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2019 (11) TMI 1206 - HC - Service TaxNature of activity - manufacture or service - services of erection, commissioning and installation to the service recipient M/s. Larsen and Toubro Limited - territorial jurisdiction - manufacture taking place or not? - Service tax already paid - recovery sought - double taxation - time limitation - demand of interest and penalty. Territorial Jurisdiction - Whether, in facts and circumstances of the present case the learned Tribunal vide impugned order is correct in not considering submissions / documents for wrong invocation of jurisdiction? - HELD THAT - With reference to the materials on record, the Tribunal held that admittedly, the Head Office of the Appellant was situated at Raipur; that the Appellant/Proprietor of the establishment was residing at Raipur; that the Appellant had neither registered centrally nor regionally so as to confine to the jurisdiction to a particular place as sought to be effected by the Appellant and further that, all the work orders were executed by the Appellant at his Raipur address, as admitted by him in this regard - After having submitted to the jurisdiction of the Commissioner / Adjudicating Authority without any protest, it is not correct or proper for the Appellant to take a 'U-turn', when the decision has gone against him. It is settled law that the power conferred upon the competent authority with reference to 'territorial jurisdiction' is not an instance of total lack of jurisdiction, so as to make the order null and void. Manufacture taking place or not - HELD THAT - Obviously, it is an inclusive definition and not exclusive one. Admittedly, the activity being pursued by the Appellant in the premises of M/s. L T involving fabrication, commissioning and erection is by making use of the raw materials supplied by the service recipient / M/s. L T. There is no case for the Appellant that the Appellant was owner of the raw materials, which were put into the alleged manufacturing activity, to give rise the products. There is no instance of any sale and the products cannot be called as goods, having no independent marketability, as tailor-made, subject to the specifications given by the M/s. L T / service recipient - It is nothing but a 'service', the Appellant admittedly having no ownership over the materials supplied by the M/s. L T or on the products. Service tax already paid - recovery sought - double taxation - HELD THAT - The explanation offered by the Appellant that they had not taken registration and were not satisfying the service tax, despite the liability to satisfy the same, merely on the basis of instructions / advice stated as given by the service recipient / M/s. L T can never be accepted as any explanation, much less, anything reasonable or satisfactory. Ignorance of law is no excuse. This being the position, the said ground also does not hold any water at all. Extended period of limitation - Whether, in facts and circumstances of the present case the Appellate Tribunal vide impugned order is correct in confirming demand of service tax invoking extended period of limitation under proviso to section 73 of the Act? - HELD THAT - The contention of the Appellant is that the extended period of 'five years' is not applicable to the instant case, as it does not come within the purview of specific Clauses at 'a, b, c, d and e'. This aspect has been considered by the Tribunal and it has been clearly held in paragraph 17 that non-registration of the Appellant, in the given circumstances, definitely will amount to suppression of the relevant facts, which came to the notice of the Department, only later, on the basis of some intelligence gathered by the Preventive Officers of the Central Excise. This being the position, it squarely comes within the purview of 'sub-Clause (d)' under the proviso to Section 73 (1) of the Finance Act, 1994 and hence it was open for the Department to have invoked the extended period of 'five years' for issuing the show-cause notice - the finding rendered by the Tribunal is well supported by the reasoning and hence it warrants no interference. Penalty - Whether, in facts and circumstances of the present case the Appellate Tribunal vide impugned order is correct in confirming imposition of penalties U/S 76, 77 78 of the Act? - HELD THAT - The course pursued by the Appellant might be considered as a reasonable cause for the failure as envisaged under Section 80 of the Finance Act, 1994, so as to exclude the Appellant from satisfying penalty (which otherwise is payable under Sections 76 or 78 of the Finance Act, 1994). The learned counsel submits that the above penalty provisions are not attracted and the Appellant might be considered for the benefit of Section 80 of the Finance Act, 1994. Though the said provision came to be deleted with effect from 14.05.2015, insofar as the Appellant is concerned, the said provision was governing the field for the period from 01.10.2006 to 15.12.2011 involved herein. The course and conduct pursued by the Appellant is not liable to be branded as innocent or bona fide, insofar as the necessity to have taken registration was well known to the Appellant, who, in fact, had taken registration in respect of the sister concern belonging to the very same Appellant as Proprietor, which was being run under the name and style as M/s. M.R. Engineering Works, providing necessary services to the very same service recipient / M/s. L T. There is no substantial question of law - appeal dismissed.
Issues Involved:
1. Wrong invocation of jurisdiction. 2. Jurisdiction of Commissioner, Central Excise, Raipur. 3. Confirmation of demand of service tax invoking extended period of limitation under proviso to section 73 of the Act. 4. Recovery of interest under Section 75 of the Act. 5. Imposition of penalties under Sections 76, 77 & 78 of the Act. Issue-Wise Detailed Analysis: 1. Wrong Invocation of Jurisdiction: The appellant argued that the Adjudicating Authority (Commissioner, Central Excise, Raipur) lacked territorial jurisdiction as the work was executed outside Raipur's geographical limits, specifically in West Bengal, Orissa, and Bihar. The Tribunal found that the appellant's head office and residence were in Raipur, and all work orders were executed from Raipur. The appellant did not dispute jurisdiction initially and only raised the issue later, which the court found inappropriate. The court held that the power conferred upon the competent authority with reference to 'territorial jurisdiction' is not an instance of total lack of jurisdiction, so as to make the order null and void. 2. Jurisdiction of Commissioner, Central Excise, Raipur: The Tribunal noted that the appellant's head office was in Raipur, and the appellant had not registered centrally or regionally, thereby confining jurisdiction to a particular place. The appellant's sister concern was also registered in Raipur. The court found no reason to deviate from the Tribunal's finding that the Commissioner, Central Excise, Raipur had jurisdiction. 3. Confirmation of Demand of Service Tax Invoking Extended Period of Limitation: The appellant contended that the work done amounted to 'manufacture' under Section 2(f) of the Act and hence was outside the purview of service tax liability. The Tribunal held that the appellant's activities did not constitute manufacturing as the appellant did not own the raw materials and the products were not independently marketable. The Tribunal also found that the appellant's non-registration amounted to suppression of facts, justifying the invocation of the extended period of five years under the proviso to Section 73 of the Act. 4. Recovery of Interest Under Section 75 of the Act: The court upheld the recovery of interest under Section 75, as the appellant failed to pay the service tax due to non-registration and suppression of facts. The appellant's argument that M/s. L&T had already paid the service tax was rejected, as the appellant was responsible for its tax liability. 5. Imposition of Penalties Under Sections 76, 77 & 78 of the Act: The appellant argued that penalties should not be imposed as they acted on M/s. L&T's advice. The court found that the appellant's failure to register and pay service tax was not bona fide, especially since the appellant had registered a sister concern providing similar services. The court held that the appellant's conduct did not warrant relief under Section 80 of the Finance Act, 1994, and upheld the penalties. Conclusion: The appeal was dismissed as devoid of merit. The court found no substantial question of law and upheld the Tribunal's order, confirming the jurisdiction of the Commissioner, the demand of service tax, recovery of interest, and imposition of penalties.
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