BHARAT COKING COAL LIMITED Vs. STATE OF JHARKHAND

JUDGEMENT

(1.) Heard learned counsel for the petitioner Mr. Indrajit Sinha; learned counsel Mr. Ratnesh Kumar for the Central Excise and Service Tax Department and Mr. Ankur Sinha, A.C to G.A. V for the State.

(2.) Petitioner approached this Court for quashing of the notice dated 6/8.10.2016 issued under Section 87 of the Finance Act by the Assistant Commissioner of Central Excise and Service Tax Division no.2, Bokaro whereby and where under it was directed to comply with the provisions of Section 87 of the Finance Act, failing which it was to be treated as defaulter and face legal consequences and recovery. Petitioner also prayed for quashing of notice dated 10.08.2016 issued under Section 87 of the Finance Act, 1994, where again he was asked to take steps in terms thereof, otherwise it would be declared defaulter and face all legal consequences.

(3.) The basic challenge is to the direction to deposit the arrears of interest on the enhanced rate of washed coking coal dispatched to the Steel Authority of India Limited (SAIL) in terms of long terms agreement between the SAIL and this petitioner Bharat Coking Coal Limited (BCCL) for the period from April 2011 to March, 2012, which according to them, has been raised with retrospective effect. As per the Memorandum of Understanding (MOU) executed on 24.02.2011, petitioner Company was required to supply washed coking coal for the year 2011-12 to 2015-16. According to the petitioner, the MOU for the year 2010-11 was deemed to have commenced w.e.f. 01.04.2010 irrespective of the date on which it was signed and that the annual MOU for supply of washed coking coal for the long terms agreement were to be signed every year in line with the terms agreed therein. Petitioner started supplying washed coking coal to the SAIL as per the schedule. Central Excise tax was levied on coal for the first time w.e.f. March, 2011. As per the petitioner, since the MOU for the financial year 2011-12 was not finalized till the beginning of the financial year 2011-12, billing of washed coking coal was done @ Rs.7500/- per ton i.e. as per available rate for the financial year 2010- 2011. The rate for the financial year 2011-12 got finalized at much later date when it was increased to Rs.10,303/- per ton for the period April 2011 to June 2011 ; Rs. 9678/- per ton for the period from July, 2011 to September 2011 and Rs. 8,273/- per ton for the period from October, 2011 to December, 2011 with retrospective effect. In this regard the Deputy Commissioner (Audit), Central Excise ( Headquarters), Ranchi raised an objection vide its report dated 26.07.2012 for short payment of service tax under Works Contract ( Reserve Charge Mechanism) during the period July 2012 to March 2013. On such objection, BCCL deposited an amount of Rs. 10,03,913/- and Rs. 1,41,974/- towards service tax in August, 2013 and March , 2013. Notice under Section 87 of the Finance Act, 1994 was issued on 10.08.2016 wherein petitioner was directed to take steps otherwise he would be declared defaulter and face consequences. The Superintendent of Central Excise, Range No. 5, Division no.2, Bokaro had also issued a letter dated 09.05.2016 for payment of interest. It was followed up by letter dated 25.07.2016 stipulating that failure to deposit the amount would invite legal consequences. Petitioner informed the department that all initiatives would be taken for payment of interest after due approval of the competent authority. Another notice dated 6/8.10.2016 was issued under Section 87 of the Act of 1994 asking the petitioner to deposit the arrears of interest amount, failing which, it was to be treated as defaulter and face all legal consequences.