Back
2018 Supreme(Raj) 740
IN THE HIGH COURT OF JUDICATURE AT RAJASTHAN BENCH AT JAIPUR
Kalpesh Satyendra Jhaveri, Vijay Kumar Vyas, JJ.
Arvind Bankat Lal Sarda Director - Appellant
Vs.
Union of India (UOI) - Respondent
Civil Writs Nos. 4752 & 4753 of 2018
Decided On : 25-07-2018
Advocate Appeared:
M.P. Devnath, Daksh Pareek, Anuroop Singhi, Aditya Vijay
The fourth proviso to section 32E(1) of the Central Excise Act, 1944 cannot have any application in Service tax matters.
Headnote:
SERVICE TAX - SETTLEMENT COMMISSION - JURISDICTION - CLASSIFICATION DISPUTE - FOURTH PROVISO TO SECTION 32E(1) OF THE CENTRAL EXCISE ACT, 1944 - APPLICABILITY TO SERVICE TAX MATTERS - HELD, THE FOURTH PROVISO TO SECTION 32E(1) OF THE CENTRAL EXCISE ACT, 1944 CANNOT HAVE ANY APPLICATION IN SERVICE TAX MATTERS.
Fact of the Case:
The petitioner is a Private Ltd. Company engaged in the transportation of goods by road. The petitioner owns more than four hundred vehicles for the purpose of transportation of goods. All the vehicles are registered as 'Public Carrier' and accordingly Road tax, registration charges, etc. stand discharged. The petitioner was providing goods transport agency service (GTA service) under Service tax laws. Liability of payment of Service tax under GTA service was on the service receiver. The receiver, Sh. Cement Ltd. (for short SCL) was discharged Service tax on the GTA service provided by the petitioner. The Service tax Department had been accepting this payment of Service Tax as GTA service from SCL during the period 2009 to 2015 and onwards (to the best knowledge of the petitioner) and the same has never been questioned till date. Notwithstanding the fact that Service tax of Rs. 21.25 crores (approx) under GTA service stood discharged on the transaction between the petitioner and SCL for the period covered by SCN; unnecessary harassment was caused to the petitioner by conducting search proceedings, investigations on the same transaction; ultimately culminating in issuance of show cause notice on the petitioner.
Finding of the Court:
The Commission has failed to appreciate the judgments of the full bench of the Commission which were strongly relied upon by the present petitioner.
Issues: Whether the fourth proviso to section 32E(1) of the Central Excise Act, 1944 can have any application in Service tax matters.
Ratio Decidendi: The fourth proviso to section 32E(1) of the Central Excise Act, 1944 cannot have any application in Service tax matters. The reason for disputes relating to classification of excise tariff not being before the Settlement Commission stands succinctly stated in the decision of the Commission in the case of In re: Oriflame India Pvt. Ltd,2000 122 ELT 601 (Sett. Comm.) wherein it was held as follows:- 26. We should now briefly deal with the fourth issue raised by the Bench. The 3rd proviso to section 32E(1) states that an application for interpretation of the classification of the excisable goods under the Central Excise Tariff Act, 1985 cannot be made. The main provision of section 32E(1), however, requires that the applicant is to give particulars of the excisable goods in respect of which he admits short levy on account of mis-declaration or otherwise. Section 32F(1) shows that cases involving complexity are expected to be settled by the Settlement Commission. A complicated case may have several issues including one of classification, bearing on the determination of the duty amount to be paid. It, therefore, appears that the 3rd proviso to section 32E(1) refers to exclude an attempt by an applicant to have a pure classification issue settled by the Commission. This is so because classification of goods has to be uniform for all manufacturers of identical goods and there cannot be any settlement with regard to classification of goods per se. In this case, however, as correctly pointed out by the learned Advocate and accepted by the Department's Representative, we are concerned only with Chapter Note IV to Chapter 33 of the Central Excise Tariff. This Chapter Note lays down that certain activities which may otherwise not qualify to be manufacturing activity shall be construed as manufacture for specific goods falling under this Chapter. One of such activity is labeling or re-labeling of containers intended for consumers. This Chapter Note does not required any interpretation of classification of the good. It only refers to an activity which can be deemed to be 'manufacture'. The application in the present case cannot be said to be barred on the ground of the provision of 3rd proviso to section 32E(1).
Final Decision: The petitions stand allowed. However, it is made clear that we have not expressed any opinion on the merits of the case. The Commission will reconsider the matter in view of law laid down by the Commission itself in accordance with law.
1. In both these petitions common question of law and facts are involved hence they are decided by this common judgment. For convenience of the court, the facts are taken from CWP No.4752/2018.
2. By way of these petitions, the petitioners have assailed the judgment and order of the Settlement Commission whereby Settlement Commission has rejected the applications preferred by the petitioners on the ground that they have not fulfilled the condition of Section 32E of the Central Excise Act, 1944.
3. The facts of the case are that the petitioner is a Private Ltd. Company engaged in the transportation of goods by road. The petitioner owns more than four hundred vehicles for the purpose of transportation of goods. All the vehicles are registered as 'Public Carrier' and accordingly Road tax, registration charges, etc. stand discharged. The petitioner was providing goods transport agency service (GTA service) under Service tax laws. Liability of payment of Service tax under GTA service was on the service receiver. The receiver, Sh. Cement Ltd. (for short SCL) was discharged Service tax on the GTA service provided by the petitioner. The Service tax Department had been accepting this payment of Service Tax as GTA service from SCL during the period 2009 to 2015 and onwards (to the best knowledge of the petitioner) and the same has never been questioned till date. Notwithstanding the fact that Service tax of Rs. 21.25 crores (approx) under GTA service stood discharged on the transaction between the petitioner and SCL for the period covered by SCN; unnecessary harassment was caused to the petitioner by conducting search proceedings, investigations on the same transaction; ultimately culminating in issuance of show cause notice on the petitioner.
3.1 The show cause notices were issued demanding Service tax from the petitioner under the category of "supply of tangible goods service" on the same transactions with SCL, where Service tax already stood discharged under GTA service, this show cause notice sought to impose penalties on the Director of the petitioner.
4. Counsel for the petitioner first contended that the matter was admitted by three Members of Settlement Commission on 17.1.2017 by passing the following order:-
"The case was heard on 17.1.2017 for admission, and the same stands admitted.
5. There was no condition while admitting the matter, however, Superintendent of the Commission who is the Administrative Head wrote a letter on 17.1.2017 which is produced on record where he has written as under:-
Sub: Service Tax Settlement Application filed by M/s. Tanushree Logstics Pvt. Ltd. and Sh. Arvind Bankat Lal Sards u/s 32E of Central Excise Act, 1944 made applicable to service tax vide Section 83 of the Finance Act, 1994 (32 of 1994) to settle a dispute arising out of SCN No. C.No. V(H) Adj.I/ST/200/2014/2099 dt. 15.10.2014 issued by the Commissioner, C. Ex. & S. Tax, Jaipur-I-reg.:-
I am directed to inform the Hon'ble Bench has allowed the applications filed by the above mentioned applicants to be proceeded with in terms of sub-section (1) of section 32F of the Central Excise Act 1944, as made applicable to Service Tax vide Section 83 of the Finance Act, 1944 (32 of 1994), subject to the condition that the applicant show at the time of final hearing that they fulfill the conditions of Section 32E of the Central Excise Act, 1944.
2. You may also submit six copies of all the documents you intend to rely upon in support of your contentions in terms of para 6(2) of Customs and Central Excise, Settlement Commission Procedure, 2007.
6. Counsel for the petitioner has contended that the Superintendent has travelled beyond the order which was unconditional and the Commission has committed serious error in relying on the letter issued by the sub-ordinate officer. He has relied upon the ground E.6 which reads as under:-
E.6 In any case, the fourth proviso to section 32E(1) of the Central Excise Act, 1944 can have no application in Service tax
