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2016 Supreme(Mad) 2889
IN THE HIGH COURT OF JUDICATURE AT MADRAS
T.S. SIVAGNANAM, J.
Southern Investments Private Ltd. – Petitioner
Versus
The Commissioner of Service Tax (Appeals-1), Chennai – Respondent
W.P. No. 31167 of 2016 & W.M.P. Nos. 27012, 27013 of 2016
Decided On : 07-09-2016
For the Petitioner: Mr. S. Joseph Prabakar.
For the Respondent: Mr. N. Senthilkumar, Junior Standing Counsel for Central Excise.
The main legal point established in the judgment is that the question of limitation in Central Excise and Service Tax matters is a mixed question of fact and law, and parties should pursue the available Appeal remedy under the Act.
Headnote:
Finance Act - Central Excise and Service Tax - Section 86 of the Finance Act, 1994 - Section 73(1) - Rule 14 of Cenvat Credit Rules, 2004 - Rule 6(1) and sub rule (6) of Rule 9 of the Cenvat Credit Rules, 2004 - Rule 7(b) of CCR, 2004
Fact of the Case:
The petitioner challenged the order passed by the first respondent confirming the order passed by the second respondent. The petitioner contended that the extended period of limitation invoked by the second respondent was not justifiable. The petitioner is engaged in property development and had disputes regarding service tax payment and input credit.
Finding of the Court:
The Court found that the question of limitation in Central Excise and Service Tax matters is a mixed question of fact and law. The Court also noted that the petitioner should have availed the Appeal remedy available under the Act. The Court dismissed the Writ Petition as not maintainable.
Issues: The issues revolved around the invocation of the extended period of limitation, deliberate non-disclosure of facts, and the petitioner's bypassing of the Appeal remedy.
Ratio Decidendi: The Court emphasized that the question of limitation in such matters is a mixed question of fact and law. The Court also highlighted that the petitioner should have pursued the Appeal remedy available under the Act.
Final Decision: The Writ Petition was dismissed as not maintainable, and no costs were imposed. Connected miscellaneous petitions were closed.
1. Heard Mr. S. Joseph Prabakar, learned counsel appearing for the petitioner and Mr. N. Senthilkumar, Junior Standing Counsel for Central Excise, accepting notice on behalf of respondents. With the consent of the learned counsel on either side, the Writ Petition itself is taken up for disposal.
2. The petitioner in this Writ Petition has challenged the order passed by the first respondent in Order-in-Appeal No. 272/2016 (STA-1), dated 28.04.2016, confirming the order passed by the second respondent in Order-in-Original No. 41/2013, dated 18.11.2013.
3. At the commencement of the argument of the learned counsel for the petitioner, this Court raised an issue as to why the petitioner has not availed the Appeal remedy available to them in terms of Section 86 of the Finance Act, 1994. By virtue of the said provision, the petitioner is entitled to file an Appeal before the CESTAT.
4. The learned counsel for the petitioner submitted that the only reason for which the petitioner has not availed the Appeal remedy is on the ground that the impugned proceedings has been initiated by the second respondent by invoking the extended period of limitation which is not invocable in the petitioner's case. Though such was the statement made in the Show-cause notice, dated 14.09.2012, which was controverted by the petitioner by an elaborate reply, dated 27.11.2012, the second respondent while passing the Order-in-Original, dated 18.11.2013 has not rendered any findings as to the aspect as to why the extended period of limitation is invocable in the instant case.
5. Firstly, it has to be pointed out that the question of limitation in these matters, especially, in Central Excise and Service Tax matters is not essentially a pure question of law, but a mixed question of fact and law. Therefore, question whether extended period of limitation could be invoked or not is essentially a question of fact. The contention raised by the petitioner is that in the absence of specific and explicit averments about suppression of facts, the larger period of limitation cannot be invoked in the facts of the case and as there is no finding rendered to the said effect, both the Order-in-Original and Order-in-Appeal they are liable to be set-aside.
6. The petitioner/assessee is registered with the service tax Commissionerate for taxable service of construction of complex services on 01.01.2007 and included works contract service on 09.07.2007 and further amended to include business auxiliary services and input service distribution on 06.05.2008. The petitioner is engaged in property development and prompting residential units in the form of flats, villas and have branches in Kochi, Trivandrum, Calicult, Thrissur and Chennai, its Corporate Office.
7. The petitioner/assessee vide letter, dated 04.05.2009, intimated the Department that they have paid service tax under protest and to refund the service tax amount collected from their customers, as they have objected for payment of service tax based on the Circular No. 108/02/09-ST dated 29.01.2009. Based on the said letter given by the petitioner to the Commissioner, the Survey Intelligence & Research Section (SIR) of the respondent-Department took up the case for investigation. It was alleged that the assessee has availed in-eligible Input Credit on commission paid to overseas agent under reverse charge mechanism and distributed the same to their branches in Chennai Office and branches in Kerala. The assessee was called upon to produce balance sheet ST-2, ST-3 returns and other documents for verification which were submitted on various dates. On verification of the records produced by the petitioner, the respondent Department stated that the petitioners are discharging Service Tax only in respect of Meadows Enclave project under WCS at Chennai, a joint venture which was signed on 14.07.2007 as all other residential complex/villas at Chennai are exempted as they are less than 12 residential units; that they have first regi
