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2016 (6) TMI 878 - GUJARAT HIGH COURT

2016 (6) TMI 878 - GUJARAT HIGH COURT - 2016 (44) S.T.R. 211 (Guj.) - Recovery of service tax from the FCI where service provider failed to deposit the amount with the service tax department - Deposit of amount u/s 73A collected in the name of Service Tax - Can the Central Government seek direct recovery from FCI with the aid of the section 87 of the Finance Act of 1994? - Case of the petitioner is that cargo service relating to agriculture produce provided by Kailash Enterprise was exempt from .....

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rom any other person or requiring any other person from whom money is due or may become due to such defaulting person. The fundamental question is when the Government of India wrote letters to the FCI in the year 2015 and onwards, did FCI was there any due of Kailash Enterprise from FCI ? The answer is obviously in the negative. Section 87 of the Finance Act, 1997 was therefore wrongly invoked. - Decided in favor of petitioner. - SPECIAL CIVIL APPLICATION NO. 3051 of 2016 - Dated:- 16-6-2016 - M .....

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ters, the service tax authorities are seeking to recover service tax of ₹ 5.37 crores (rounded off) from the petitioner. 2. Brief facts are as under. 3. The petitioner as Food Corporation engages agencies for handling food cargo for transportation and other related activities. FCI had engaged one Kailash Enterprise for handling of wheat cargo during the year 200-607. Case of the petitioner is that such service provided by Kailash Enterprise was exempt from payment of service tax, despite w .....

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accepted that no service tax was payable since under exemption notification No.10/2002 dated 01.08.2002 service provided in relation to agricultural produce was exempt from payment of service tax. However, referring to section 73A of the Finance Act, 1994 he held that now that Kailash Enterprise had recovered the tax from FCI, it must deposit with the service tax authorities. Relevant portion of the order of the Commissioner reads as under: (b) SERVICE PROVIDED TO FCI (i) The Notices has contend .....

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as meaning that the exemption is available only in respect of such agricultural produce as is intended for cold storage. I have gone through notification, No.10/2002, ST dated 01.08.2002 and I find that the phrase agricultural produce or goods intended for could storage was meant to cover two categories of items. (I) agricultural Produce (ii) goods intended for cold storage Therefore, I find the demand of Service Tax is not sustainable on the said cargo in view of the exemption notification No.1 .....

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paid by the Assessee along with applicable interest under Section 73A and Section 73B of the Act. (ii) Out of the said amount of ₹ 7,69,65,589/- only ₹ 5,36,90,043/- pertains to FCI which is ordered to be recovered from M/s Kailash under Section 73A of the Finance Act, 1994, Rest of the amount of ₹ 2,32,75,546/- pertains to M/s GPPL, demand for which is already confirmed under Section 73(2) of the said Act as per para 6(a) above. (iii) Regarding issue of two credit notes said .....

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rson who had borne the incidence of such amount. Liability under Section 73A of the Act is not extinguished by subsequent suo moto adjustments or refunds of any amount by M/s Kailash to FCI. In view of the above, I hold that the amount of ₹ 5,36,90,043/- eligible. 7. M/s. Kailash are liable for appropriate penalty under Section 77 of the Finance Act, 1994 for having failed to file the Service Tax returns failed to declare that correct amount of taxable value received by them and failed to .....

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f April - 2007 Oct 2007 to March2008. April2008 to Spt.2008 to March2009. I, therefore, order for the recovery of the amount payable for delay in furnishing return at the rate specified in Rule 7C of Service Tax Rules, 1994. 4. It appears that between FCI and Kailash Enterprise there were multiple disputes of deficiency in service provided by the service provider. The FCI by the year 2011-12 had also realized that the service tax collected by Kailash Enterprise was not deposited in the governmen .....

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rgo handling service received by it from Kailash Enterprise for handling of wheat cargo. This much has been held by the Commissioner in his order dated 31.01.2013. He negated the Revenue's contention that the exemption applied only to agriculture produce which were meant for cold storage and interpreted the exemption as to include both items i.e. agriculture produce and produce meant for cold storage separately. We therefore, have to proceed on such basis. What therefore, emerges is that tho .....

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Tax collected from any person to be deposited with Central Government: 1 Inserted (w.e.f. 18.04.2006) by s. 68 of the Finance Act, 2006 (21 of 2006) (1) Any person who is liable to pay service tax under the provisions of this Chapter or the rules made thereunder, and has collected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of this Chapter or the rules made there under from the recipient of taxable service in any manner as r .....

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as not been so paid, the Central Excise Officer shall serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government. (4) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under subsection (3), determine the amount due from such person, not being in excess of the amount specified in t .....

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ll either be credited to the Consumer Welfare Fund referred to in section 12C of the Central Excise Act, 1944 or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B of the said Act and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Central Excise Officer for the refund of such surplus amount. 7. Under sub section (1) o .....

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