Dismissed

Commissioner of Central Excise v. M/S Kansal Hosiery Exports

Punjab & Haryana HC2 Jan 2012STA/16/2011

Case brief

AI extract

What is this about?

The High Court of Punjab and Haryana dismissed the Revenue's appeal, holding that services received from non-residents prior to the insertion of Section 66 A in the Finance Act, 1994 (effective 18.4.2006) were not exigible to service tax.

What did the court decide?

The appeal of the Revenue is dismissed with the direction that no service tax is payable for the period prior to 18.4.2006.

Commissioner of Central Excise Vs M/S Kansal… — Banking and Recovery | Punjab & Haryana HC (2012)

¶1

¶2

STA No.16 of 2011

¶3

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

¶4

STA No. 16 of 2011 (O&M) Date of decision 2.1.2012

¶5

Commissioner of Central Excise

¶6

Versus

¶7

M/s Kansal Hosiery Exports

¶8

.. Respondent

¶9

CORAM: HON'BLE MR. JUSTICE M.M.KUMAR HON'BLE MR. JUSTICE AJAY KUMAR MITTAL

¶10

Present: Mr. HPS Ghuman, Sr. Standing Counsel (Indirect Taxes) for the appellant

¶11

To be referred to the Reporter or not ?

¶12

Whether the judgement should be reported in the Digest ?

¶13

M.M.KUMAR,J.

¶14

The short issue raised in the instant appeal preferred by the Revenue is “what is the effect of implementation of Section 66 A in the Finance Act, 1994”. It was by the aforesaid provision that the service tax was levied. The provision was introduced on 18.4.2006. The Tribunal by placing reliance on a judgement of the Bombay High Court in the case of Indian National Shipowners Association v. Union of India (2009)13 STR 235 has held that any transaction prior to 18.4.2006 will not be exigible to the service tax and accordingly accepted the appeal of the assesseerespondent by holding that even Special Leave to Appeal (Civil) No. 18932 of 2009 has been dismissed on 14.12.2009, against the judgement of the Bombay High Court in the case of Indian National Shipowners Association (supra).

¶15

We have heard Mr. H.P.S.Ghuman, learned Senior Standing Counsel (Indirect Taxes) and has confronted him with the view taken by the Division Bench of the Bombay High Court as well as the judgement of

¶16

¶17

STA No.16 of 2011

¶18

this Court in the case of Commissioner of C.Excise, Ludhiana v. Bhandari Hosiery Exports Ltd. 2010(18) STR 713 (P&H). The learned counsel has not been able to highlight any distinguishing feature between the case in hand and the one decided by the Division Bench of the Bombay High Court or this Court in the case of Bhandari Hosiery Exports Ltd. (supra). The view of the Division Bench of this Court is discernible from para 4 of the judgement which reads thus:

¶19

“ We have heard learned counsel for the parties at a considerable length and find that there is nothing in Section 66A or Section 2(1)(d)(iv) which may lead to a conclusion that earlier to 18.4.2006 the legislature intended imposition of tax on the services received by a recipient in India from outside India. The matter was considered in some detail by a Division Bench of Bombay High Court in the case of Indian National Shipowners Association v. Union of India, 2009 (13) S.T.R. 235 (Bom.) . Following the judgment of Hon’ble the Supreme Court rendered in the case of Laghu Udyog Bharati v. Union of India, 2006 (2) S.T.R. 276 (S.C.), the Division Bench of Bombay High Court held that the Finance Act, 1994 was for the first time amended on 18.4.2006 whereby the revenue acquired legal authority to levy service tax on the recipient of taxable service from a person who is resident in India or has business in India. Accordingly, such a person becomes liable to payment of service tax when he received service outside India from a person who is non-resident or is from outside India after 18.4.2006. Earlier to the enforcement of Section

¶20

STA No.16 of 2011

¶21

¶22

66A there was no authority vested by law in the revenue to levy service tax on a person who is resident in India but who receive services from a person resident outside India. Till the time Section 66A was enacted only the person who rendered the service was liable to pay tax and not the recipient of the service. Accordingly, the revenue did not have any authority to levy service tax on the assessee. The aforesaid view of the Bombay High Court has been followed and applied by a Division Bench of Delhi High Court in the case of Unitech Ltd. v. Commissioner of Service Tax, Delhi, 2009 (15) S.T.R. 385 (Del.) . We are in respectful agreement with the aforesaid view expressed by the Bombay and Delhi High Court.”

¶23

The facts of the present case reveal that the material period involved in the instant appeal is 9.7.2004 to 18.1.2006 when the assessee had paid Rs. 74,83,295/- to Non-resident Service Providers and a show cause notice for recovery of service tax amounting to Rs.7,20,822/alongwith interest under Section 73 read with Section 75 of the Act was issued with a proposal to impose penalty under Sections 76, 77 and 78 of the Act. The case was adjudicated by the Joint Commissioner Central Excise, Commissionerate, Ludhiana and the Adjudicating Authority affirmed the aforesaid demand and also imposed penalty. The assesseerespondent filed an appeal with the Commissioner (Appeals), Chandigarh which was rejected vide order dated 3.8.2007. On further appeal to the Customs, Excise and Service Tax Appellate Tribunal the assesseerespondent succeeded as it placed reliance on the judgement rendered in

¶24

¶25

STA No.16 of 2011

¶26

the case of Indian National Ship Owners Association (supra), against which SLP has been dismissed, holding that the party was not liable to pay service tax on the service provided to them by the Non-resident prior to insertion of Section 66A in the Act i.e. 18.4.2006. The view of the Division Bench of this Court in the case of Bhandari Hosiery Exports Ltd. (supra) and that of the Bombay High Court in Indian National Shipowners Association's case (supra) put the matter beyond any doubt. Any service provided to the assessee- respondent by Non-resident prior to insertion of Section 66A of the Act was not exigible to service tax. Accordingly the appeal of the revenue is without any merit and does not warrant admission. Dismissed.

¶27

(M.M.Kumar) Judge (Ajay Kumar Mittal) 2.1.2012 Judge

¶28

okg

Commissioner of Central Excise v. M/S Kansal Hosiery Exports

Case brief

What is this about?

What did the court decide?

Commissioner of Central Excise v. M/S Kansal Hosiery Exports

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

M/S Gheru Lal Bal Chand Vs State of Haryana and Anr.

M/S Nidhi Pipes Ltd. Vs Punjab Financial Corp. and Ors.

M/S Industrial Organics Ltd. Vs State of Pb and Ors.

Bhushan Kumar Vs Union of India and Ors.

Subhash Chand Vs State of Punjab and Others

Sanjeev Kumar Vs State Bank of India