TMI Blog2011 (9) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation dropped. Penalty - held that:- while re-quantifying the demand falling within the period of limitation, no penalty is required to be imposed on the appellants inasmuch as we have already held that there is no malafide on the part of the assessee who could have entertained the reasonable belief that the value of material is not required to be added in the value of services being provided by them. - ST/738 and 760/2007 - ST/503-504/11 - Dated:- 20-9-2011 - Ms. Archana Wadhwa, Mr. Mathew John, JJ. Appearance: Shri Sumit Kumar, SDR for the Appellants Ms. Nisha Bageli and Shri Vikram Mehta for the Respondent Per Archna Wadhwa (for the Bench): Both the appeals of the revenue are being disposed of by a common order as the issue involved in all of them is identical. The impugned orders stand passed by the Commissioner (Appeals) vide which he has set aside the demand of Service Tax against the respondents on the ground that the value of the goods and materials sold by the respondents while providing the services, are not required to be added in the value of services. 2. As per the facts on record, the respondents are engaged in providing photograp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption in respect of inputs, material consumed / sold to the service recipient. Apart from the above clarification, the earlier decision of the Tribunal in the case of Shilpa Colour Lab reported in [2007 (5) STR 423 (Tri-Bang)] as also in the case of Adlab Labs reported in [2006 (2) STR 121 (Tri)] etc. were in favour of the assessee. As such, the respondent submitted that there was enough material for them to entertain a bonafide belief as regards non inclusion of the material cost in the value of services. They submitted that the issue stands decided against the appellant, by the Larger Bench decision of the Tribunal delivered on 11.8.2011. As the decisions prior to the Larger Bench judgment were in favour of the assessee, no malafide can be attributed to them so as to invoke the longer period of limitation. 6. As against the above pleas of the respondents, the learned SDR Shri Sumit Kumar have submitted that the law on the issue was clear even prior to the Larger Bench judgement and relies upon the Supreme Court decision in the case of C.K. Jidheesh vs. Union of India as reported in [2006 (1) STR 3(SC)]. He submits that the Commissioner (Appeals) has misapplied the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by both sides. There is no dispute about the merits of the case which stands decided against the respondents by the Larger Bench decision of the Tribunal. There is also no dispute about the fact that the earlier decision of the Tribunal were in favour of the assessee. The Hon'ble Supreme Court in the case of C.K. Jidheesh vs. CCE Chandigarh cited supra has held as under: "6. As has been mentioned above, the challenge is ostensibly to the letter issued by the Ministry of Finance. But the real challenge is to the amendment in the Finance Act. That letter is only clarifying what Section 67 of the Finance Act, 1994, as amended by Act 14 of 2001, provides." 8. As regards the learned SDR's plea that the issue was covered by the Apex Court decision in the case of C.K. Jidheesh, we find that the said judgement was on the issue whether material sold by photograph studios can be separated from the value of services rendered by them and a letter / clarification issued by Ministry was under challenge. The decision was itself based on the decision of the Apex Court in a sales tax matter in Rainbow Colour Lab Anr. v. State of M.P. Ors. - (2000) 2 SCC 385. This decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After the 46th Amendment, the sale element of those contracts which are covered by the six sub-clauses of Clause (29A) of Article 366 are separable and may be subjected to sales tax by the States under Entry 54 of List II and there is no question of the dominant nature test applying. Therefore when in 2005, C.K. Jidheesh v. Union of India - (2005) 8 SCALE 784 held that the aforesaid observations in Associated Cement (supra) were merely obiter and that Rainbow Colour Lab (supra) was still good law, it was not correct. It is necessary to note that Associated Cement did not say that in all cases of composite transactions the 46th Amendment would apply." 9. It appears that the SDR is arguing that the Apex Court had endorsed the contention of Revenue that in the case of photography service only the cost of unexposed films can be deducted from the value of service realized from the customer and not the value of chemicals used and further that since the Apex Court had declared the law in the matter in 27-10-2005 itself, any action (or inaction) of any assessee done without taking cognizance of this finding of Apex Court is with intention to evade payment of tax. In this context a care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of suppression and mis-statement justifying invokation of extended period of limitation stands upheld against the assessee on the sole ground that the specific details of computation of taxable value and the service tax were not being provided by the respondents at the time of filing the returns. Mere filing of return by itself without giving bifurcation of the cost of the material and cost of services do not act as estoppels in invoking the extended period. Inasmuch as the particulars mentioned in the return does not give a clear picture, it stands recorded by the adjudicating authority that in ST 3 return, the respondents have only mentioned the taxable value' post deduction from the gross bill amount. As such, he has arrived at a finding that no demand could have possibly be raised without disclosure of facts and figures. We find that the grounds on which extended period of limitation can be invoked against the assessee are available in proviso to Section 11 A of Central Excise Act, 1944. While interpreting the expression 'suppression, misstatement' there are plethora of judgement by the Hon'ble Supreme Court laying down that such suppression or mis-statement has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the law laid down by the Supreme Court is a nullity is not appropriate, inasmuch as the same has no bearing on the invokation of longer period of limitation. We are not holding that the law as clarified in the Board's letter dated 7.4.2004 is the correct law. The reference to the said letter is being made only to arrive at a conclusion that there could be a bonafide belief on the part of the assessees. The law as declared by the Larger Bench in the case of Aggarwal Photo Lab is the correct law, which is admittedly contrary to the said letter of the Board and is not being adopted for deciding the issue on merits. 14. Similarly, we note that the reference to the Hon'ble Gujarat Cour's decision in the case of Neminath Fabrics cited supra is not correct inasmuch as the issue involved in that case as also in the case of decision of the Apex Court in Mehta Co. cited supra, was on the issue as to whether the period of 5 years would be available to the revenue from the date of search of the factory, when the officers get the knowledge about the clandestine activities of the assessees. 15. By applying the ratio of law declared in the above decision, we find that since the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
