Rakesh Garg, J. - (1.) THE revenue has filed the present appeal under Section 35G of the Central Excise Act, 1944 challenging the order dated 20 -6 -2005 passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi raising the following substantial questions of law: (i) Whether the service provided by M/s. United Plastomers, Amritsar to M/s. IPCL as dealer/commission agent is covered under the 'Clearing and Forwarding Agent Service' as defined under Section 65 of the Act as any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent? (ii) Whether the penalty is imposable when the party deposits the service tax before the issue of the show cause notice after department has caught them for non -payment of service tax?
(2.) THE respondent -assessee is providing the services of consignment agents as defined under Section 65(23) of the Finance Act, 1944 as amended (hereinafter referred to as the 'Act'). It was found that the respondent is not registered with the Department as required under Section 69 of the Act and has also not paid service tax as required under Section 66 of the Act. It is alleged that the respondent received commission of Rs. 45,79,411/ - for the period from August, 1999 to February, 2001 and Rs. 32,28,379/ - for the period from March, 2001 to November, 2001. As such, the respondent was issued two show cause notices for the recovery of the service tax amounting to Rs. 2,28,971/ - and Rs. 1,61,419/ - respectively along with interest and imposition of penalty under Sections 76 and 77 of the Act. The assessee -respondent submitted reply dated 22 -10 -2003 as under: They are consignment agents of Indian Petro Chemicals Corporation Ltd. (A Govt. of India Undertaking). M/s. IPCL Ltd. had been charging Service Tax from us and they were deducting the same from out commissions received from them. However, w.e.f. 1 -9 -99, with the amendment of Section 68(1) of the Finance Act, the responsibility for payment of Service Tax was cast upon the C & F agents. However we were under the bona fide belief that Service Tax was to be deducted and deposited by our principal only i.e. M/s. IPCL Ltd., since they had been doing the same since 1997. 2. The matter was pointed out to us by Service Tax branch of the Central Excise Department that w.e.f. 1 -9 -99 the responsibility of payment Service Tax was cast upon the C & F agents. The present Show Cause Notice has invoked the extended period of the limitation in utter disregard to the substantive factum that they were under the bona fide belief that the Service Tax was to be charged by their principal i.e. M/s. IPCL Ltd. and that there was no wilful suppression or mala fide intention involved in the whole episode.
(3.) THE present Show Cause Notice is based on wrong calculations leading to arbitrary demand, in so far as Service Tax has been demanded for the month of August, 1999, whereas the responsibility of payment of Service Tax was cast upon the C/F agents w.e.f 1 -9 -1999 vide amendment to Section 68(1) of Finance Act. Therefore, the demand of Service Tax for the month of August, 1999 being illegal, arbitrary, ultra virus the Constitution, may kindly be dropped in entirety.;