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2016 (8) TMI 147 - CESTAT CHANDIGARH

2016 (8) TMI 147 - CESTAT CHANDIGARH - 2016 (45) S.T.R. 148 (Tri. - Chan.) - Technical Inspection and Certification Service of seeds produced by the seeds producer - issuing the certificates - Extended period of limitation - revenue submitted that the activity undertaken by the respondents is not a sovereign function as per the section 9 of the seeds act, 1966 - Held that:- the activity undertaken by the respondents are not a sovereign function and the respondents are liable to pay service tax o .....

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for the normal period only. - assessee is entitle for cum tax benefit - Decided partly in favor of Revenue. - ST/200-201/2011 - Final Order No. 60343-60344/2016 - Dated:- 6-6-2016 - Mr. Ashok Jindal, Member (Judicial) Shri. G.M.Sharma, A.R for the appellant Mr. Rajeev Kumar, Advocate for the respondent ORDER The revenue is in appeal against the impugned orders wherein the demand of service tax has been dropped by the Ld. Commissioner (A). 2. The facts of the case are that the respondents are re .....

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05)(zzi) of Finance Act, 1994, the respondents are liable to pay service tax on their activity under category of Technical Inspection and Certification Services. Therefore, the show cause notices were issued to the respondents for the period of 2003-04 to 2007-08. The show cause notices were issued by invoking extended period of limitation and the adjudicating authority after giving opportunity to the respondent confirms the demand of service tax and along with interest and imposed penalties und .....

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e respondents is not a sovereign function as per the section 9 of the seeds act, 1966. In facts, services of the respondent can be obtained by any person which is optional, therefore, the activity undertaken by the respondents does not qualify as sovereign function. The Ld. AR also relied on the CBEC circular no. 89/7/2006-S.T dated 18.12.2006. He further submits that the identical issue came up before this tribunal in the case Maharashtra State Seeds Certification Agency 2015 (37) STR 655 (Tri. .....

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he certifying agency for seeds. It is further submitted that a clarification was sought by the Gujarat State Seed Certification Agency, Ahmadabad and it was clarified vide clarification dated 27.09.2006 that the activity undertaken by the respondent is the sovereign function and they are not liable to pay service tax. Therefore, the impugned orders are to be upheld. 5. Heard the parties and considered the submissions. 6. On careful consideration of submissions made by both the sides, we find tha .....

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a certificate for the purpose. (2) Every application under sub-section (1) shall be made in such form, shall contain such particulars and shall be accompanied by such fees as may be prescribed. (3) On receipt of any such application for the grant of a certificate, the certification agency may, after such enquiry as it thinks fit and after satisfying itself that the seed , to which the application relates conforms to the 8 [prescribed standards], grant a certificate in such form and on such cond .....

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rovisions, it is clear that the service provided by the respondents are optional not mandatory. Therefore, these activities have lost characteristic of sovereign function. Further, the similar issue came up before this tribunal in the case of Maharashtra State Seed Certification Agency (Supra) wherein this tribunal has observed as under. 9. We have considered the rival submissions. We have also gone through the Seeds Act, 1966 as also the Rules made there under. The said Seeds Act provided .....

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e specified varieties of seeds through the intermediaries or in the market then certification from the appellant or similarly placed agency is required. We have gone through the Board s Circular relied upon by the appellant which is reproduced below : A number of sovereign/public authorities (i.e. an agency constituted/set up by government) perform certain functions/duties, which are statutory in nature. These functions are performed in terms of specific responsibility assigned to them under the .....

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e same is ultimately deposited into the Government Treasury. A doubt has arisen whether such activities provided by a sovereign/public authority required to be provided under a statute can be considered as provision of service for the purpose of levy of service tax. 2. The issue has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accord .....

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not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. 3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service. 4. Trade and field formation may be advised accordingly. The .....

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ect of immovable property should fall under the purview of technical inspection and certification services . In this regard it may be recalled that earlier, CBEC vide its order No. 1/1/2002, dated 26-2-2003, issued under Section 37B (of the Central Excise Act as made applicable to service tax) had clarified that certification given under authority of any code or statute cannot be considered as a consulting engineer service. However, the new service included in 2003 budget, namely technical inspe .....

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and Certification Service as enumerated in para 2 above. 12. We have also gone through the case laws submitted by the appellant and we do not consider it necessary to discuss the same as the facts, nature of service, implementation authorities in those cases are entirely different. 13. We however note that the said service became taxable with effect from 1-7-2003 and the appellant started collecting the same with effect from 1-4-2005 and the amount collected by the appellant was initi .....

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do not find that ingredients of proviso to Section 73 of the Finance Act, 1994 are present in the facts and circumstances of the case. Therefore, the demand within the normal period of limitation is only upheld and that beyond the same is set aside. 14. Keeping in view the facts and circumstances of the case, as enumerated in earlier para, we set aside the penalty under Sections 76, 77 and 78 under Section 80 of the Finance Act, 1994. We also observe that part of the demand of tax under Se .....

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