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

Ramesh Nair, Member (J)

The issue involved in the present appeal iswhether the Appellant is liable to pay Service Tax on the rental income received by them for renting of vacant land, prior to 01.07.2010 and for renting of residential buildings under the category of „Renting of Immovable Property Service‟ as under Section 65(105)(zzzz) of the Finance Act, 1994.

The facts in brief are that M/s Kandla Port Trust, is holding Service Tax Registration under the categories of “Port Service” and “Renting of Immovable and has been duly discharging its Service Tax liability under the said categories in accordance with law. During the course of Audit, the Department sought information from the Appellant for the period of F.Y. - 2007-08 to F.Y. -2011-12 and the requisite information was duly furnished to the Department. The department issued a show causenotice dated 19.10.2012 to the Appellant, alleging that the Appellant has not paid Service Tax on the rent received from leasing of vacant lands and residential buildings. Accordingly, the show cause notice proposed to recover Service Tax amounting to Rs. 81,68,976/- from the Appellant under the category of „Renting of Immovable Property‟ as defined under Section 65 (105) (zzzz) of the Finance Act, 1994. The Show Cause Notice also sought to impose interest under Section 75 of the Act, penalty under Sections 76, 77 and 78 of the Act and late fee under Section 70 of the Act read with Rule 7C of the Rules.

2.1 The Appellant replied to the Show Cause Notice dated 19.10.2012 vide letter dated 14.01.2013 wherein the Appellant had submitted that the Department had calculated the total value of services as Rs. 7,75,63,952/-for the relevant period based on the information provided by the staff of the Kandla Port Trust located at Vadinar which was factually incorrect. Therefore, the Appellant submitted a revised table which was prepared from the Annual Accounts of the Kandla Port Trust duly audited by the CAG showing the total value of services provided by the Appellant during the relevant period was Rs. 14,63,25,233/-. Out of the total value of services, services to the tune of Rs. 7,68,72,901/- were received in relation to lease of vacant land which was not taxable under Section 65 (105) (zzzz) of the Finance Act, 1994 prior to 01.07.2010. Further, the amount of Rs. 76,77,160/- was received by the Appellant in relation to renting out of buildings for residential purposes which is explicitly excluded from the ambit of Section 65 (105) (zzzz) of the Finance Act, 1994. Therefore, after removing the above two amounts related to rent from lease of vacant land and from renting of residential buildings, from total value of service, the amount of taxable service comes to Rs. 6,17,75,172/- which is related to renting of non- residential buildings. Therefore, after removing the above two amounts related to rent from lease of vacant land and from renting of residential buildings, from total value of service, the amount of taxable service comes to Rs. 6,17,75,172/- which is related to renting of non-residential buildings. Accordingly, the amount of Service Tax payable is Rs. 63,69,048/- and against this demand, the Appellant had already discharged Service Tax amounting Rs. 80,50,670/-. Therefore, the Appellant was in fact eligible to a refund of Rs. 16,81,622. The Appellant made the above submissions along with other detailed submissions against the show cause notice issued by the Department. However, ignoring the submissions made by the Appellant, the Commissioner passed the Order-in-Original dated 29.01.2014 confirming the demand proposed in the Show Cause Notice along with the applicable interest, penalty and late fees.

2.2 Against the said order-in-original dated 29.01.2014, the Appellant had filed an appeal before this Tribunal. After considering the submissions made by both the parties, the matter was remanded to the Adjudicating Authority vide Order No. A/11116/2014 dated 18.06.2014. On remanding back, the Appellant furnished its submissions to the Principal Commissioner, Rajkot vide letter dated 12.02.2016, however, the same was not accepted by the learned Principal Commissioner. The submissions dated 12.02.2016 and 24.02.2016 were once again submitted before the learned Commissioner during the personal hearing dated 24.02.2016. Despite the fact that the matter was remanded back and the learned Commissioner was required to adjudicate the matter afresh, the learned Commissioner did not consider any of the representations made by the Appellant. In denovo proceedings, the learned Commissioner vide order-in-original dated 31.03.2016 confirmed the demand amounting to Rs. 76,15,777/- and adjusted the remaining amount of Rs. 5,53,199/- against the Service tax liability already discharged by the Appellant under the head of „Renting of Immovable Property‟. Learned Commissioner did not allow adjustment of the remaining demand amount on the ground that the Service Tax was paid under the category of „Port Service‟ instead of „Renting of Immovable Property Service‟. Being aggrieved by the impugned order, the appellant has preferred the present appeal before this Tribunal.

Shri Jigar Shah, learned Counsel appearing 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.

Shri Ajay Kumar Samota, learned Superintendent (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 learned Commissioner 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.