12-2018 passed by the learned Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata in ST Appeal No. 198/2008 and ST Appeal No. 210/2008 have been assailed by the appellant in this appeal filed under Section 35G of the Central Excise Act, 1945.
3. At the very outset, it would be apposite to mention herein that by filing only one appeal, the appellant has assailed the common judgment and order dated 13-12-2018 of the learned CESTAT disposing of both the appeals pending before it. However, taking note of the submission of Mr. Chopra that he would have no objection if the appellant is allowed to assail the common judgment and order passed by the learned CESTAT by filing a composite appeal, the issue of maintainability of the appeal stands resolved and therefore, we proceed to dispose of the appeal on merit.
4. The facts leading to the institution of the appeal, briefly stated, are as follows:-
The Finance Act, 1994 had introduced the provision for realizing service tax. Accordingly, some of the services provided by the Secondary Switching Area (SSA) under the BSNL fell within the purview of the Act of 1994 and therefore, were liable to be taxed @ 5% on gross receipt. On 28-03-2003, the Deputy Commissioner, Central Excise, Guwahati had issued a Show Cause notice addressed to the respondent Bharat Sanchar Nigam Limited (BSNL), Assam Circle, Guwahati and four of its SSAs demanding a sum of Rs. 3,47,49,000/- being the shortfall of service tax recoverable from the department in terms of Section 73(a) of the Finance Act, 1994 as well as for realization of interest and penalty as per the provision of the said act. In the Show Cause notice dated 28-03-2003, it has been, inter alia, projected that the respective SSAs had failed to pay service tax on the 'gross receipt' charged by the service providers.
5. The sum of Rs. 3,47,49,000/- pertains to the demand of service tax for the period from 01-12-1997 to 31-03-2000 in respect of the four SSAs named therein. Upon receipt of the notice dated 28-03-2003, the respondent filed reply denying the liability. Thereafter, the matter was taken up for adjudication and by the order dated 28-08-2008 passed by the Commissioner, Central Excise, Shillong, the proceeding was disposed of by confirming the demand of recovery of tax to the extent of Rs. 2,77,65,000/-. By the order dated 28-08-2008, the Commissioner of Central Excise had also imposed penalty of Rs. 2,77,65,000/- upon the respondent by invoking the jurisdiction under Section 74 of the Finance Act, 1994. Thus, the original demand of Rs. 3,47,49,000/- raised in the Show Cause notice dated 28-03-2003 was reduced by the Commissioner to Rs. 2,77,65,000/- for the reasons recorded in the order. But at the same time, heavy penalty of equal amount was also imposed upon the respondent.
6. The operative part of the order dated 28-08-2008 is reproduced herein below for ready reference:-
'ORDER
6.1 Having regards to above discussion and findings, I order confirmation of the demand and recovery of service tax of Rs. 2,77,65,000.00 (Rupees two crore seventy seven lakh sixty five thousand only) from M/s BSNL, Assam Circle, Guwahati in terms of section 73(1)(a) of the Finance Act, 1994.
6.2 I order recovery of interest at the appropriate rate in terms of section 75 of the Finance Act, 1994.
6.3 I impose penalty of Rs. 2,77,65,000/- (Rupees two crore seventy seven lakh sixty five thousand only) on M/s BSNL, Assam Circle, Guwahati in terms of section 78 of the Finance Act, 1994'
7. Aggrieved by the order dated 28-08-2008, the respondent had preferred ST Appeal No. 198/2008 before the CESTAT. Simultaneously, the appellant had also preferred ST Appeal No. 210/2008 assailing the order dated 28-08-2008 to the extent of reduction o
