Service tax is indirect tax like that of customs duty, excise duty and sales tax. In the case of customs duty, the incidence of such duty is on goods imported into India or exported from India. The importer or the exporter is liable to pay the customs duty. The Registered Office of the importer or exporter may be located anywhere, but normally the customs official in whose territorial jurisdiction the import or export takes place has the power to adjudge the duty unless some other official is specially assigned jurisdiction over a particular case of import or export. In the case of excise duty, the incidence of levy is on the goods manufactured. The manufacturer who is liable to discharge the duty liability may have his registered office in another place, but there is no doubt that the excise officials in whose territorial jurisdiction, the manufacture of goods takes place are competent to adjudge the duty unless some other official is specially assigned the job. In the case of sales tax, the incidence is on sale of goods and hence the jurisdiction to adjudge sales tax is to be decided with reference to the place where sale of goods takes place unless the relevant legislation confers jurisdiction with reference to the location of the seller. The Central Excise officials have been vested with powers under the service tax provisions instead of appointing separate set of officials to administer the service tax.
In 'Commissioner of Central Excise, Customs & Service Tax, BBSR-II V. Ores India Private Limited' - 2008 -TMI - 31594 - CESTAT KOLKATA, the appeal is filed by the revenue. In this case a show cause notice was issued by the Commissioner, BBSR-II to the respondents demanding service tax amounting to Rs.2,92,86,475/- and proposing penal action under Sec. 76, 77 and 78 of the Finance Act, 1994. By the impugned order the Commissioner has held that the impugned show cause issued to the respondents fails on the limited ground of jurisdiction and he has thus disposed of the same 'as without jurisdiction'. The respondents have their registered office at Barbil which falls within the territorial jurisdiction of Bhubaneswar-II Commissioner in Orissa. The respondents have not opted for centralized registration. The impugned services have been provided by them in the state of Jharkhand within the territorial jurisdiction of Commissioner, Jamshedpur. In the impugned order the Commissioner has no jurisdiction in respect of services provides in the state of Jharkhand outside his territorial jurisdiction.
The appellant department put forth the following contentions:
· The respondents have their registered office at Barbil within the State of Orissa;
· The contracts for providing the impugned service have been executed with their Barbil address;
· The payments have been received by the respondents at Barbil;
· The respondents have not applied for service tax registration either in Orissa or in Jharkhand jurisdiction;
· According to the statement of the Accountant of the respondents, the respondents do not have any branch office in Jharkhand.
The respondents put forth the following contentions:
§ They have not opted for centralized registration;
§ The bills are raised only from their office at Monoharpur in the state of Jharkhand for services rendered in Jharkhand;
§ The Commissioner, Jamshedpur has also issued a show cause notice to the respondents covering the same period of dispute claiming jurisdiction over the respondents;
The tribunal observed that the jurisdiction of central excise officials is confined to the notified territory and hence under the excise law they have control over the factories manufacturing goods within such territory. In the context of service tax, since the incidence of service tax is on provision of service, the excise officials would normally have jurisdiction with reference to services provided within their territorial jurisdiction as a natural corollary of the territorial jurisdiction assigned to excise authorities originally under the excise law made applicable to the service tax provisions.
The tribunal further observed that the presumption behind the arguments advanced by the Department appears to be that since the respondents have their head office at Barbil in Orissa, they are subject to Commissioner, Bhubaneswar - II's territorial jurisdiction. In other words, the location of the service provider according to the Department determines the jurisdiction and not where the service is provided giving to the incidence of service tax.
Rule 3 of the Service Tax Rules, 1994 provides that the Central Board of Excise and Customs may appoint such Central Excise Officers as it thinks fit for exercising the powers under Chapter V of the Act within such local limits as it may assign to them as also specify the taxable service in relation to which any such Central Excise Officer shall exercise his powers. The Service Tax Order No.1/1/94, dated 29.6.1994 was issued under the said Rule in which the jurisdiction of the central excise officers for service tax matters has been specified with reference to assessees. The term 'assessee' has been defined in Sec. 65(7) of the Finance Act as a person liable to pay the service tax and includes his agent. The above definition read with the provisions of Sec. 68 leaves no doubt that an 'assessee' means a person including a legal person such as a company or firm who is liable to pay service tax.
Though the Commissioners of Central Excise, who have been vested with the powers under the Service Tax provisions, have territorial jurisdiction as notified under the Central Excise Rules, since the order issued under Rule 3 of the Service Tax Rules, 1994 specifies the jurisdiction with reference to the 'assessee' within the territorial jurisdiction, it becomes clear that the location of the registered office of a service tax payer is crucial to determine the jurisdiction of the Commissioners. Consequently it follows that irrespective of where the service may be provided, the location of the assessee would determine the jurisdiction of the Central Excise Commissioner to adjudge service tax cases.
The Service Tax Order No.1/1/94, dated 29.6.1994 does not envisage two Commissioners have concurrent jurisdiction over the same assessee. This order makes it clear that the jurisdiction has to be determined with reference to the location of the assessee i.e., the service tax payer and since the registered office of the respondents is located in the jurisdiction of the Commissioner, Bhubaneswar - II, the said Commissioner has to be held as the Commissioner having jurisdiction over the assessment and collection of service tax in respect of the respondents. Consequently it would be immaterial where the service is provided and where the incidence of taxable services in the territorial jurisdiction spread over several states, but a deliberate provision has been made to bring all the taxable services provided by an assessee under one Commissioner within whose territorial jurisdiction the assessee is located. Such a provision also appears to facilitate ease of collection and control.
The tribunal held that the Commissioner, Central Excise, Bhubaneswar - II did have the jurisdiction under the service tax provisions in respect of the respondent assessee.
This case law makes clear the territorial jurisdiction of the Commissioner of Central Excise Officer. This is to be taken into account by the service provider while dealing with the matters of service tax.
By: Mr. M. GOVINDARAJAN - January 25, 2009