Bhima S.S.K. Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. the stay application is directed against the order passed by the commissioner (appeals) whereunder the appeal of the appellants against the order-in-original passed by the assistant commissioner was rejected. vide the order of the assistant collector, the appellants were directed to pay an amount of rs. 4,70,707/- towards service tax liability under section 68 of the finance act, 1994.3. the appellants pray that they have strong prima facie case on merits to claim that the said service tax is not leviable. service tax of rs. 4,70,707/- was sought to be recovered from the appellants for the period from 16-7-1997 to 1-6-1998, being the availer of the services of the goods transport operators. the main plea of the appellants to oppose the tax is based on the decision of the tribunal reported in 2004 (165) e.l.t. 161 (tri. - del.) in the case of l.h. sugar factories ltd. v. c.c.e., meerut-ii, in which it has been held that even the amended section 73 of the finance act, 1994, whereunder retrospective amendment has been made to the effect that the transport service availer shall be liable to service tax, does not cover the service availer, and is confined only to service provider. in short, it was held that, demand to the service availer is not covered under section 73 of the act.4. i have considered the submission and i note that reference to section 73 is totally unjustified. here the liability is cast on the person who is service availer. since this is a special deeming provision in respect of availer of the services of goods transport operators and the recovery of service tax has been authorised (validated) in terms of provisions contained in the finance act, 2003, the said tax is recoverable from such a person and it is immaterial that the provisions of section 73 do not apply. the recovery is sustainable only through section 71a. the said provision authorities collection of service tax, from such service availer.5. the demand has already been issued prior to the date of president's assent to finance act, 2003. the appellants are squarely covered under charging provisions of the service tax and therefore, i feel that the appellants have not made a prima facie case on merits for total waiver of the service tax amount. the appellants also raised a plea of financial hardship. the counsel submitted copy of the balance sheet as on 31st march 2003 which shows losses amounting to rs. 3.28 crores (approximately) but i note that this would not come in way of any financial hardship since the company has substantial assets and deposits. therefore, the stay petition is dismissed and the appellants are directed to make a pre-deposit of entire amount of service tax of rs. 4,70,707/- within the six weeks from today and report compliance on 1-9-2004. failure to make a pre-deposit will lead to dismissal of the appeal under section 35f of the act.

Judgment:
1. The stay application is directed against the order passed by the Commissioner (Appeals) whereunder the appeal of the appellants against the order-in-original passed by the Assistant Commissioner was rejected. Vide the order of the Assistant Collector, the appellants were directed to pay an amount of Rs. 4,70,707/- towards service tax liability under Section 68 of the Finance Act, 1994.

3. The appellants pray that they have strong prima facie case on merits to claim that the said service tax is not leviable. Service tax of Rs. 4,70,707/- was sought to be recovered from the appellants for the period from 16-7-1997 to 1-6-1998, being the availer of the services of the goods transport operators. The main plea of the appellants to oppose the tax is based on the decision of the Tribunal reported in 2004 (165) E.L.T. 161 (Tri. - Del.) in the case of L.H. Sugar Factories Ltd. v. C.C.E., Meerut-II, in which it has been held that even the amended Section 73 of the Finance Act, 1994, whereunder retrospective amendment has been made to the effect that the transport service availer shall be liable to service tax, does not cover the service availer, and is confined only to service provider. In short, it was held that, demand to the service availer is not covered under Section 73 of the Act.

4. I have considered the submission and I note that reference to Section 73 is totally unjustified. Here the liability is cast on the person who is service availer. Since this is a special deeming provision in respect of availer of the services of Goods Transport operators and the recovery of Service Tax has been authorised (validated) in terms of provisions contained in the Finance Act, 2003, the said tax is recoverable from such a person and it is immaterial that the provisions of Section 73 do not apply. The recovery is sustainable only through Section 71A. The said provision authorities collection of Service Tax, from such service availer.

5. The demand has already been issued prior to the date of President's assent to Finance Act, 2003. The appellants are squarely covered under charging provisions of the service tax and therefore, I feel that the appellants have not made a prima facie case on merits for total waiver of the service tax amount. The appellants also raised a plea of financial hardship. The Counsel submitted copy of the balance sheet as on 31st March 2003 which shows losses amounting to Rs. 3.28 crores (approximately) but I note that this would not come in way of any financial hardship since the company has substantial assets and deposits. Therefore, the stay petition is dismissed and the appellants are directed to make a pre-deposit of entire amount of service tax of Rs. 4,70,707/- within the six weeks from today and report compliance on 1-9-2004. Failure to make a pre-deposit will lead to dismissal of the appeal under Section 35F of the Act.