Jurisdiction to issue Show Cause Notice

PJ/Case Laws/2011-12/1314

Case: COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR Vs HELIOS FOOD ADDITIVES PVT LTD

Citation: 2011-TIOL-1052-CESTAT-MUM

Issue:- Assessee having separate registered factory premises and separate Service Tax registration at other place – jurisdiction to issue service tax notice is with Department where Service Tax registration taken.

Brief Facts:- Respondent-assessee is manufacturer of Food products falling under various chapters of Central Excise Tariff and their factory is situated at Chiplun, District Ratnagiri. He is also engaged in providing the taxable services of renting immovable properties at Mumbai. During the course of audit, it was noticed that Respondent has not discharged the service tax liability on renting of immovable properties during the financial year 2007-2008.

Accordingly, a show-cause notice was issued by the Assistant Commissioner, Central Excise, Ratnagiri proposing to demand of service tax with interest thereon under Section 75 and also proposing to impose penalties under Section 76, 77 & 78 of the said Finance Act. Respondent contended that the AC, ratnagiri did not have jurisdiction to issue the show cause notice but the jurisdictional AC at Mumbai has the jurisdiction to issue show cause notice.

However, the Assistant Commissioner, Ratnagiri passed order confirming the duty demand and interest thereon and also imposing a penalties under various sections of the Finance Act.

In appeal, the Commissioner (Appeals) set aside the impugned order passed by the lower Adjudicating Authority on the ground that since the appellants were already registered in Mumbai, the Assistant Commissioner at Ratnagiri does not have any jurisdiction either to issue notice or to demand service tax.

Against the said order of the Lower Appellate Authority, Department is in appeal before the Tribunal.

Appellant’s Contention:- Department urged that since the Factory of the assessee is situated at Ratnagiri, the Assistant Commissioner, Ratnagiri has jurisdiction over the factory of the assessee and the assessee has also been issued with a service tax registration at Ratnagiri. In as much as the assessee has provided the taxable service of ‘renting of immovable property' without payment of service tax, they are liable to pay service tax on the said service.

Respondent’s Contention:- Respondent-assessee contested the demand and submitted that the service has been rendered in Mumbai and they are registered for service tax at Mumbai and, therefore, the Assistant Commissioner at Ratnagiri does not have the jurisdiction to issue notice.

The assessee submits that the Commissionerate at Pune-II has jurisdiction in the Districts of Sindhudurg, Ratnagiri, Sangli, Kolhapur and Satara of the State of Maharashtra vide Notification no. 14/2002-CE(N.T) dated 08.03.2002.

Assessee also submittted that they have obtained a separate registration for service tax at Mumbai on 29.01.2009, which is much before the issuance of show-cause notice dated 05.03.2009. They also submit that they have their registered office in Mumbai and, therefore, the competent authority to initiate proceedings in relation to service tax is the jurisdictional Assistant Commissioner of Service Tax, Mumbai. They also rely on the judgment in the case of CCE, C & ST, BBSR-II vs. Ores India (P) Ltd [2009 (91) RLT 81 (CESTAT-Kol)] wherein it has been held that the Commissioner, in whose territorial jurisdiction the registered office of service provider is located, has jurisdiction over him irrespective of the place where service is provided. In the light of these submissions, it was contended that the proceedings initiated at Ratnagiri are not sustainable in law and, therefore, the order of the lower Appellate Authority has to be upheld.

Reasoning of Judgment:- The Tribunal held that as far as Mumbai is concerned, the jurisdiction lies with the Mumbai Central Excise Commissionerate. Since the Central Excise officers have been entrusted with the task of enforcing the provisions of service tax law, their jurisdiction in respect of service tax is concurrent with the jurisdiction of Central Excise.

Therefore, the Assistant Commissioner in Ratnagiri does not have any power to initiate proceedings and recover service tax in respect of services rendered in Mumbai as the same falls outside his jurisdiction.

There is no dispute about the fact that the service of renting of immovable property was undertaken by the respondent/assessee at Mumbai and the registered office of the assessee is also in Mumbai. It is, further, on record that the respondent/assessee had obtained service tax registration in Mumbai from the Assistant/Deputy Commissioner of Service Tax Division-V, Mumbai, vide registration certificate dated 29.01.2009. That being the position, the competent authority to issue show-cause notice and recover service tax in respect of services rendered in Mumbai, is the Assistant Commissioner of Service Tax in Mumbai and not the Assistant Commissioner of Central Excise at Ratnagiri. This Tribunal in the Ores India (P) Ltd case has clearly held that as per Rule 3 of Service Tax Rules, 1994 read with Board's order no. 1/94 dated 29.06.1994, it is the Commissioner in whose territorial jurisdiction the registered office of the service provider is located, has the jurisdiction over him irrespective of the place where service is provided. In the instant case, the service has been provided at Mumbai and the registered office is also situated in Mumbai. Therefore, the Assistant Commissioner, Ratnagiri has no jurisdiction over the activities undertaken by the respondent in Mumbai. Therefore, the proceedings initiated by the Assistant Commissioner, Ratnagiri is unsustainable in law, as rightly held by the lower appellate authority.

Decision:- Appeal dismissed.

Comment: - This is very important decision where in the jurisdiction of the authorities issuing show cause notice is defined. We have also come across a situation where the jurisdictional authorities of a place where the service is provided has issued the show cause notice. But the office of service provider was at other place. We have also successfully contended that a person can provide service all over India but the registration will be taken at a place where his office is located. The authorities at this place can issue show cause notice to him. Hence the demand is not sustatinable. This decision also underlines the same analogy.

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PJ/Case Laws/2011-12/1314

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