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Singh Sales and Services V/S Commr. of Cus., C. Ex. & S.T., Allahabad

    Final Order No. ST/A/70243/2017-CU(DB) in Appeal No. ST/53691/2014-CU(DB)

    Decided On, 07 March 2017

    At, Customs Excise Service Tax Appellate Tribunal Regional Bench Allahabad

    By, THE HONORABLE JUSTICE: ANIL CHOUDHARY
    By, MEMBER AND THE HONORABLE JUSTICE: ANIL G. SHAKKARWAR
    By, MEMBER

    For Petitioner: R.K. Tiwari, Advocate And For Respondents: Sanjay Hasija, Superintendent (AR)



Judgment Text


1. The appellant Singh Sales and Service is proprietorship concern of late Sanjay Kumar Singh through his legal heir Smt. Sonia Singh. The appeal is preferred against Order-in-Appeal dated 9-11-2011 passed ex parte, dismissing the appeal. The brief facts are that late Sanjay Kumar Singh had entered into contract with BSNL for repair and maintenance of engine alternator sets. The main terms of the contract was that the appellant will also supply the spare parts and the same shall be billed separately in the invoices. The appellant had taken registration under the provisions of Service Tax and had also filed the returns for the period October, 2006 to March, 2007-08. SCN dated 28-1-2010 was issued as it appears to Revenue that the appellant have not taken registration in due time nor submitted the returns in time and further have not deposited the service tax on the due dates. As per information obtained from BSNL for the period 2007 to 2008, it was revealed that appellant have provided taxable service under the head Management, Maintenance or Repair Service and received a gross amount of Rs. 1,35,95,894/- and have deposited the total service tax Rs. 6,02,987/- including education cess and SHES against total service tax due, as per Revenue amounting to Rs. 16,32,410/- including cess as per Annexure-B to the SCN. Accordingly, it appeared that the appellant have not disclosed their proper affairs to the Revenue and have suppressed information and accordingly proposed to recover the service tax amount of Rs. 16,32,410/- with further proposal to appropriate the amount already paid Rs. 6,02,987/- and further penalty was proposed under Sections 76, 77 and 78 of the Act. The SCN was decided ex parte as the appellant had not filed any reply and/or representation nor had appeared for personal hearing confirming the proposed demand along with appropriation as proposed. Further, penalty of Rs. 5,000/- was imposed under Section 77 for non-filing of the ST-3 returns and equal amount of penalty of Rs. 16,32,410/- was imposed under Section 78 of the Act. Being aggrieved the appellant had preferred appeal before learned Commissioner (Appeals) on various grounds including that deduction for cost of materials supplied, which is included in the gross amount have not been given, resulted into wrong demand. But vide ex parte order dated 9-11-2011 the appeal was rejected confirming the Order-in-Original.

2. Being aggrieved the appellant is before this Tribunal. The learned counsel for the appellant Shri R.K. Tiwari, Advocate have pointed out from the terms of contract that the appellant was required to separately bill the spare parts supplied and/or used in the repair and maintenance. He has further shown and also filed the copy of bills raised on the service receiver wherein the materials have been billed separately and the labour charges have been billed separately. Further, sales tax have been levied as applicable on the materials so supplied. Accordingly, he prays for allowing the appeal by way of remand for recalculation of the tax payable more particularly under the provisions of Notification No. 12 of 2003, dated 1-7-2003. Further, on the issue of penalty he states that there is no case of any deliberate default as the sole proprietor was ailing during that time and was constantly being hospitalised and/or under bed rest which resulted in non-compliance before the courts below. He also led evidence in support of the ailment of the proprietor, who finally died on 4-2-2014.

3. The learned AR for Revenue relies on the impugned order.

4. Having considered the rival submissions and evidences on record, we find that the appellant is entitled to deduction of the material component from the gross amount. Before this Tribunal, the appellant have also filed a detailed calculation chart for the disputed period, according to which the service tax payable after making deduction for material component comes to Rs. 5,45,744/-. The learned counsel also urges that upon reducing the material component the turnover for the financial year remains Rs. 7,34,425/- and for this year for the first time the turnover is exceeding four lakhs, they will be entitled to the threshold exemption. Accordingly, we allow the benefit of threshold exemption for the financial year 2005-06 as allowable under Notification No. 6 of 2005-S.T. Under the facts and circumstances, as the appellant had paid the taxes and it appears have paid rather more amount then the amount actually payable as per the calculation produced before this

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Tribunal, which is categorical fact on record. Accordingly, we set aside the penalty under Section 78 of the Act. However we retain the penalty under Section 77 for Rs. 5,000/-. Accordingly, we allow this appeal by way of remand to the Adjudicating Authority for the limited purpose of recalculating the tax payable, after allowing the threshold exemption and the set off for material component, as hereinabove indicated. The appeal is allowed in part by way of remand to the Adjudicating Authority.
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