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M/s Secon Surveys (P) Ltd. Versus The Commissioner of Service Tax, Bangalore And Commissioner of Central Excise & Service Tax Versus M/s Secon Surveys (P) Ltd.

2016 (9) TMI 1138 - CESTAT BANGALORE

Validity of Deputy Commissioner and Commissioner (Appeals) order - Doctrine of Merger - jurisdiction of the same to adjudicate a demand notice involving the amount more than ₹ 5,00,000/- all the services covered by the impugned order became taxable services only from 16.6.2005 by virtue of Finance Act, 2005 which introduced new services in relation to survey and map making services - ignorance of legal principles of Doctrine of Merger - Held that:- the Deputy Commissioner lacks jurisdictio .....

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re so when review order is passed much after order passed by the Commissioner (Appeals). We also find that the Department has also filed appeal against the Order-in-Appeal. In view of these facts and circumstances, we are of the considered opinion that the impugned order is bad in law and we set aside the same. - Decided in favour of appellant - ST/10/2006 & ST/100/2004 - Final Order Nos. 20766 & 20767/2016 - Dated:- 15-9-2016 - Shri S. S. Garg, Judicial Member And Ashok K. Arya, Technical Membe .....

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ed by the assessee-appellant. The appellant, M/s Secon Surveys (P) Ltd., is a private limited company and is engaged in the business of surveying apart from rendering Consultancy Service and Construction Supervision for Highways , etc. During the course of audit, the appellant furnished information, records, documents and copies of contracts/agreements, bills etc. as required by the authorities. After completion to audit, the Department issued a letter dated 04.12.2002 to the appellant stating t .....

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are engaged in providing services in the field of civil engineer like topographical, hydrographical, geo-tech surveys and investigations, pipeline transportation studies, infrastructure development studies, design and consultancy for irrigation and water management, supervision and surveying in respect of highway construction, bridges and environmental impact studies; (ii) That these services come within the scope of consulting engineer as defined in Section 65(25); (iii) That the clarification .....

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tailed in the Statement of Facts annexed to the show-cause notice; (vii) That during the period from 1.4.1998 to 31.3.2003, the appellant charged a gross sum of ₹ 58,05,08,327/- as charges for consulting engineer service and the service tax liability thereon works out to ₹ 3,40,25,416/-; and (viii) That the appellant had suppressed facts and had contravened Sections 68, 69 & 70 of the Finance Act, 1994. 3. The appellant refuted the above allegations in the show-cause notice. The .....

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d only w.e.f. 1.7.2003 onwards under the category of technical testing, analysis, inspection and certificate services. In this regard, reliance was placed on the amendment made by the Finance Act, 2003 and the Board Circular No. 79/9/2004-S.T. dated 13.5.2004. Hence, geo-tech investigations were not covered under consulting engineer prior to 1.7.2003. (d) That the activity of Right of Use/Ownership (ROU/ROW) did not involve any consultancy service. (e) That work executed by the appellant as a su .....

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(i) Insofar as pure consultancy services, the same was taxable. (j) As regards turnkey projects involving design consultancy work is concerned, the same was not taxable in the light of decision of State of Punjab v. Associated Hotels India Ltd., Daelim Industries Co. Ltd. V. CCE, L&T Ltd. v. CCE. (k) That the appellant was liable for payment of interest. (l) As regards penalties, in the light of developments made by the Finance Acts, and the Board Circulars bringing new service categories wi .....

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sing the discretion vested in the said authority in terms of Section 80 of the Finance Act, 1994. 3.2. Aggrieved by the same, the appellant filed appeal before the Commissioner (Appeals) challenging the following issues : (i) That the finding of the adjudicating authority that pursuant Board Circular dt. 26.2.2002, the activity of Land Survey fell under consulting engineer service. That service of surveying was brought under service tax net only by Budget 2004 and it did not fall under consultin .....

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ing authority had taken the word survey from the circular out of context and misinterpreted the same. (iii) That even after the Board Circular dt. 26.2.2002, the provisions relating to consulting engineer had not changed. Hence the order of the adjudicating authority that after 26.2.2002 land survey would fall within consulting engineer was unwarranted and without basis. (iv) That turnkey projects could not be taxed under the category of consulting engineer in the light of Daelim Industrial Comp .....

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ing design consultancy and auxiliary services. (b) The adjudication order imposing service tax on pure consultancy was upheld. (c) The appellants were held liable to pay interest under Section 75. (d) In the light of setting aside of the service tax, refund of tax paud, if any, was to be sanctioned. 4. Aggrieved by the said order, the Department filed appeal before the Tribunal (ST/100/2004) and tagged with the appeal of the assessee-appellant. 5. After the order of the Commissioner (Appeals), t .....

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missioner (Appeals) and an Order-in-Appeal had been passed vide Order No.167/2004-CE dated 31.8.2004. The Original adjudication order had merged insofar as issues contested before the Commissioner (Appeals). Hence, the revisionary powers exercised by the Commissioner in review show cause notice were without authority. (b) That the adjudication order had merged with the appellate order of the Commissioner (Appeals) and the jurisdiction of the Commissioner under Section 84 of the Act ceased. Relia .....

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407 (Cal.), the Calcutta High Court held that if the authority reviewing had merely proceeded at the suggestion of the audit department, then it would be untenable in law. (e) That there was no question of any intendment in a taxing statute and it ought to be interpreted strictly on the basis of words used in the Statute. (f) That insofar as demand of service on land survey was concerned- a. The adjudicating authority recorded detailed findings on non-taxability of the same under the category of .....

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in Roots Multiclean Ltd. v. CCE, 2005 (179) ELT 107 (T). (g) As regards geo-tech investigations, hire charges for hiring chattel and crew was concerned the same did not fall under consulting engineer . That geo-technological investigation primarily involved soil drilling, boring, etc., and got specifically covered under new service site formation and clearance, excavation and earth moving and demolition introduced by the Finance Act, 2005 w.e.f. 16.6.2005. The adjudication order was proper in up .....

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cision of the Tribunal in Daelim Industrial co. Ltd. v. CCE, 2003 (155) ELT 457 (T) affirmed by the Supreme Court in 2004 (170) ELT A181 (SC) was rightly followed. Further, the review show cause notice made bald allegations and the details of the review made by the respondent were not forthcoming in the show cause notice. (i) That there was no suppression of facts warranting pressing into service the extended period of limitation under Section 73 of the Act. Reliance was placed on the decision i .....

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iew show cause notice. That there was no mens-rea or culpable mental state ont he part of the appellant. That the adjudicating authority had rightly exercised the discretion vested in the said authority under Section 80 of the Act. Therefore, the proposals to invoke penal provisions were not proper. A number of decisions were relied on in this frame of reference. 6. Thereafter, the Respondent-Commissioner passed the Order-in-Original dated 30.11.2005. The findings in the impugned order-in-origin .....

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ii) Charges received for geo-tech investigations: The order of the Deputy Commissioner that this would be covered only w.e.f. 1.7.2003 suffers from legal infirmity. These services are part of the engineering services carried out to examine the suitability of soil and to determine the type of structure, etc. The contention of the assessee is not legally sustainable. (iii) Charges for hiring chattel and crew at the site: That the value of taxable service is the gross amount charged and these charg .....

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peals) was not binding on the Commissioner in revision proceedings under Section 84 of the Act. That Section 84 and 85 were independent sections, which operated in different spheres distinguishable from each other. The revision proceedings did not suffer from any legal infirmity. (vi) That the contentions of the appellant regarding penalty were not legally sustainable. The provisions of law did not confer any benefit on the assessee. Since the extended period had been invoked on grounds of suppr .....

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7 of the Act. (e) He imposed further penalty of ₹ 1,50,00,000/- under Section 78 of the Act for having suppressed value of taxable service with an intent to evade payment of service tax. 7. Aggrieved by the said order, the appellant is before the Tribunal. The appeal of the Department is against that segment which has been allowed by the Order-in-Appeal of the Commissioner (Appeals) and the appellant is against the order of the Commissioner s order of review show-cause notice passed under .....

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proceedings are void ab-initio. Then he referred to various provisions of Finance Act, Central Excise Act, Central Excise Rules, 2002 and Service Tax Rules and submitted that service tax law does not have a statutory provisions in the Finance Act for independent appointment of Central Excise officers for the purpose of service tax law. Service Tax Rule 3 has the provisions for the Board to pick and choose a Central Excise officer appointed and invested with powers under Central Excise Act/Rules .....

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the exercise of powers within such local limits assigned to them for specified taxable services; and the appointment made under Rule 3 of the Central Excise Rules does not mean an automatic appointment under Service Tax law, more so when the Finance Act, 1994 is silent on appointments. The provisions of Rule 3 of the Service Tax Rules cannot eclipse the Finance Act, 1994 and enable the Government to make appointments contrary to law. Section 65(121) is not a provision enabling appointment of of .....

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on. 8.1. The learned counsel further submitted that the Deputy Commissioner who passed the adjudication order dated 16.7.2004 do not have the pecuniary jurisdiction to adjudicate a demand notice involving the amount more than ₹ 5,00,000/-. To support this submission, the learned counsel produced the Board s Circular No. 752/68/2003-CX dated 1-10-2003 which was in force during the relevant time, specifically restricts the power of the Deputy Commissioner for the purpose of adjudication dema .....

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services, the scope of which is also explained in the contemporaneous exposition i.e. Board Circular issued by Govt. of India, explaining the Budget changes of 2005. The service tax cannot be charged retrospectively as per the decision of the Hon ble Supreme Court in the case of Govinddas Vs. ITO [1976 (103)ITR 123 (S.C.)] wherein the apex court has held that no tax can be imposed retrospectively so as to saddle a person with a liability which did not exist when an act took place. The impugned o .....

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. Therefore, seeking review of the order which merged in Order-in-Appeal much after the order-in-appeal is not legal and not sustainable in law. In support of this submission, the learned counsel relied upon the decision in the case of CIT Vs. Amritlal Bhogilal & Co. [AIR 1958 SC 868 Supreme Court]. He also submitted that the Department has also filed appeal against the Order-in-Appeal before the CESTAT whereas on the other hand passed Order-in-Original in exercise of powers of review under .....

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CE & C., Cochin [2009 (15) STR 408 (Tri.-Bang.)] (v) CCE & Cus., Kerala Vs. Larsen & Toubro Ltd. [2015 (39) STR 913 (S.C.)] (vi) CST, Bangalore Vs. Turbotech Precision Engineering Pvt. Ltd. [2010 (18) STR 545 (Kar.)] (vii) CCE & ST Vs. Simplex Infrastructure & Foundry Works [2014 (34) STR 191 (Del.)] (viii) CCE, Jaipur-I Vs. Consulting Engineers Groups Ltd. [2014 (36) STR 634 (Tri.-Del.) (ix) CCE Vs. Sanghi Threads [2015 (321) ELT 180 (S.C.) 9. The learned A.R. on the on hand .....

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