2014 (9) TMI 333 - HC - Service Tax

Clearing and Forwarding Agent service - challenge to the correctness and validity of the show cause notice - Interest u/s 75 - Penalty u/s 75A, 76, 77 and 78 - Held that - The respondents have not seriously disputed the overlapping of the transactions and the period covering those transactions under two assessment proceedings. This aspect, therefore, requires consideration by the respondent authorities. The petitioner has already submitted a reply highlighting these issues. Therefore, Respondent No. 2/ Commissioner Customs and Central Excise, before proceeding further in the matter, shall minutely scrutinize and if necessary, obtain information from the Kolkata office with regard to the petitioner s liability of payment of service tax under the head of Clearing and Forwarding Agent relating to the transactions covered under notice dated 23-5-2006. In respect of the period subsequent to 31-3-2004, it would be open for the respondent to proceed further against the petitioner by considering petitioner s reply to show cause notice in that regard, if at all found necessary in the changed circumstances after excluding the period of transaction from 1-9-1999 to 31-3-2004. A clear order of exclusion of transactions in respect of overlapping period shall be passed by respondent No. 2 before proceeding further with the matter. Thereafter, if the respondent No. 2 further requires, it may proceed against the petitioner in respect of the period and transactions which have not been covered by the order of assessment passed by the Commissioner Service Tax, Kolkata. It would be open for the petitioner to raise all the grounds to assail correctness and validity of the proceedings, if continued, in respect of the period subsequent to 31-3-2004 including grounds which have been urged before this Court. - Petition disposed of.

Summary

Issues:
1. Maintainability of the show cause notice dated 23-5-2006.
2. Territorial jurisdiction of the Commissioner Customs and Central Excise, Raipur.
3. Barred by limitation under Section 73(1) of the Finance Act, 1994.
4. Overlapping liability towards payment of service tax under the head "Clearing and Forwarding Agent" in two assessment proceedings.

Analysis:
1. Maintainability of the Show Cause Notice:
The petitioner challenged the correctness and validity of the show cause notice dated 23-5-2006 issued by respondent No. 2. The petitioner contended that the notice is barred by limitation under Section 73(1) of the Act of 1994. The respondent argued that the notice is within the limitation period as per the proviso to sub-section (1) of Section 73. The court noted that the petitioner had already been assessed to service tax by the Central Excise Intelligence, Kolkata, for the period from 1-9-1999 to 31-3-2004. The court directed the respondent to verify the liability of the petitioner and make appropriate orders after due consideration of the reply filed by the petitioner.

2. Territorial Jurisdiction Issue:
The petitioner argued that as they were registered under Centralized Registration at Kolkata, the respondent at Raipur had no territorial jurisdiction to initiate recovery proceedings. The respondent contended that the transactions attracting tax liability had taken place within the territorial jurisdiction of Chhattisgarh, giving them the authority to proceed. The court directed the respondent to scrutinize the petitioner's liability under the head "Clearing and Forwarding Agent" and exclude transactions already assessed by the Kolkata office before further proceedings.

3. Barred by Limitation:
The petitioner claimed that the notice was barred by limitation as there was no fraud, misrepresentation, or suppression of facts for tax evasion. The respondent argued that the notice fell within the limitation period as per the proviso to sub-section (1) of Section 73. The court directed the respondent to verify the period of transactions and make appropriate decisions based on the overlapping liability.

4. Overlapping Liability Issue:
The court noted considerable overlapping of the petitioner's liability towards service tax payment under the head "Clearing and Forwarding Agent" in two assessment proceedings. The transactions and periods covered in both notices were found to be similar. The court directed the respondent to scrutinize the transactions, obtain information from the Kolkata office, and pass appropriate orders regarding the overlapping period. The respondent was instructed to exclude transactions already assessed by the Kolkata office before proceeding further with the matter.

In conclusion, the court disposed of the petition with directions for the respondent to carefully examine the overlapping liability issues and take necessary actions accordingly.