COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE Vs. NIIT

JUDGEMENT

(1.) THIS is an appeal filed by the revenue. Vide the impugned order, the Commissioner (Appeals) vacated the order of the Original Authority and remanded the matter for fresh adjudication. The Original Authority had invoked longer period to confirm a demand of Rs. 40,275 (Rupees Forty thousand two hundred and seventy five only) against the respondents M/s. NIIT Ltd. towards service tax on Engineering Consultancy provided by it during the period from 31 -7 -1997 to 31 -8 -1998. He also demanded appropriate interest on the service tax found due. A penalty of Rs. 20,000 (Rupees Twenty thousand only) had been imposed on NIIT under Section 76 of the Finance Act, 1994 (the Act). Vide the impugned order, the Commissioner found that as per Trade Notice Nos. 47/CE (ST), dated 27 -6 -1997 and 53/CE(ST), dated 4 -7 -1997 issued by the Commissioner of Central Excise, New Delhi, only the Commissioner could invoke longer period under Section 73 of the Act. The notice issued by the Assistant Commissioner was not valid. The show -cause notices had not spelt out grounds justifying invocation of longer period. The order of the original authority was silent on the assessee's challenge on the point of limitation. Relying on two decisions of the Tribunal, the Commissioner (Appeals) found that penalty imposed on the respondents was not justified as the dispute involved interpretation of statutory provisions and the respondents were under the bona fide belief that the services rendered by them were not liable to service tax.

(2.) IN an appeal before the Tribunal, the Revenue has taken the ground that the Trade Notices relied on by the lower appellate authority covered only specified services and did not cover all services. The Commissioner (Appeals) had wrongly relied on the said trade notices to hold that only Commissioner had powers to issue notices invoking Section 73(G) of the Act. The powers to issue show -cause notices by various classes of officers were regulated by the Board's Circular F.No. 137/8/94 -CX, dated 22 -4 -1996. As per this Circular, the Assistant Commissioner was competent to issue the show -cause notices basic to the proceedings before the original authority in the instant case. The impugned order vacated the order of the original authority as a non -speaking order, as it had not justified invocation of longer period. This was a new ground and could not have been validly raised before the appellate authority by the respondents in terms of Rule 5 of Central Excise (Appeals) Rules, 2001. The Commissioner erred in holding that NET were under bona fide belief that the impugned services were not exigible to service tax. This was reflected in their conduct of not promptly responding to the department pointing out their liability. Instead they had argued that the services involved were not exigible to service tax. The impugned order erroneously vacated the penalty on the respondents.

(3.) ON a careful consideration of the case records and the submissions by both sides, we find that contrary to the argument of the Revenue in the appeal, the Trade Notices relied on by the lower appellate authority had clarified that notices for demand of service tax on specified services including consulting engineer services invoking Section 73(a) of the Act could be issued only by the Commissioner. The point of limitation being a question of law, the respondents had validly raised this issue for the first time before the Commissioner (Appeals). As the issue involved is interpretation of statutory provisions, the Commissioner held that no penalty was imposable on the respondents. We find no infirmity in the impugned order. As the original authority had not considered the point of limitation, as well as the Trade Notices on the subject of issue of notices invoking Section 73(a) of the Act, the Commissioner had rightly remanded the matter to the original authority for a fresh adjudication. In the circumstances, we do not find any merit in the appeal filed by the Revenue. Revenue's appeal is dismissed.