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TMI Blog2018 (3) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and he has to suffer in his business and has to face the breach of contract. Any payment of contract which are entered after 1-7-2003 will invite Service Tax and any contract which is concluded prior to 1-7-2003 will not invite imposition of Service Tax. Appeal allowed - decided in favor of assessee. - D.B. Central Excise Appeal No.11 of 2009 with D.B. Central Excise Appeal Nos.12 of 2009 and 18 of 2013 - - - Dated:- 7-9-2017 - K.S. Jhaveri And Inderjeet Singh, JJ. S/Shri Sameer Jain with Daksh Pareek and Arjun Singh, for the Appellant S/Shri Kinshuk Jain and Anuroop Singhi, for the Respondent [Judgment]. - By way of these appeals, the appellants have challenged the judgment and order of the Tribunal [2009 (14) S.T.R. 34 (Tribunal)] whereby the Tribunal has dismissed the appeals of the assessee confirming the order of Commissioner of Central Excise and Service Tax, dated 1-8-2006 whereby the appellants were directed to pay tax for the services rendered after 1-7-2003. 2. This Court while admitting the matter has framed the following substantial questions of law : D.B. Central Excise Appeal No.11/2009 admitted on 16-3-2009 Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of value of services. 1. I am directed to say that some doubts have been raised regarding payment of Service Tax in cases where a lump sum payment for a service to be provided in future over a certain period of time, is made in advance before the date on which the particular service came under the tax net, but the entire or part of such service is provided after the date on which it became taxable. The doubt appears to have arisen as Rule 6(1) of Service Tax Rules, 1994, provides for payment of tax on the value of service received during a month/quarter, and in the instant case, no payment is received after the date on which the tax came into force (for example a case where payments for coaching service is received before 1-7-2003 i.e. the date on which the service became taxable, but the entire or part of coaching is provided after that date). 2. In this regard it may be noted that rule 16 only prescribes the procedure of payment of tax. The liability of tax is created by section 66 of the Finance Act, 1994 as amended from time to time. The liability to pay tax is fastened on the service provider by section 68 of the said Act. These two sections read together impl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Bill, 1994, Service Tax was introduced as an Indirect Tax and the Finance Minister in his speech has clearly stated that as per the Tax Reforms Committee's recommendation, the net of indirect tax is broadened by including service sector and the proposals of his budget speech and new levies will come into force from a date to be notified later on. The relevant para 87 is produced below : Over the years while attempts have been made to widen the base for domestic indirect taxes, the services sector has not been subjected to taxation. Yet this sector accounts for about 40% of our GDP and is showing strong growth. There is no sound reason for exempting services from taxation, when goods are taxed and many countries treat goods and services alike for tax purposes. The Tax Reforms Committee has also recommended imposition of tax on services as a measure for broadening the base of Indirect Taxes, I, therefore propose to make a modest effort in this direction by imposing a tax on services of telephones, non-life insurance and stock brokers. The tax will be charged at 5 per cent on the amount of telephone bills, the net premium charged by the insurance companies, and the br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the Central Boards of Revenue Act, 1963 (54 of 1963); (25) Commercial Training or Coaching means any training or coaching provided by a commercial training or coaching centre; (27) Commercial Training or Coaching means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre of any institute or establishment which issues any certificates or diploma or degree or any educational qualification recognized by law for the time being in force; 7. He has also relied on Rule 6 and Rule 4 and more particularly 83 which reads as under : 6. Payment of Service Tax. - (1) The Service Tax on the value of taxable services received during any calendar month shall be paid to the credit of the Central Government by the 25 th of the month immediately following the said calendar month : Provided further that where the assessee is an individual or proprietary firm or partnership firm, the Service Tax on the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on to the buyer.:- Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods. 8. He has also taken us to the Service Tax (Amendment) Rules, 2003 which came into force on the date of their publication in the Official Gazette. Clause (v) and (vi) which reads as under :- (v) Vide Notification No.7/2003 notification was issued under the power of Section 66(2) of the Finance Act, 1994, by which all the new services introduced by the Finance Bill, confirmed in the Finance Act mentioned hereinunder were levied with the Service Tax @ 8 per cent w.e.f. 1-7-2003 onward. The said notification is reproduced as under. In exercise of the powers conferred by sub-section (2) of section 66 of the Finance Act, 1994 (32 of 1994), the Central Government hereby appoints the 1 st day of July, 2003, as the date from which the Service Tax shall be levied under sub-section (2) of section 66 of the said Finance Act. [Notification No.7/2003-S.T., dated 20-6-2003, Source - 2003 (E.L.T.) 155 Pg. N-168] (vi) Vide C.B.E. C. Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in future. He also relied upon Board's Circular F. No.B1/6/2005-TRU, dated 27-7-2005. The Id. Joint C.D.R. submitted that explanation inserted subsequently for the removal of doubt only reinforces an already existing provision and does not introduce anything new. The Explanation would be retrospective or not, depending on the meaning of the provisions of Section and Rules. In the present case, the Explanation appears to be declaratory in nature, would have retrospective effect The Id. Joint C.D.R. relied upon the decision of the Hon'ble Delhi High Court in the case of Pawan Kumar v. DRI - 2007 (218) E.L.T. 331 (Del.) and Binani Industries Ltd. (JT) 2007 (5) SC (311). The relevant portion in the case of Pawan Kumar (supra) is reproduced below : (10) The presumption against retrospective operation is not applicable to declaratory statutes. CRAIES has explained the position regarding declaratory statutes in the following manner [Statute Law, 7 th Edn., p. 58] For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, by any 40 [Central Act] or Regulation which is not to come into force immediately, on the passing thereof, a power is conferred to make rules or bye-laws, or to issue orders with respect to the application of the Act or Regulation, or with respect to the establishment of any Court or office or the appointment of any Judge or officer thereunder, or with respect to the person by whom, or the time when, or the place where, or the manner in which, or the fees for which, anything is to be done under the Act or Regulation, then that power may be exercised at any time after the passing of the Act or Regulation; but rules, bye-laws or orders so made or issued shall not take effect till the commencement of the Act or Regulation. 1 16. He has also relied upon the judgment of the Supreme Court in the case of Suchiatra Components Ltd. v. Commissioner of Central Excise, Guntur : 2007 (208) E.L.T. 321 (S.C.) wherein it has been held as under :- 2. We have heard Mr. A.R. Madhav Rao, learned Counsel for the appellant and Mr. K. Radhakrishna, learned Senior Counsel for the respondent. We have perused the orders passed by the lower Authorities and also of the Tribunal. The point ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence which permitted the collection of tax. Shri Venugopal is right in contending that after 25 th October, 1989 the provisions of Section 39 of the U.P. Excise Act, 1910 which provides for recovery of excise revenue would be inapplicable. The said section inter alia states that all excise revenue may be recovered from the person primarily liable to pay the same, as arrears of land revenue or in the manner provided for the recovery of public demands by any law for the time being in force. Section 3(1) defines excise revenue as meaning revenue derived or derivable from any duty if the taxes etc. imposed or ordered under the provisions of the Act or of any other law for the time being in force. Section 3(3a) defines excise duty and countervailing duty as meaning any such excise duty or countervailing duty, as may be mentioned in Entry 51 of List II of the Seventh Schedule of the Constitution. There can be no excise duty under the U.P. Excise Act on industrial alcohol because that would be outside the ambit of Entry 51 of List II of the Seventh Schedule. Vend fee being regarded as excise duty on industrial alcohol which is not valid as not falling under Entry 51 of List Il cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable service notified by the Central Government in the Official Gazette, the Service Tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this chapter shall apply to such person as if he is the person liable for paying the Service Tax in relation to such service. 11. Considering the fact that section 65(105) of Finance Act, 1994, defines taxable services including service to be provided and Rule 6 of Service Tax Rules prescribes payment of tax on consideration received during the calendar month without any reference to actual providing of service we are not able to agree with the point of view canvassed by Revenue. 12. We have also examined the Explanation in Rule 6(1). This explanation does not make any provision as to which rate of tax will apply in situation like the one at hand (whether that on date of receipt of value or that on date of providing service). This explanation says that the service provider needs to pay tax only on that portion of value for which Service Tax has been provided. In the instant case the Appellant paid tax on the full value received. The department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to evade payment of duty. It was observed by this Court that something positive other than more inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required before it is saddled with any liability beyond the period of six months had to be established. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal, however, had held contrary to the contention of the appellants. The Tribunal noted that dhoop sticks are different products from agarbaties even though they belonged to the same category and the Tribunal was of the view that these were to be treated differently. Therefore, the clarification given in the context of the agarbaties could not be applicable to dhoop sticks etc., and the Tribunal came to the conclusion that inasmuch as the appellant had manufactured the goods without informing the Central Excise authorities and had been removing these without payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be taken out or where there was scope for doubt whether goods were dutiable or not would not attract Section 11A of the Act. In the facts and circumstances of this case, there were materials, as indicated to suggest that there was scope for confusion and the appellants believing that the goods came within the purview of the concept of handicrafts and as such were exempt. If there was scope for such a belief or opinion, then failure either to take out a licence or to pay duty on that belief, when there was no contrary evidence that the producer or the manufacturer knew that these were excisable or required to be licensed, would not attract the penal provisions of Section 11 A of the Act. If the facts are otherwise, then the position would be different. It is true that the Tribunal has come to a conclusion that there was failure in terms of Section 11A of the Act. Section 35L of the Act, inter alia, provides that an appeal shall lie to this Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Therefore, in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Circular dated 5-11-2006 of CBEC New Delhi. Moreover Hon'ble High Court has not restrained the department in completing the adjudication proceedings by issue of stay order etc. It is also pertinent to stress that a substantial amount of Government revenue is due from the assessee and the assessee has been given suitable opportunity to present their case, in the circumstances, I have no other option but to decide the case. 22. He has strongly relied on show cause notice which was issued at Annexure-8 and para 9 which is reproduced hereinabove and contended that the view taken by the authority is just and proper. 23. He has relied upon the decision of the Supreme Court rendered in the case of W.P.I.L. Ltd., Ghaziabad v. Commissioner of Central Excise, Meerut, U.P. in Appeal (Civil) No.4228-4229 of 1999 decided on 22-2-2005, [2005 (181) E.L.T. 359 (S.C.)] wherein it has been held as under :- 1 [''4a 72, 83, 85 73, 84 82, or Goods other than namely :- (a) Electrical stampings Laminations (b) Bearings (c) Winding Wires Nil If the said goods are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, this court was considering a case where two interpretations of Section 22 of the Income-tax Act were possible. It was opined that if one interpretation is possible and the same is clear, the next thing to be considered would be what would be the effect of the amendment. Referring to Benion s Statutory Interpretation and G.P. Singh's Principles of Statutory Interpretation, it was held : An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law when the Constitution came into force, the amending Act also will be part of the existing law. It furthermore noticed the decision of the Constitution Bench in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas and Anr. [(1968) 3 SCR 623], wherein it was opined that an Explanatory Act is generally made to supply an obvious omission or to clear up doubts as to the meaning of previous Act. We are herein not concerned with such a situation. In W.P.I.L. Ltd., Ghaziabad v. Commissioner of Central Excise, Meerut, U.P. [(2005) 3 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is drawn, the extended period of 5 years for raising demand becomes invocable and it is obvious that the impugned show Cause Notice dated 27-6-2006 was issued well within the period of 5 years from the relevant date. It is immaterial that earlier Show cause notice dated 12-5-2004 issued for a different category of service was not found sustainable, because so long as the impugned show cause notice dated 27-6-2006 was issued within the permissible period of 5 years from the relevant date, the show cause notice remains valid as it does not suffer from any legal infirmities. 7. Looking to the interest of Revenue that has undergone suffering and exercise of power by learned Adjudicating Authority not being faulted as has been held by Apex Court in Pradyumna steel Ltd. - 1996 (82) E.L.T. 441 (S.C.) adjudication in terms of the impugned order cannot be said to be fatal because show cause notice dated 27-6-2006 intended to tax the escaped receipts. Reliance of learned Counsel on the decision in Twenty First Century Steel (P) Ltd. - 2010 (255) E.L.T. 524 (P H) may not be profitable to him because Hon'ble High Court held that during pendency of a matter before CESTAT, issua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed save by authority of law. - No tax shall be levied or collected except by authority of law. 30. The assessee herein has entered into a concluded Contract much prior to coming into force of Service Tax law and in view of the clarification which has been issued in 2005 which clearly made out the case for the appellant inasmuch as the legislation has now used the language after 2005 which clearly states as under; Taxable service means any service or to be provided to any person by a Commercial training or coaching classes in relation of the Coaching . 31. In that view of the mater, it is very clear that prior thereto, there is authority interpretation of the provision as services which are referred to be provided in future was not covered. Even otherwise in view of the law Concluded Contract cannot be revived in view of subsequent development which will lead to a very odd situation with the assessee and he has to suffer in his business and has to face the breach of contract. 32. In that view of the matter when we have to interpret the taxing statute, we have to interpret Article 265 and the possibility of interpretation should not be avoided to be very impract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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