9911796707
TMI Blog2010 (5) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the Order of the Commissioner No. 1/Commr./ST/Kol/2007-08 dated 27-6-2007. 2.Heard both sides. 3.The relevant facts in brief are that the Appellants, through a tender process, received a Work Order dated 7-2-05 from the Irrigation Department of the West Bengal Government for dredging of river Ichhamati from BSF Bridge at Kalanchi to Bridge at Tentulia in the District of North 24-Paraganas for better drainage and flood control. The value of the Contract was for Rs. 25.44 crore. In the Budget of 2005, proposal for levy of Service tax on dredging service was made and the same services came under Service tax net with effect from 16-6-2005 in pursuance of Notification No. 15/05-Service Tax dated 7-6-2005. The Appellants registered themselves with the Central Excise Authorities on 19-7-05 for different services including dredging services falling under Section 65(105)(zzzb) of the Finance Act, 1994. A Board's Circular dated 27-7-05 came to be issued clarifying the scope of new services introduced. The Appellant vide their letter dated 7-2-06 forwarded a copy of the Work Order to the Commissioner of Service Tax, Kolkata along with their views that the services rendered by them f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder a bona fide belief that the activities undertaken by them did not attract levy under dredging service and accordingly, they wrote a letter dated 7-2-06 and on receipt of reply dated 23-2-06 from the Department, they again wrote another letter dated 15-3-06 placing relevant facts before the Department. Under these circumstances, the question of suppression of any relevant facts from the Department does not arise. The question of intention to evade payment of Service Tax also does not arise. Therefore, the demand cannot be raised invoking the extended period of limitation. 5.3 He also submits that during investigation, Shri Manna, Accounts Officer vide his statement dated 27-2-07, has clearly claimed that about Rs. 5.00 crore received by them in August, 2005 was related to the services rendered by them prior to 16-6-05 when the levy was not in force. The Commissioner has confirmed the demand of Service Tax on the entire amount of service charges received by them including the service charges received for services rendered for the period prior to 16-6-05. This is contrary to law. 5.4 He submits that the Appellants have not received the Service Tax from the Irrigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service charges relating to the activities undertaken prior to 16-6-05, he submits that the Appellants have not made any such submission before the original authority and also in the Appeal Memorandum before the Tribunal and the same has been taken up only during arguments. 6.4 Regarding the claim for treating the service charges received as cum-tax value, he submits that this stand has not been taken before the Commissioner. Further, the Appellants have admittedly raised bills separately for service tax amount on the Irrigation Department. Under these circumstances, the claim that the value of the Service Tax should be treated as cum-tax value is not supported by facts. He also submits that in terms of Section 67(2) of the Finance Act, only when the amount charged by the service provider includes the Service Tax payable, the cum-tax benefit should be extended. 6.5 Regarding claim for exclusion of the value of material, learned Jt. CDR submits that as per the Work Order, the dredging services rendered by the Appellants included the value of such materials and all these activities are either for dredging services or are integrally connected to the said dredging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person, in relation to dredging;" 7.2 From a careful reading of the definition of the term, "dredging" and the connected "taxable service", we find that dredging has been defined in an inclusive manner. The said activities 'undertaken in river' is covered under the definition of "dredging". The definition implies exclusion of the dredging activities of pond or lake. The dredging undertaken in a river is clearly specified. The purpose for which the dredging is undertaken in the river, whether it is for the navigational purpose or for other purposes, appears irrelevant. The Board's instructions dated 27-7-05 heavily relied upon by the Appellants reads as follows : 7.1 Any service provided or to be provided to any person, by any other person, in relation to dredging is leviable to service tax under sub-clause (zzzb) of section 65(105) of the Finance Act, 1994. 'Dredging' has been defined under clause (36a) of section 65 of the Finance Act, 1994. 7.2 This taxable service covers dredging which is generally undertaken for removal of material such as silt, sediments, rocks etc. of rivers, ports, harbour, backwater or estuary for providing adequate draught for ships ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit, we find that the Department has given clarifications about the taxability; admittedly the Appellants have raised separate bills on the customer; merely because the said amount was not paid by the customers as of now, it cannot be held that the service charges collected by them should be treated as cum-tax value. In the given facts and circumstances of the case, the claim of cum-tax benefit is permissible. 11. Regarding the invocation of the extended period of limitation, we find lot of force in the submissions made by the learned Jt. CDR. The Appellants are claiming that they were having a doubt about the taxability of the services. They ought to have promptly sought clarification about the taxability in the event of their doubt. They, in fact, sought clarification, though belatedly, on 7-2-06. We find that the Department after perusing a copy of the Work Order submitted by the Appellants had given clarification on 23-2-06 about the taxability. At least thereafter, the question of the Appellants entertaining any bona fide belief that there was no liability to tax, does not arise. It is not the case that they furnished the details of service charges received for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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