RUBY MILLS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appeal is directed against Order -in -Appeal No. AT/25/RGD/2005, dated 25 -1 -2005 passed by Commissioner of Central Excise (Appeals), Mumbai. The appellant, M/s. The Ruby Mills Ltd., received services of clearing and forwarding agent during the period 16 -7 -1997 to 31 -8 -1999. The Service Tax liability on the said service was Rs. 10,156/ -. As per the provisions of Rule 2(1)(d)(iii) of the Service Tax Rules, 1994, (Rules in short) the liability to pay Service Tax was on the recipient of the service. Inasmuch as the appellant did not pay the Service Tax, a show cause notice dated 9 -1 -2001 was issued proposing to demand Service Tax of Rs. 10,156/ - under Rule 6 of the Rules read with Section 11 of Central Excise Act, 1944. The demand was confirmed vide order dated 5 -5 -2004 and appeal against the same was rejected. Hence, the appellant is before us.

(2.) THE ld. counsel for the appellant submits that in the present case the appellant was not required to file any return under Section 70 of the Finance Act and Section 73 of the said Finance Act, 1994 empowers the department to demand duty on account of short levy/non -levy only in the case of assessees who are liable to file return under Section 70. In the instant case since the appellants were not required to file a return under Section 70, the provisions of Section 73 would not apply. Subsequently in 2003, the law was amended and new Section 71A was inserted, which provided for filing of returns by the recipient of the service and Section 73 was amended in 2004 providing for recovery of short levy/non -levy, if any, in respect of persons who are required to file return under Section 71A. In the present case, since the notice has been issued in 2001 invoking the powers under Section 11 of the Central Excise Act, 1944, the demands are unsustainable. He also relies on the decision of the Apex Court in the case of L.H. Sugar Factories Ltd., reported : 2005 (187) E.L.T. 5 (S.C.) : 2006 (3) S.T.R. 715 (S.C.), wherein the Hon'ble Apex Court held as follows:

(3.) 1 As held by the Hon'ble Apex Court, the demands under Section 73 towards short levy/non -levy of the Service Tax could have been made only in respect of service providers who were required to file returns under Section 70 and not under Section 71A. Filing of returns by recipients of service was provided under Section 71A in 2003 and thereafter, in 2004, Section 73 was amended for recovery of duty from those persons who are required to file return whether under Section 70 or 71A. No such notice has been issued in the present case quoting the correct legal provisions. Therefore, the show cause notice issued in the present case and the impugned orders confirming the demand are unsustainable in law. Accordingly, we allow the appeal.