Case Note & Summary
The appeal was filed by the Commissioner of CGST & Central Excise under Section 35G of the Central Excise Act, 1944, challenging the order of the Customs, Excise, & Service Tax Appellate Tribunal (CESTAT) dated 29.05.2018. The dispute pertained to the taxability of services provided by the respondent, Shriram Transport Finance Company Ltd., prior to 01.03.2006. The appellant argued that the activity was taxable even before that date, but the Tribunal held that there was no mechanism for bifurcation of the value of service from the interest amount prior to 01.03.2006, and therefore the activity was not taxable. The High Court, after hearing the parties, dismissed the appeal, finding no substantial question of law. The Court noted that the mechanism for bifurcation was introduced only by Notification No.4/2006-ST with effect from 01.03.2006, and thus the Tribunal's finding was correct. The appeal was dismissed with no order as to costs.
Headnote
A) Service Tax - Bifurcation of Value - Prior to 01.03.2006 - The Tribunal held that the activity is not taxable prior to 01.03.2006 as there was no mechanism provided for bifurcation of value of service from the interest amount. The High Court upheld this finding, noting that the mechanism for bifurcation was introduced only by Notification No.4/2006-ST with effect from 01.03.2006. (Paras 2-3)
B) Service Tax - Penalty - Section 76 of Finance Act, 1994 - The Tribunal imposed penalty under Section 76 for the period from 01.03.2006 to 31.03.2008 treating it as a regular period. The High Court did not interfere with this finding. (Para 3)
Issue of Consideration
Whether the CESTAT was correct in holding that the activity is not taxable prior to 01.03.2006 as there was no mechanism provided for bifurcation of value of service from the interest amount; whether the period prior to 01.03.2006 is not taxable in the absence of mechanism for bifurcation of Service Income as provided in Notification No.4/2006 – ST; whether the CESTAT was correct in holding that the period from 01.03.2006 to 31.03.2008 as regular period and imposed penalty u/s 76 when the period from 01.03.2006 to 31.03.2008 is part period of the first demand notice.
Final Decision
Appeal dismissed with no order as to costs.
Law Points
- Service tax
- Bifurcation of value
- Interest
- Notification No.4/2006-ST
- Section 35G of Central Excise Act
- 1944
Case Details
2021 LawText (BOM) (02) 41
Central Excise Appeal No.189 of 2019
Ujjal Bhuyan, Milind N. Jadhav
Mr. Vijay Kantharia with Mr. D.B. Deshmukh, for the Appellant; Ms. Padmavati Patil a/w. Mr. Kiran Chavan i/by Cen Ex Services for the Respondent
Commissioner of CGST & Central Excise
Shriram Transport Finance Company Ltd.
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Nature of Litigation
Service tax appeal against CESTAT order
Remedy Sought
Appellant sought to set aside CESTAT order and restore demand for service tax prior to 01.03.2006
Filing Reason
Challenge to CESTAT order holding that activity is not taxable prior to 01.03.2006 due to absence of mechanism for bifurcation of value of service from interest amount
Previous Decisions
CESTAT order No. A/86601/2018 dated 29.05.2018; Order-in-Original No. 119-121/STC-1/SKS/13-14 dated 24.12.2013
Issues
Whether the CESTAT was correct in holding that the activity is not taxable prior to 01.03.2006 as there was no mechanism provided for bifurcation of value of service from the interest amount?
Whether the CESTAT was correct in holding that the period prior to 01.03.2006 is not taxable in the absence of mechanism for bifurcation of Service Income as provided in Notification No.4/2006 – ST?
Whether the CESTAT was correct in holding that the period from 01.03.2006 to 31.03.2008 as regular period and imposed penalty u/s 76 when the period from 01.03.2006 to 31.03.2008 is part period of the first demand notice?
Submissions/Arguments
Appellant argued that the activity was taxable prior to 01.03.2006 and the Tribunal erred in holding otherwise.
Respondent supported the Tribunal's finding that no mechanism for bifurcation existed prior to 01.03.2006.
Ratio Decidendi
The mechanism for bifurcation of value of service from interest amount was introduced only by Notification No.4/2006-ST with effect from 01.03.2006. Prior to that date, there was no mechanism, and hence the activity was not taxable. The Tribunal's finding on this point is correct and does not give rise to any substantial question of law.
Judgment Excerpts
This appeal has been filed by the Commissioner of Central Goods and Services Tax under the provisions of Section 35G of the Central Excise Act, 1994 to challenge the order No. A/86601/2018 dated 29.05.2018 passed by the Customs, Excise, & Service Tax Appellate Tribunal...
Today, learned counsel for the appellant has restricted the appeal to the following substantial questions of law: a. Whether the Hon’ble Tribunal was correct in holding that the activity is not taxable prior to 01.03.2006 as there was no mechanism provided for bifurcation of value of service from the interest amount ?...
Procedural History
Order-in-Original No. 119-121/STC-1/SKS/13-14 dated 24.12.2013 was passed by the Commissioner of Service Tax, Mumbai - I. Against that, an appeal was filed before CESTAT, which passed order No. A/86601/2018 dated 29.05.2018. The present appeal under Section 35G of the Central Excise Act, 1944 was filed by the Commissioner before the High Court.
Acts & Sections
- Central Excise Act, 1944: Section 35G
- Finance Act, 1994: Section 76
