NEXUS COMPUTERS (P) LTD. Vs. CCE

JUDGEMENT

(1.) ONE of the applications is for waiver of predeposit and stay of recovery and the other is for out -of -turn disposal of the appeal. After examining the records and hearing both sides, we are of the view that the appeal itself requires to be disposed of at this stage. Accordingly, after dispensing with predeposit and allowing the application for out -of -turn disposal of appeal, we take up the appeal.

(2.) THE lower authorities have demanded service tax of Rs. 16,04,672/ - from the appellants for the period September 1999 to March 2004 in the category of 'Clearing and Forwarding Agents' Service'. The demand is in adjudication of show -cause notice dated 18.4.2005, which invoked the extended period of limitation under the proviso to Section 73(1)(a) of the Finance Act, 1994. They have also imposed penalties on the assessee under Sections 75A, 76 and 77 of the Act.

(3.) THE appellants were engaged in the activity of canvassing and procurement of orders for M/s. IBM Singapore on commission basis during the material period. It is submitted by learned Counsel that the question whether the above activity could be termed 'clearing and forwarding agent's service' stands settled in the case of Larsen and Toubro Ltd. v. Commissioner 2006 (3) STR 321 (Tri. LB.), wherein it was held that 'Clearing and Forwarding Agent's service required a connection with clearing and forwarding operations and that mere procurement of orders would not amount to clearing and forwarding activity. Counsel submits that the show -cause notice itself was issued in the light of the Tribunal's decision in the case of Prabhat Zarda Factory (Pvt.) Ltd. v. Commissioner and that the said decision was overruled by the Larger Bench in the case of Larsen & Toubro Ltd. (supra). Reliance has also been placed on the decision of this Bench in the case of K.K. Corporation v. Commissioner 2007 (5) STR 89 (Tri. Chennai). Learned Counsel has also assailed the above demand of tax on the ground of limitation. It is submitted that the appellants had no intention to evade payment of any service tax. The letters written to them by the departmental authorities from time to time would show that the authorities themselves were not clear in there mind as to the nature of the service rendered by the appellants during the period of dispute. In this connection, a few letters have been placed on record. Letter dated 13.10.2003, issued by the Superintendent of Central Excise to the appellants says that the latter is liable to pay service tax on the commission/overriding commission collected by them from M/s. IBM Singapore in the category of 'Clearing and Forwarding Agents' Service'. This letter also demands service tax for the period 2000 - 01 to 2001 - 02. Letter dated 12.11.2003 of the Superintendent demands the same amount of tax for the same period on the commission collected by the appellants from M/s. IBM, in the category of 'Consulting Engineers' Service'. The third letter dated 15.9.2004 of the Superintendent advises the appellants to get themselves registered under Section 69 of the Finance Act, 1994 in the category of 'Business Auxiliary Service' and also requests them to furnish particulars of commission received from M/s. IBM from 1.7.2003. Learned SDR has also perused these letters. As rightly pointed out by learned Counsel, the vacillating stand of the department is abundantly clear from the documents mentioned above. They were not consistent in their approach to the subject -matter of this case. By taking different views at different points of time as regards the nature of the service rendered by the appellants to M/s. IBM during the material period, the departmental authorities themselves landed the assessee in total chaos and confusion. They are, therefore, not entitled to allege that the assessee did anything or omitted to do anything with intent to evade payment of service tax. Admittedly, the show -cause notice was issued beyond the normal period of limitation, but without satisfying the requirement for invoking the extended period of limitation under the proviso to Section 73(1)(a) of the Act.