IMPERIAL GRANITES PVT. LTD. Vs. COMMISSIONER OF C. EX. , GUNTUR

JUDGEMENT

(1.) THE appeal and stay application are directed against the Order -in -Appeal No. 12/2011 (T) ST., dated 4 -5 -2011, passed by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Guntur. The stay application is taken up for consideration. The brief facts of the case are that the appellants, M/s. Imperial Granites Pvt. Ltd. engaged the services of "commission agents" abroad for procuring of export orders and paid commission to the agents for the services rendered. Vide provisions of Section 66A of the Finance Act, 1994, the recipient is liable to discharge service tax liability in a case where services were received from abroad and the service provider has no office in India. Accordingly, under the said provisions, the appellants were liable to discharge service tax liability. The appellants had paid a commission of Rs. 30,73,751/ - to the foreign service provider for the year 2006 -07, according to the audited balance sheet but this fact was not informed to the department. The department noticed that as per the ledger accounts maintained by the party, they had paid an amount of Rs. 28,66,963/ - as commission. Accordingly a show -cause notice was issued demanding service tax which was confirmed by the adjudicating authority and the lower appellate authority against which the appellant preferred an appeal before this Tribunal which is pending for final disposal. Subsequently, when the accounts were finalized, the amount indicated in the balance sheet was Rs. 30,73,751/ -. When the difference in the figures was noticed between the balance sheet and ledger accounts, the department made an enquiry. The appellant admitted that there is an error in the entry made in their ledger accounts and actual amount paid was Rs. 30,73,751/ - as commission to the foreign service provider. Accordingly, another show -cause notice was issued demanding additional service tax of Rs. 25,311/ - along with interest thereon and also proposing penal action. The proposals in the notice were confirmed by the adjudication order No. 11/2010 (S.T.), dated 31 -12 -2010. The appellants preferred an appeal before the Commissioner (Appeals) who vide the impugned order upheld the order of the lower adjudicating authority. Hence, the appellant is before me.

(2.) THE Learned Counsel for the appellant submits that they are challenging levy of service tax. Inasmuch as the services were rendered abroad, they are not liable to pay service tax in India and the demand is unsustainable in law. She also submits that the demand is time -barred inasmuch as the show -cause notice was issued for the additional amount after a lapse of more than one year. She further submits that they had no intention to evade payment of service tax and therefore, prays for waiver of pre -deposit.

(3.) I have carefully considered the rival submissions. As regards the vires for levy, the Tribunal is not the forum to raise the issue. If the appellant is aggrieved, the vires of the levy should be challenged before the Hon'ble High Court of Karnataka or before the Hon'ble Apex Court. In any case, this issue has been settled by both the Hon'ble High Court [ : 2009 (13) S.T.R. 235 (Bom.)] and Hon'ble Apex Court [2010 (17) S.T.R. J57 (S.C.)] in the case of Indian National Shipowners Association, in favour of the Revenue. Therefore, this plea adduced by the learned advocate for the appellant has no basis at all. Regarding the issue of time bar, it is noticed that the error was detected by the department on their own. The appellants had made a wrong entry in their ledger accounts and on the basis of wrong entry, earlier show -cause notice was issued. Subsequently, after finalization of the balance sheet the appellant had confirmed that the higher amount shown in the balance sheet was the correct commission amount paid to the foreign service provider. On the higher amount paid, the department sought additional service tax liability. Therefore, the appellant's plea that the demand is hit by limitation of time cannot be accepted. Inasmuch as the issue regarding levy of service tax by the recipient of the service in respect of services received from abroad has been finally settled by the Apex Court in favour of the Revenue, I direct the appellant to make pre -deposit of the entire service tax amount of Rs. 25,311/ - within a period of 4 weeks from today and report compliance to Assistant Registrar on 20 -3 -2012 and the Assistant Registrar to report to the Bench on 30 -3 -2012. On such compliance, pre -deposit of balance dues adjudged shall stand waived and recovery thereof stayed during the pendency of the appeal. The learned Advocate submits that this appeal be linked to appeal No. ST/254/2010 where also the issue involved is identical for final disposal. Registry is directed to tag these appeals together at the time of final disposal.