Kandla Port Trust vs Commissioner Of Central Excise & ST, Rajkot

Ramesh Nair, Member (J)

The issue involved in the present case is M/s Kandla Port Trust is holding Service Tax Registration under the categories of “Port Service” and “Renting of Immovable Property Service” and has been duly discharging its Service Tax liability under the said categories in accordance with law. Audit was conducted by the Department for the period from April, 2007 to March, 2011 during the course of which the Department reconciled the income shown by the Appellant in its books of accounts and the amounts declared by it in the ST-3 Returns. On the basis of the same, the Department came to conclusion that the Appellant has short paid Service Tax towards „Renting of Immovable Property Service‟ on the income received by it towards „Estate Rentals and the demand of differential amount of service tax is raised. During the course of investigation, the Appellant had paid service tax amounting to Rs. 56,59,021/- on 30.08.2012 and Rs. 1,01,88,545/- on 05.10.2012 for renting of immovable property. Accordingly, a show cause notice dated 19.10.2012 was issued proposing to recover service tax amounting to Rs. 7,16,05,812/- under the category of „Renting of Immovable Property‟ as defined under Section 65 (105) (zzzz) of the Finance Act, 1994 along with the applicable interest and penalty.

In response to the aforesaid show cause notice, the Appellant had furnished a detailed reply dated 27.12.2012 denying all the allegations leveled by the Department. The appellant also submitted that the service tax liability has been computed by the Department by taking into account the entire income received in respect of „Estate Rentals‟ which includes income from both taxable and non-taxable services and therefore, the same is not correct. The Appellant submitted that the income received by them, only rent from non- residential buildings was subject to Service Tax and all the remaining activities were non- taxable in nature. Accordingly, the Appellant submitted that during the relevant period, the Appellant was only required to discharge service tax amounting to Rs. 1,57,33,412. Further, the Appellant had submitted that it had already discharged service tax amounting to Rs. 3,39,42,596/- pertaining to the period from April 2007 to March 2011; thus, the Appellant has in fact paid Rs. 1,82,09,184/-(3,39,42,596- 1,57,33,412) in excess of the tax that was payable by it. Therefore, no liability of service tax is tenable against the Appellant.

The said show cause notice was adjudicated by the learned Commissioner who has confirmed the demand to the tune of Rs. 6,94,49,319/- along with interest and penalty. However, the learned Commissioner dropped the demand of Rs. 21,56,493/- on the ground that the same was pertaining to rental income from residential properties. The learned Commissioner also rejected the calculations submitted by the Appellant and also refrained from allowing appropriation of the tax already paid by the Appellant on the ground that the data provided by the Appellant was a mere afterthought and therefore, the same is frivolous. Being aggrieved, the appellant has preferred the present appeal.

Shri Jigar Shah, learned Counsel appearing along with Shri Amber Kumarawat, Advocate at the outset submits that the details of service tax paid by the appellant were not considered by the learned Commissioner while passing the impugned order. He submits that in the light of service tax already discharged by the appellant, which is in excess to the tax that was payable, no service tax can arise against the appellant. He submits that learned Commissioner has not appreciated the calculation provided by the appellant during adjudication. He also made detailed submission on merits of the case also.

Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on behalf of the Revenue has no objection if the matter is remanded to the Adjudicating Authority for reconsideration of the case on all points.

We find that appellant have provided all the calculation of the service tax paid by them however, the Adjudicating Authority has not considered the said vital details provided by the appellant and passed the order by confirming a huge demand whereas, as per the appellant‟s claim they have paid service tax in excess. In these circumstances, the Adjudicating Authority needs to reconsider the case on all the points particularly the recalculation of service tax paid by the appellant along with supporting documents. Therefore, we set-aside the impugned order and remand the matter to the Adjudicating Authority for passing a fresh order on all the points.