M D Engineers VERSUS  C.C.E. & S.T.- Vadodara-i – Service Tax

Customs, Excise & Service Tax

 Appellate Tribunal West Zonal

Bench at Ahmedabad

 

REGIONAL BENCH- COURT NO. 3

Service Tax Appeal No. 13997 of 2013- DB

(Arising out of OIA-VAD-EXCUS-001-APP-348-13-14 dated 03/09/2013 passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-I ( Appeal))

M D Engineers

VERSUS 

C.C.E. & S.T.-Vadodara-i

APPEARANCE:

None appeared for the Appellant

Shri Ajay Kumar Samota, Superintendent (AR) for the Respondent

 

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. C.L MAHAR

 

Final Order No. A/ 11722 /2023

 

DATE OF HEARING: 19.04.2023 DATE OF DECISION: 18.08.2023

 

 

RAMESH NAIR

 

As per the impugned order the Learned Commissioner (Appeals) upheld the service tax demand of Rs.36,00,875 for the period April, 2006 to March, 2011 and admitted amount of Rs.33,62,186 paid by the appellant was appropriated and the interest amount of Rs. 4,23,451 paid by the appellant was also appropriated . The appellant in the present appeal challenging the following demand and also penalties imposed:

1. Service tax of Rs. 1,14,509/- on loading and unloading charges is claimed by the appellant

 

1. Servicetax of  51,126/- on house rent charges reimbursed by its client.

• Servicetax of  73,053/- due to incorrect working of service tax.

 

2. None appeared on behalf of the appellant however, through e-mail dated 13th March, 2023, the Learned Chartered Accountant on record requested to decide the appeal on merit.
3. We have heard Shri Ajay Kumar Samota, Learned Superintendent (AR) appearing on behalf of the Revenue who reiterated the finding of the impugned order.
4. We have carefully considered the submission made by Learned AR and the grounds of appeal and perused the record of the appeal. As per the ground of the appeal regarding demand of Rs. 1,14,509/- it is submitted that the actual movement of goods was done by the service recipient by using their own Hydra equipment and appellant have provided ancillary service of loading and unloading the material which is exempted as per the various decision. The appellant submits that the Learned Commissioner (Appeals) erred by levying the tax under Manpower Supply Service and not under cargo handling service therefore, the same is not sustainable.
   • As regard the demand of service tax of Rs. 51,126/- it is the submission of the appellant that this is towards house rent charges which was reimbursed by their customers. It is his submission that the Assistant Commissioner as well as the Commissioner (Appeals) have failed to recognize that the facility of residence was provided to the workers at the remote site by the contractors which was the responsibility of the contractee andthere by will not be liable to levy of tax. These charges is nothing but the reimbursement during the provision of service therefore, the same is not

 

• As regard the service tax amount of Rs. 73,053/- it is the submission of the appellant that this is not payable as due to incorrect working of tax in the show cause notice. They submit that they have in their letter dated 06.02.2011, written to the superintendent explaining difference year wise, however, the same was not considered. Therefore, this demand is also not
• As regard the penalties imposed, it is the submission of the appellant thatsince the major amount was already paid and remaining amount was on debatable issue, the penalties are not sustainable invoking Section 80 of the Finance Act, 1994.
• We find that the major demand was admittedly paid by the appellant only a small amount was disputed in the present appeal.As regard the service tax demand of Rs. 1, 14,509/-, the appellant’s claim is that it is on account of loading and unloading charges. As per the order of the Commissioner (Appeals), We find that by referring the work order it was contended that the appellant were to supply labour required for the shifting, loading and unloading of material, therefore, there is no doubt that the appellant have provided man power. As per the contract dated 30.07.2010 irrespective that the fact whether the labour provided by the appellant have carried out the loading and unloading or any other work but when as per contract the appellant were supposed to provide the manpower service, the activity clearly qualified as Manpower Recruitment and Supply Agency Service and therefore on this count the demand is clearly
• As regard the demand of service tax of RS. 51,126/-, we find that as per the contract the service recipient M/s. Punj Lloyds undertook to provide residence to the worker at the site since the appellant could not provide such accommodation at site. The recipient have arranged such accommodation on behalf of the  company and  on receiving the sum  as

 

reimbursement, As per contract dated 30.07.2010 the appellant were to pay salary/ food/ accommodation to the worker engaged in the work. As per these terms, the appellant themselves have to incur the expenditure for all these items including accommodation of the workers and on the turn key working the appellant is supposed to receive the service charges. Therefore, it cannot be said that the appellant have incurred the expenses on behalf of the service recipient as buyer/agent. Accordingly, the amount of house rent charges cannot be termed as reimbursement of expenses over and above the service charges. Therefore, the demand on this count is also sustainable.

• As regard the demand of Rs. 73,053/- it was claimed by the appellant that this amount is in excess due to calculation error. The appellant have referred the letter dated 07.06.2011, though the appellant have given the reconciliation in the said letter. However, both the lower authorities have rejected the same on the ground that no documents were produced in support of their claim of incorrect calculation of service tax liability. We find that in appeal also the appellant have not submitted any documents therefore, demand of service tax of amount of Rs. 73,053/- is also
• As regard the penalty imposed under Section 76, 77 and 78 , We find that the appellant have recorded  the entire transaction in the books of account. They have worked under the contract, they have admittedly paid the major amount of Rs. 36, 00,875/- along with interest of Rs. 4,23,451/- and the remaining amount involved is on debatable issue, therefore, malafide intention cannot be attributed to the appellant. In these circumstances by invoking Section 80, the penalties under section 76, 77 and 78 are not imposable.

5. Without prejudice, we also find that the appellant have been imposed penalty under section 76 and 78  It is settled legal position

 

by the Hon’ble Gujarat High Court in the case of Raval Trading Company – 2016 (42) STR 210 (Guj) that the penalty under Section 76 and 78 cannot be imposed simultaneously. Accordingly, the penalty under section 78 is not imposable also on this principle.

6. As per our above discussion and finding the impugned order is modified to the above extent. The appeal is partly allowed in the above

(Pronounced in the open court on 18.08.2023)

 

 

 

 

RAMESH NAIR MEMBER (JUDUICIAL)

 

 

 

 

 

C.L.MAHAR MEMBER (TECHNICAL)