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TMI Blog2010 (3) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the penalties imposed relying on various case-laws. Held that- The appellants have claimed that they had availed input service and paid Service Tax qualified as Cenvat credit. Thus, this claim needs to be examined. In the circumstances, vacate the impugned order and remand the matter to the Adjudicating Authority to re-determine the liability of the appellants afresh. Thus, the appeal is allowed by way of remand. - ST/276/2007 - 642/2010 - Dated:- 29-3-2010 - S/Shri M.V. Ravindran, Member (J) and P. Karthikeyan, Member (T) Shri B.G. Chidananda, Advocate, for the Appellant. Mrs. Sudha Koka, SDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. - The appellant M/s. Karnataka State Warehousing Corporation (KSWC), a State Government undertaking has filed this appeal. Appellants were found to have rendered taxable services under the category 'Storage and Warehousing Services' and 'Cargo Handling Services' during the period 16-8-2002 to 31-3-2005 without following the statutory formalities including payment of Service tax due. On the omissions being pointed out by the department, the appellant pleaded ignorance of their liability for their failure and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arehouses did not amount to 'Cargo Handling Services' taxable under the Act. They had paid excess amount of Rs. 4,65,151/- and Rs. 2,51,806/- respectively under 'Storage and Warehousing Services' and 'Cargo Handling Services'. The appellants had paid Service tax of Rs. 2,38,778/- on services received as input and they were eligible for the credit of the same. In the appeal filed before us, the appellants have challenged the denial of abatement of tax already paid in computing the demand and the penalties imposed relying on various case-laws. Relying on the decision in the case of M/s. BEL v. CCE - 2004 (165) E.L.T. 485 (S.C.), it is submitted that their accounts were subjected to scrutiny by various agencies such as the Accountant General and there could not be any intention on their part to evade payment of duty. Appellants were under the bona fide belief that they were not required to discharge the tax liability found against them in the impugned order. As they had acted on a bona fide belief regarding their liability to pay Service tax, no penalty was liable to be imposed on them, They relied on the following case-law in respect of this claim; (i) Hindustan Steel Ltd. v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Service tax liability. In the written submissions furnished on behalf of the Revenue after the hearing was concluded, earnest pleas were made to oppose the claim of the appellants that they are a public authority and that they are not liable to discharge any Service tax since they discharged a statutory function. The salient argument advanced by Revenue is reproduced below : "2. The Circular dated 18-12-2006 of the Central Board of Excise Customs grants exemption only in respect of statutory levies collected, by a sovereign/public authority under the provisions of law and is in the nature of statutory obligation, which is to be fulfilled in accordance with the law. The fee collected by them for performing such activities should be in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity should be purely in public interest and undertaken as mandatory and statutory function. However if such authority performs a service which is not in the nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fees/levy, then in such cases Service tax would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptually not a valid proposition." 5. It is submitted that the appellant was engaged in providing storage and warehousing facility for a consideration and that they raised Commercial invoices for the services rendered; this showed that they were not levying any fee as statutorily prescribed. As per the CBEC Circular, an organization rendering statutory functions collecting the prescribed fee which is to be deposited in the Government Treasury was not rendering any taxable service. The appellant was under no statutory obligation under any law to store fertilizers. As regards limitation and liability to penalty the reasoning followed by the Adjudicating Authority is reiterated. 6. We have carefully perused the case records and the rival submissions. The main ground taken by the appellant is that they did not render any taxable services in the light of the clarification contained in CBEC Circular No. 89/7/2006-S.T., dated 18-12-2006. The pertinent paragraphs of the Circular are reproduced below : "A number of sovereign/public authorities (i.e. an agency constituted/set up by government) perform certain functions/duties, which are statutory in nature. These functions are perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of various statutes produced by the appellants do not indicate that there is a statutory mandate for the appellants to store fertilizer or any other commodity. Fertilizer is a commodity notified under the Essential Commodities Act. Its procurement, sale and distribution can be regulated by the Government. The Government can adopt measures to ensure that selected fertilizers are made available to the farmers at reasonable prices. For storing fertilizers, the State Government avails the services of KSWC. The concerned authorities are requested to make storage space available whenever required. From the entire literature furnished, we are not able to find any material to support the claim of the appellants that they carry out a statutory function. There is no dispute that KSWC is a public authority. There is no dispute that KSWC does not discharge any sovereign function such as maintenance of law and order, maintenance of military etc. Rule 17 of the Karnataka State Warehouse Rules require the warehouse keepers to charge its customers not in excess of the fees indicated in their application for appointment as warehousemen. The appellants have not furnished any evidence lo show that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase based solely on the CBEC Circular cited, we do not consider it necessary to consider the case law cited by the Ld SDR to understand the liability of services mandatorily rendered by public authorities in public interest. However, the submissions and case law cited throw light on the nature of activity excluded from levy as per the CBEC Circular. 8. The Central Warehousing Corporation and State Warehousing Corporations (such as KSWC) set up under the aegis of Warehousing Corporation Act, 1962, may acquire and build godowns and warehouses at suitable places to run warehouses for the storage of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities by individual, co-oporative societies and other institutions; it may arrange facility for transport of such goods which they are supposed to warehouse. Appellants also undertake transport of notified goods between warehouses. It appears that the appellant engages in warehousing and transportation of notified commodities and earn a reasonable profit. No statutory provisions govern the charges collected by the appellants for storage and transportation of notified goods. The fertilizer compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entry 'Cargo Handling Services' we hold that the appellants are also engaged in provision of 'Cargo Handling Services'. 10. As regards the argument the plea of limitation, we find that the appellants were registered with the department as early as on 8-3-2004 as a provider of Storage and Warehousing services. The departmental officers visited the assessee and went through its records on 14-2-2005. Therefore, the show cause notice issued on 21-3-2006 for demanding Service tax for the period 16-8-2002 to 31-3-2005 cannot be held to have been made in time. Therefore, the demand for a period beyond the normal period with reference to the date of issue of show cause notice is not sustainable in law. The appellants have claimed that they had availed input service and paid Service Tax qualified as Cenvat credit. We find that this claim needs to be examined. In the circumstances, we vacate the impugned order and remand the matter to the Adjudicating Authority to re-determine the liability of the appellants afresh. Thus, the appeal is allowed by way of remand. Needless to say that the appellant shall be allowed an opportunity of personal hearing before the matter is decided afresh. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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