SHOW CAUSE NOTICE ISSUED TO ASSESSEE OUTSIDE JURISDICTION IS NOT VALID EVEN IN CASE OF CENTRALIZED BILLING

[Mr. M. GOVINDARAJAN]

                        The provisions of Chapter V of Finance Act 1994 require that every service provider is to get registration with the Superintendent of Central Excise having jurisdiction. A service provider may get registration centrally if the bills are issued centrally and the premises or offices of the service provider are at many places. Sec. 73 gives powers to the Central Excise Officers having jurisdiction to issue show cause notice to the assessee who fails to pay service tax or fails to levy service tax or short levy of service tax or short payment of service tax demanding the payment of service tax along with interest and penalty, if any, that can be imposed under relevant section of Finance Act, 1994.

                        The issue taken up for this article is whether the Central Excise Officer can issue show cause notice to a service provider for one area of the service provider for which the said Officer is not having jurisdiction but having jurisdiction over the centralized registered office of the service provider.

                        For this purpose we may refer the case law in 'Commissioner of Central Excise, Guntur V. Integral Construction Company' - 2009 -TMI - 75587 - (CESTAT, BANGALORE). In this case the assessee is a proprietary firm engaged in blast hole drilling, blasting, excavation, loading, transportation dumping etc., of overbudern in open case mines of M/s South Eastern Coal Fields, Suhagpur and excavation of hard rock in the mines of M/s Malanjkhand Copper Mines, Malanjkhand, Balaghat dist, Madhya Pradesh.

                        A show cause notice was issued to the assessee alleging that-

·  the services provided by the assessee to M/s Malanjkhand Copper Mines and M/s South Eastern Coal Fields at their mines fall under the category of 'Site Formation and clearance, excavation and earthmoving and demolition' and are liable to pay service tax with effect from 16.06.2005;

·  The assessee have later taken registration with the Department in Seoni Range of Chhindwana Division of Bhopal Comissionerate in March 2006 and have paid service tax and education cess for the period from 16.06.2005 to 31.12.2006 for the amounts received from M/s Malanjkhand Copper Mines.

·  The assessee have not paid the total service tax due and the interest payable on the tax paid by them;

The show cause notice was adjudicated by the Additional Commissioner of Central Excise - II and after considering the submissions made by the respondent before him he confirmed the demand raised in the show cause notice. Aggrieved against this order the assessee filed an appeal before the Commissioner (Appeals).  The Commissioner (Appeals) after considering the submissions made by the assessee set aside the order-in-original and allowed the appeal.

                        In the appeal the Commissioner (Appeals) agreed with the contention of the appellants that under the provisions of Rule 3 of Service Tax Rules, 1994, the CBEC may appoint such Central Excise Officers as it thinks fit for exercising powers under Chapter V of the Finance Act within such local limits as it may assign to them, that Chapter V of the Finance Act comprises Section 64 to Section 96 and therefore, the authority should confine the excise of their powers to the local limits i.e., within the Commissionerate of Guntur but not beyond. The provisio to Rule 4(3A) of the Service Tax Rules, 1994 reads that where an assessee is providing a taxable service from more than one premises or offices, and does not have any centralized billing systems or centralized accounting systems, as the case may be, he shall make separate applications for registration in respect of each of such premises or offices to the jurisdictional Superintendent of Central Excise.  In the present case it has not been alleged by the Revenue that the appellants have opted for centralized billing/accounting system. In the absence of proof of excise of such an option by the appellant and that too within the jurisdiction of the respondents, the authorities in Guntur Commissionerate have no jurisdiction either for issuance of the demand notice or for the confirmation of the said demand.

                        Aggrieved against the order of Commissioner (Appeals) the Revenue filed the present appeal before the Tribunal. The Revenue submitted the following:

·  The Commissioner (Appeals) has set aside  the order only on the jurisdiction point;

·  The Commissioner (Appeals) has not considered the merits of the case;

·  The assessee, having taken the registration should have discharged the service tax liability.

The assessee submitted the following:

·  The Commissioner (Appeals) have clearly come to the conclusion that the assessee was not covered under the jurisdiction of the Guntur Commissionerate;

·  The Board Circular No. 75/05/2004-ST, dated 03.03.2004 provides that in the matter of power of adjudication of officers of Central Excise in relation to Service Tax Rules, 1994, it has been decided by the Board that adjudication of all the cases relating to service tax may be carried out only by the jurisdictional Asst.Commissioner/Deputy commissioners of the Central Excise as per Section 73 of the Finance Act, 1994;

The Tribunal considered the submissions made by both parties. In this case, the Tribunal observed, that it is undisputed that the assessee is providing service of 'site formation and clearance, excavations, earthmoving and demolition services' and it is also undisputed that the assessee is doing this activity at Bilaspur, Madhya Pradesh. The only reason for confirmation of demand by the adjudicating authority was on the fact that the respondents had a centralized billing system at Vijayawada which is falling within the jurisdiction of Guntur Commissionerate. The Tribunal found that the order of the Commissioner (Appeals) is in accordance with law.

                        The activity of rendering service was done at Bilaspur and it is on record that the respondent had taken service tax registration from Chindwan Division of Bhopal Commissionerate in March, 2006. If that be so, a show cause notice dated 13.10.2006 issued by Guntur Commissionerate for the demand of service tax on services rendered at Chindwan Division, of Bhopal Commissionerate cannot be held as correct in law and to proceed against the assessee for the violation, if any. The Tribunal is convinced that there is no jurisdiction of the Guntur Commissionerate to proceed against the assessee's default, if any, at other Commissionerate. The appeal filed by the Revenue is rejected by the Tribunal.