LALIT ENTERPRISES Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, I note that the lower appellate authority, pursuant to a remand order of this Bench [Final Order No. 808/2005 dated 3.6.2005], confirmed demand of service tax of Rs. 70,143/ - against the appellants. Penalties have also been sustained by the appellate authority. In the remand order, a view was taken against the assessee on the merits of the case and the Commissioner (Appeals) was directed to take a fresh decision after hearing the party on their plea of limitation as also on their claim for the benefit of Section 80 of the Finance Act, 1994. When the case was taken up by the appellate authority, the party informed it that their appeal against Final Order No. 808/2005 ibid was before the High Court and therefore the hearing must be deferred. However, the Commissioner (Appeals) proceeded to pass the impugned order. It is the case of the counsel today that natural justice was denied once again to the assessee. Adverting to the facts of the case, it is submitted that the demand raised on the assessee in show -cause notice dated 7.7.2003 for the period September 1999 to February 2003 is time -barred inasmuch as, for want of evidence, against the assessee, of intention to evade payment of service tax, the larger period of limitation was not invocable against them. It is submitted that the assessee was in constant correspondence with the department since 2001 on the question whether service tax was payable on the commission collected by them from the manufacturer of excisable goods. It is submitted that no clarification was offered by the departmental authorities and consequently the assessee was in a confused state of mind. It is argued that, in such mental state, intent to evade payment of service tax cannot be attributed to the assessee. Finally, it is submitted that the subsequent decision of the Tribunal's Larger Bench in the case of Larsen and Toubro Ltd. v. Commissioner of Central Excise, Chennai 2006 (3) STR 321 (Tri. - LB) on the substantive issue is in favour of the assessee. For these reasons, learned Counsel prays for waiver of predeposit and stay of recovery or alternatively for remand of the case.

(2.) LEARNED SDR submits that the commission in question was collected by the assessee from the manufacturer in relation to both grey cement and white cement and that, in respect of grey cement, they paid service tax. Their objection is only in respect of the commission collected in relation to white cement. It is argued that the assessee has no valid reason to resist levy of service tax in relation to white cement, having voluntarily paid service tax in relation to grey cement.

(3.) THE argument of both sides are appealing in their own ways. The fact, however, remains that the remand order of this Bench is under challenge before the Hon'ble High Court. However, the assessee has not been able to obtain stay of operation of the remand order. It is claimed by counsel that they hope to obtain stay order shortly. For the present, the remand order stands. It has been carried into effect by the lower appellate authority. However, it appears, the assessee's plea of limitation and their claim for the benefit of Section 80 ibid were not heard at the bar. In the circumstances, I have considered their plea of limitation for the limited purpose of Section 35F of the Central Excise Act.