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TMI Blog2010 (5) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for dredging of the river as above, would not attract Service Tax and sought for the opinion of the Commissioner. The Department vide letter dated 23-2-06 replied that as the activity covered by the Work Order involved removal of silt and sediments from the river-bed, the same attracted Service Tax as dredging services. Thereafter, the Appellant issued another letter dated 15-3-2006 specifically referring to the Board's Circular dated 27-7-05 and reiterating the view that the activities undertaken by them in dredging the river would not come under the tax net. According to the Department, a reply dated 5-4-06 was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation, 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 Irrigation Department of West Bengal. Under these circumstances, the service charges received relating to 16-6-05 onwards should be treated as cum-tax value and the demand should be re-worked. 5.5 The Work Order for dredging included several activities in respect of which the Appellants were required to supply materials and value of such materials has also been included for the purpose of demanding Service Tax which is not legal and proper. 5.6 The Appellants are Government-managed company. They have executed the work for a Government Department and there was no intention to evade Service Tax involving any suppr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 services and in view of the wider nature of the definition of dredging services, there is no scope for excluding the value of such material. Further this plea has been taken for the first time during the arguments. 6.6 On the issue of limitation, learned Jt.CDR submits that "doubt "and "bona fide belief" do not go together. If the Appellants were in doubt, they were duty-bound to seek clarification from the Department. When the Service Tax had been proposed during the Budget introduced on 1-3-05 and became law with effect from 16-6-05, they sought for clarification only through their letter dated 7-2-06. At a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and other vessels and to maintain shipping channels. Service Tax is leviable only on dredging of river, port, harbour, backwater or estuary and dredging in any other cases does not attract service tax. The definition of dredging is an inclusive definition and the activities specified are only indicative and not exhaustive." 7.3 From the above guidelines, we are not able to agree that the dredging service is limited to "maintenance of the shipping channels". The clarification clearly refers to the inclusive nature of the definition of dredging and states that the activities specified are only indicative and not exhaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity 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 the dredging services in the ST return and claimed that they were not liable to pay Service tax. It is also not their case that they sought for any Speaking Order on the issue. At any rate, the demand relating to the period from October, 2005 (For October, 2005 to March, 2006 the due date for return was 25-4-06), has been raised within the normal period of limitation, as the Show Cause Notice was issued on 14-3-07. For the period prior to October, 2005, the conduct of the assessee as narrated earlier justified the invocation of the extended period of limitation. 12. Since we hold that the Appellants have no reason to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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