2011 (7) TMI 281 - AT - Service Tax

Accreditation of laboratories - Technical Inspection and Certification Service - accreditation activity undertaken by Appellant M/s. NABL is to recognise the competence of laboratories as to whether international standards are applied in developing the management system for quality and technical operations. - appellants have not paid the service tax for the period in question - They have also not filed any Service Tax Return under Technical Inspection and Certification Service - Commissioner has held that in view of suppression of fact with intent to evade service tax, extended period is applicable - Regarding objection of jurisdiction, Commissioner has held that ADG, DGCEI has powers of Commissioner of Central Excise on all India basis under Notification No. 3/2004-ST, dated 11-3-2004 and show-cause notice issued by ADG, DGCEI can be adjudicated by the Commissioner of Service Tax - As regards making show-cause notice issued by ADG, DGCEI answerable to Commissioner of Service Tax but case adjudicated by Commissioner (Adj.), under Notification No. 16/2007-ST, Chief Commissioner can assign the work of adjudication to any of Commissioner working under him - the appellant have not been able to establish the prima facie case. They have not claimed any plea of financial hardship also. We direct each of the appellants to pre-deposit 30 per cent of the Service Tax amount within six weeks

Summary

Issues:
1. Whether the services provided by the appellants fall under the taxable category of "technical inspection and certification" service.
2. Whether the Commissioner's order imposing Service Tax, interest, and penalties on the appellants is legally sustainable.
3. Whether the extended period for tax assessment is applicable due to alleged suppression of facts by the appellants.
4. Whether the jurisdiction of the adjudicating authority is valid when the show-cause notice was issued by a different authority.

Issue 1: Classification of Services
The Appellate Tribunal analyzed the definition of "technical inspection and certification service" under section 65(108) of the Finance Act, 1994. It was observed that the accreditation activities undertaken by the appellants involved assessing the competence of laboratories in applying international standards to their management systems. The Tribunal noted that the certification process conducted by the appellants extended beyond mere inspection of equipment and materials, encompassing the certification of the organization itself. The Tribunal found that the activities of the appellants aligned with the definition of technical inspection and certification services, indicating that the management processes of accredited bodies were being examined and certified.

Issue 2: Legality of Commissioner's Order
The Tribunal considered the arguments raised by the appellants challenging the Commissioner's order. The appellants contended that their activities did not fall under taxable services as per the definition of technical inspection and certification. They also disputed the applicability of penalties and the invocation of the extended period for tax assessment. The Tribunal reviewed a previous case cited by the appellants but distinguished it based on the nature of certification processes involved. Ultimately, the Tribunal agreed with the Commissioner's findings that the appellants' activities constituted technical inspection and certification services, thus upholding the legality of the order.

Issue 3: Extended Period for Tax Assessment
Regarding the extended period for tax assessment, the Tribunal acknowledged the Commissioner's decision to apply the extended period due to alleged suppression of facts by the appellants. The Tribunal found that the appellants had not paid service tax for the relevant period nor filed any returns under technical inspection and certification services. Consequently, the Tribunal concurred with the Commissioner's reasoning for invoking the extended period based on the perceived intent to evade service tax.

Issue 4: Jurisdiction of Adjudicating Authority
The Tribunal addressed the issue of jurisdiction concerning the adjudicating authority when the show-cause notice was issued by a different authority. It was noted that the show-cause notice was issued by the Additional Director General of Central Excise Intelligence, making it answerable to the Commissioner of Service Tax. The Tribunal found that the objections raised by the appellants regarding jurisdiction had been reasonably addressed by the Commissioner in the impugned order, affirming the validity of the adjudicating authority's jurisdiction.

In conclusion, the Tribunal upheld the classification of the services provided by the appellants as falling under technical inspection and certification services, affirmed the legality of the Commissioner's order imposing Service Tax, interest, and penalties, validated the application of the extended period for tax assessment, and confirmed the jurisdiction of the adjudicating authority in the case. The Tribunal directed the appellants to pre-deposit a portion of the Service Tax amount to stay further recovery pending appeal.