Whether non-filing of declaration on crossing specified limit fatal to claim SSI exemption?

PJ/Case law/2014-15/2258

Case:- COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS JYTSNA SINGH

Citation:- 2013 (30) S.T.R. 485 (Tri. - Del.)

Brief facts:-The respondent was providing catering services, acting as outdoor caterers in the premises of various customers. The Department collected information that she had provided service to Madhav Institute of Technology & Science, Gwalior (MP) for a gross value of Rs. 7,01,915/- during the period September, 2005 to October, 2006. However, the respondent had not obtained service tax registration and not paid service tax for such services rendered. Accordingly, a show cause notice demanding service tax of Rs. 76,580/- along with interest was issued to the respondent. Further, penalties under various sections of Finance Act, 1994 were also proposed. The respondent did not furnish any reply to the show cause notice and did not appear for personal hearing. Therefore, adjudicating authority came to the conclusion that she had nothing to represent against the show cause notice and confirmed tax amount of Rs. 76,580/-. Further a penalty of Rs. 76,580/- was imposed on the respondent under Section 76 of the Finance Act, 1994.

Aggrieved by the order, the respondent filed appeal with Commissioner (Appeals). The respondent stated that during January 2005 to March, 2006, she had received an amount of Rs. 3,57,507/- only which is below the limit of Rs. 4 lakhs for the exemption under Notification No. 6/2005-S.T., dated 1-3-2005 (exemption for small units). Similarly, from April 2006 to October, 2006, she submitted that she received only Rs. 2,49,720/- which is also below the exemption limit of Rs. 4 lakhs. She also pointed out that the definition of “Outdoor Catering Services” was amended only from 16-6-2005 to levy tax on services provided from a premises provided by the recipient of the service. The Commissioner (Appeals) accepted the contentions of the respondent and allowed consequential relief. Therefore, the revenue is in appeal before the Tribunal.

Appellant’s contentions:-The Revenue contest that the First Appellate Authority has given benefit of Notification No. 6/2005-S.T. wrongly because the gross value of services provided by the respondent during 2005-2006 was Rs. 3,57,507 according to her own admission and she failed to take registration which is required to be taken once she crossed the limit of Rs. 3 lakhs. The Revenue further argues that the payment for April, 2005 and May, 2005 (Rs. 76,620/-) was received in June, 2005 i.e. after the amendment on 16-6-2005 came into effect and this payment should be taken into account for calculating the limit of Rs. 4 lakhs. So Revenue contests that the duty liability was correctly confirmed by the adjudicating authority. The Revenue has further argued that once she had crossed the exemption limit in 2005-06, she was not eligible for the exemption during the financial year 2006-07.

Respondent’s contentions:-The Counsel for the respondent submits that Revenue had not computed the tax liability correctly at all. He submits that Revenue has not considered the abatement in value available for outdoor catering service to the extent of 50% under Notification No. 1/2006-S.T., dated 1-3-2006. However, this contention was not raised before the lower authorities and there is no proof that the payments received from the Institute was for consideration including that for food supplied which is likely to be not the case.

The Counsel also submits that the respondent was eligible for exemption under Notification No. 21/2004-S.T., dated 10-9-2004 till 1-3-2006 when it was rescinded.

Reasoning of judgment:- We do not see any merit in the argument that value of services rendered when the service was not taxable should be included in the aggregate value of clearance, if such value is received after the service became taxable. Further we do not agree with the contention that non-filing of declaration when the respondent crossed value limit of Rs. 3 lakhs is fatal to the claim of the respondent for exemption under Notification No. 6/2005-S.T.

On the whole Revenue has mechanically raised demands without looking into exemptions available to the respondent. Considering the fact that the respondent was a small service provider, the Department was duty bound to provide proper guidance.

In the facts and circumstances of the case, we do not see any reason to interfere with the order of Commissioner (Appeals).

Decision:- The appeal dismissed.

Comment:- The analogy of the case is that there is no merits in Revenue’s argument of including value of services received when services were not taxable. Further, non-filing of declaration on crossing limit of 3 lakhs is also not fatal to assessee’s claim for SSI exemption.

Prepared by: Monika Tak

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PJ/Case law/2014-15/2258

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