TMI Blog2023 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... mand vide Show Cause Notice dated 15 April 2009, for the period of 1 July 2003 to September 2004 was barred by limitation. Whether the Hon'ble Tribunal was right in dismissing the Rectification of Mistake Application in cursory manner without discussing various judgments cited by the Appellant which are squarely applicable to the facts of the present case and without considering written submission filed post hearing? - HELD THAT:- A Division Bench of this Court in Electropneumatics [ 2014 (9) TMI 242 - BOMBAY HIGH COURT] held that minimum expectation from tribunal was complete application of mind to controversy dealing with submissions canvassed orally and in writing and by reasoned order whether to uphold or reject them. The proceedings were remanded back to the tribunal so as grant to the assessee on opportunity to argue its case completely. It was observed that it was not possible to ascertain from tribunal s order as to which of contentions have been dealt with and considered - question answered in favour of Appellant and against the Revenue, as in the order passed on the ROM the CESTAT has not recorded any findings on the position in law as canvassed by the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices rendered by banks and hence by express provisions in the same very section, cash management services stood excluded from the purview of service tax. On account of such exclusion the authorities cannot levy service tax by indirect method of charging the same services under the head business auxiliary service . The Tribunal erred in restricting the scope of exemption under Notification No. 13/2003 to promotion and marketing of Business Auxiliary Services . The benefits of notification applies to entire Business Auxiliary Service . Hence, the question of law is answered in favour of Appellant. Whether the Tribunal was correct in holding that services in the nature of veterinary services and Technical Testing services will fall under the taxable category of Business Auxiliary Services when at the relevant point of time the testing services on animals were specifically excluded from the definition of Technical Testing services ? - HELD THAT:- If the main service as Commission agent of providing service of promotion and marketing is exempted, the incidental services in the nature of laboratory testing, analysis and veterinary services ought to be exempted as well. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not liable to pay interest. Also as we have held that Appellant was not liable to pay taxes, during the relevant time, there is no question of imposing penalty u/s. 78 of the Act, as there is no suppression of taxable service provided during the material time. The questions of law are answered in favour of the Appellant, and against the Respondent - Appeal allowed. - G.S. KULKARNI RAJESH S. PATIL, JJ. For the Appellant : Mr. Jitendra Motwani i/b. For Economic Laws Practice. For the Respondent : Mr. Ram H. Ochani a/w. Mr. Karan Adik. JUDGMENT [PER RAJESH S. PATIL, J.] 1. This Appeal is filed under Section 83 of the Finance Act, 1994 read with Section 35G of the Central Excise Act, 1944, challenging the concurrent findings recorded by Order No. A/93256-93257/16/STB dated 21 October, 2016 (for short referred as Main Order ) and Order No. M/87288/17/STB dated 5 May, 2017 , arising out of application for Rectification of Mistake (for short referred as ROM ) passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (for short referred as CESTAT ). 2. The appeal is being considered on following Questions of law:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Department on 15 April, 2009 issued a Show Cause Notice, demanding Service Tax of Rs. 89,38,978/- along with interest and penalty, from the Appellant. The Appellant, by its letter dated 10 June, 2009 replied to the Show Cause Notice giving its explanation to the Show Cause Notice. 6. On 23 August 2011, the Commissioner of Central Excise, Pune III, heard the parties and by an Order-in-Original dated 31 October, 2011, the demand was confirmed, along with interest, however, no penalty was imposed as per Section 80 of Finance Act, 1994. 7. Appellant being aggrieved by the Order-in-Original preferred an appeal before the CESTAT, being Appeal No.ST/75/12. So also the Respondent/Commissioner of Central Excise and Service Tax, Pune III filed an Appeal under Section 86 of the Finance Act with the Appellate Tribunal of CESTAT, being Appeal No. ST/45/12 as penalty was not imposed. 8. Both the Appeals were heard by CESTAT and by an order dated 21 October, 2016, the CESTAT confirmed the demand, limiting to the quantum of service provided to customers of Venco/VRB along with penalty imposed under section 78 and no penalty was imposed under section 76 of the Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent were exempted from service tax and the Appellant was not paying any service tax however from 9 July, 2004 the Appellant has been paying Service Tax regularly under the category Business Auxiliary Services . The fact that the Appellant took registration and started paying tax with effect from 9 July , 2004 clearly demonstrates that it had no intention to evade tax. Therefore in the absence of any malafides, there is no justification for invoking the extended period for imposing any penalty under section 78 of the Finance Act 1994. 12.1. To buttress his submission Mr.Motwani also placed reliance upon certain authorities, few of them are as follows:- i. Commissioner of Central Excise, Nagpur V. N.P. Earth Movers Pvt Ltd. reported in 2018 (19) GSTL 462 (Bom) ii. Electropneumatics Hydraulics (1) P.Ltd. V. Commissioner of Central Excise reported in 2014 (309) ELT 408 iii. Mahindra Mahindra Ltd. V. Union of India reported in 2019 (367) ELT 609 iv. Padmini Products v. Collector of Central Excise reported in 1989 (43) E.L.T. 195 (S.C.) v. Chahabria Marketing Ltd. V. Commissioner of Service Tax, Mumbai reported in 2016 (43) S.T.R. 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf registered with the Service Tax Cell, Pune-III, and started paying Service Tax regularly under the category Business Auxiliary Services with effect from 9 July 2004. According to Appellant, prior to 9 July, 2004, the services of Veterinary and Laboratory Analysis provided as commission agent were exempted from Service Tax. Appellant submitted that the Show Cause Notice, is barred by limitation, as it is issued after the statutory period of one year. The extended period of 5 years is not attracted for issuance of Show Cause Notice. 16.2. Appellant relied upon the Judgment of Supreme Court in the case of Padmini Products (Supra), which held that mere failure or negligence on the part of the producer or manufacturer either not to take out a licence or not to pay duty in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not, would not attract the extended period. Paragraph No. 8 of the judgment reads as under:- 8. Shri V. Lakshmikumaran, learned Counsel for the appellant drew our attention to the observations of this Court in Collector of Central Excise, Hyderabad v. M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal of dhoop sticks, etc. Counsel further submitted that in any event apart from the fact that no licence had been taken and for which no licence was required because the whole duty was exempt in view of Notification No. 111/78, referred to hereinbefore, and in view of the fact that there was scope for believing that it was exempt under Schedule annexed to the first notification, i.e., 55/75, being handicrafts, the appellants could not be held to be guilty of the fact that excise duty had not been paid or short-levied or short-paid or erroneously refunded because of either any fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made there under. These ingredients postulate a positive act. Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision. Shri Ganguly, appearing for the revenue, contended before us that the appellants should have taken out a licence under rule 174 of the said Rules be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al infirmities; Firstly, it may cause prejudice to the affected party and secondly more particularly, it would hamper proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and in fact, with a greater degree of precision to judicial pronouncements. Paragraph No. 12 of the Judgment reads as under:- 12. At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law as canvassed by the petitioner which had a material bearing on the orders passed by the tribunal. 18. In so far as the Third Question of Law is concerned, namely, Whether the Tribunal was correct in not considering the decision of the coordinate bench in the case of Chahabria Marketing Ltd. V. Commissioner of Service Tax, Mumbai reported as 2016(43) STR 93 which holds that exemption under Notification No. 13/2003-ST dated 20.06.2003 is available to all services provided under Business Auxiliary Service? 18.1. In Chahabria Marketing (Supra) decided by the CESTAT Mumbai it was held that the benefit of exemption was available to all the business auxiliary Services provided by a commission Agent. Paragraph 6.1 of the judgment reads as under:- 6.1 In the impugned order the Commissioner has denied the benefit of exemption on the ground that the activities performed by the appellant were much wider than that of a 'commission agent as defined in the Notification. He has observed that though the commission was fixed with reference to the quantity of goods actually sold, the activities of the appellant were not confined to sale only but covered various other ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944) . [Emphasis supplied] 18.2 One of the learned Member (Judicial) who was part of the Bench of the CESTAT which decided Chahabria Marketing, was also member of the Bench, in present proceedings. Chahabria Marketing (Supra) was decided by the Mumbai Tribunal on 6 January 2016, and in the present proceedings, Tribunal decided the Appeals on 21 October 2016. 18.3 The Supreme Court in Fujifilm (Supra) held that judicial discipline requires that Tribunal follows decision of a Co-ordinate Bench. Paragraph Nos. 4 to 9 of the Judgment read as under:- 4. There was an order dated 20-2-2013 of the same Tribunal in the case of M/s. Jindal Photo India Pvt. Ltd. v. Commissioner of Customs (Import), Nahva Sheva' [Order No. 12/1237/2013/CST/C-I in Appeal No. C/415/2012-Mum] [2014 (300) E.L.T. 568 (Tribunal)] holding that Imaging Plates and IP Cassettes to be classifiable under Chapter 90 CTH 9018 90 99 and, therefore, entitled to the benefit of Notification No. 21/2002, dated 1-3-2002. The classification of FCR Capsula was also decided in Jindal Photo India Pvt. Ltd. (supra) in a manner adverse to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that notwithstanding anything in these sections, because of Section 80, if the Assessee can prove that there was a reasonable cause for his failure, the penalty need not be imposed. However, except for mentioning this provision, data about reasonable cause which then introduced Assessee not to pay service tax, does not figure anywhere. In paragraph No. 8 of the said order, composition of Assessee as such has been commented upon and its perusal reveals that a lenient view has been taken. In this situation, because of different view in the matter, we find substance in submission of Shri Bhattad, Learned Counsel that this order dated 3-10-2013 also shows nonapplication of mind. 10. In so far as the order which took converse view and assailed by the Assessee in other matters are concerned, there the consideration ends with a finding on nature of contract. The CESTAT holds that contract of Assessee with WCL is for a site formation. There the provisions of Section 80 of Finance Act or then Circular dated 12-11-2007 are totally omitted from consideration. The said order, therefore, also show non-application of mind. 11. In Central Excise Appeal Nos. 4/2015 and 7/2012, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid two decisions, completely ignores the same. It makes no attempt to even distinguish the facts therein with the facts which arose in the present case. The Tribunal in the impugned order seems to do away with its obligation to be bound by the decisions of its Coordinate Benches by observing that the issue of revenue neutrality is to be decided on the basis of facts of each case and the judgments cited by the appellant cannot be made applicable automatically . Once the litigant before the Tribunal placed reliance upon the decision of a Coordinate Bench of the Tribunal, then a speaking order would require the Tribunal to consider those decisions and state how and why the aforesaid decisions are not applicable to the facts of the present case. In the absence of this exercise is being done, the impugned order itself suffer from being a non-speaking order. Moreover, we find that where Authorities like the Tribunal functioning within the State of Maharashtra exercise jurisdiction in breach of principles of natural justice or in flagrant disregard of the law of precedents by not referring the issue to the President for constituting a Larger Bench of Tribunal, if it did not agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness Auxiliary Service as defined under Section 65(105)(zzb) of the Act, with effect from 9 July, 2004. Section 65(105) taxable service means any service provided or to be provided - (a) . . (zzb) to a client, by any person in relation to business auxiliary service. 19.3. The Revenue has not disputed that Veterinary Services and Testing and Analysis services falls under the definition of Business Auxiliary Services . The dispute is about whether the Veterinary services and Testing and Analysis services rendered by the Appellant would satisfy the criteria of Commission Agent . In other words whether such services amount to sale or purchase of goods on behalf of Venco/VRB for a consideration which is based on quantum of such sale or purchase. They certainly do not. 19.4 The notification in question clearly exempts the business auxiliary services provided by a commission agent and such commission agent should cause sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase. 19.5 Therefore in view of interpretation of the notification once it is established that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. 19.7 Prior to July 9, 2004, the Appellant was eligible for exemption under Notification No. 13/2003 dated 20 June, 2003 ( Notification No. 13/2003 ). In terms of the said Notification, for a period up to 9 July, 2004, business auxiliary services provided by the commission agent who caused sales and purchase of goods on behalf of another client was exempt from Service Tax. Hence, the promotion and marketing services provided by Appellant was liable to Service Tax only with effect from 9 July, 2004, post which the Appellant has been paying Service Tax. 19.8 We are therefore of a view that Tribunal erred in restricting the scope of exemption under Notification No. 13/2003 to promotion and marketing of Business Auxiliary Services . The benefits of notification applies to entire Business Auxiliary Service . Hence, the Fourth Question of law is answered in favour of Appellant. 20. In so far as the Fifth Question of Law is concerned, namely, Whether the Tribunal was correct in holding that services in the nature of veterinary services and Technical Testing services will fall under the taxable category of Business Auxiliary Services when at the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entification of a disease, prevention of any disease or disorder in human beings or animals. 20.4 Commission agent defined under Notification No. 13/2003 is a person who provides service in relation to purchase or sale of goods, this is only for defining the eligibility criteria. Once it is held that the assessee is a Commission Agent by virtue of being engaged in the activity of causing sale or purchase for a consideration which is linked to the quantum of sale or purchase, the benefit of this Notification will cover all business auxiliary services rendered by such commission agent . 20.5 In our view, if the main service as Commission agent of providing service of promotion and marketing is exempted, the incidental services in the nature of laboratory testing, analysis and veterinary services ought to be exempted as well. There cannot be a situation where the main service is exempt and all other services in relation to the same are excluded. Appellant carries out various laboratory analysis and tests in respect of the chicks and the services provided by them are in relation to the brooding, growing and laying of birds which includes routine diagnostic services, special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken for the purpose of clinical testing of drugs and formulations; but does not include testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, prevention of any disease or disorder in human beings or animals;] 8. A perusal of the afore-mentioned provision makes it clear that the expression 'technical testing and analysis' does not include any testing or analysis service provided in relation to human being or animals. The explanation goes to the extent of excluding from the afore-mentioned definition, a testing or analysis for the purposes of determination of the nature of diseased condition, identification of a disease, prevention of any disease or disorder in human beings or animals. Such being the statutory provision, we do not entertain any doubt that merely because any incidental service is rendered by the assessee-respondent like putting across or dropping of the name of the principal company, it would become part of the definition of 'Business Auxiliary Service' within the meaning of Section 65 (19) (il) of the Act. The view taken by the Tribunal is unassailable and deserves to be uph ..... X X X X Extracts X X X X X X X X Extracts X X X X
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