2013 (3) TMI 564 - AT - Service Tax

Waiver & Stay - Irregular availment of credit - Debit Note - Duty paying documents - Business Auxiliary Service - Business Support Service (BSS) - Transportation of Goods by Road services (GTA) - Extended period of limitation - Held that - During the period prior to 1-4-2007, the appellant was deducting the excess yield charges, inter alia, from the gross amount received from KPCL, for the purpose of payment of service tax and that this aspect was within the knowledge of the department. The audit report is dated 24-3-2008 and the same also indicates that the findings in the report were vetted in the monitoring committee (constituted by the Department). Prima facie, the material fact was gathered by the Department as early as in March, 2008 and therefore, the extended period of limitation could not have been invoked in the show-cause notice of 2010 for recovery of service tax on excess yield charges for the subsequent period from April, 2007 - Decided in favour of Assessee. As regards the demand arising out of denial of Cenvat credit - Held that - It was told that the credit in question was taken not merely on the basis of the debit notes but rather on the basis of the statutory invoices. There is no other reason for denial of the credit. We have also found that the debit notes and invoices contained all the requisite particulars in terms of Rule 4A of the Service Tax Rules, 1994. Prima facie, therefore, the denial of Cenvat credit is not sustainable in law - Decided in favour of Assessee. As regards the demand of under the head BSS - Held that - The power stations were engaged in the business of generating power from coal. It is difficult to believe that a service provided in relation to supply of the raw material (washed coal) to the power stations is not a service provided in relation to business or commerce of the power stations. The inclusion part of the definition just widens the scope of the service. Prima facie, the demand of service tax of Rs. 50.06 lakhs on BSS cannot be successfully resisted by the appellant. The learned counsel has pleaded limitation in this context also. The basis of this plea is, again, the audit note. Prima facie, this plea merits consideration. Consequently, the sustainable part of the demand amounts to Rs. 6 lakhs. As regards the demand on GTA service - Held that - It is submitted that the tax was paid in reverse charge mechanism by the appellant and they are entitled to take Cenvat credit of the same and therefore any intent to evade payment of service tax cannot be attributable to the appellant. The amount coming within the normal period is stated to be Rs. 6.61 lakhs. It is submitted that the appellant paid an amount of Rs. 50 lakhs towards the above demand. We have heard the learned Additional Commissioner (AR) on this count also but he has not been able to rebut the plea of limitation successfully. As regards the last leg of the demand which arises out of reconciliation of accounts - Held that - It was claimed that upon correct reconciliation, the demand would not be sustainable. This claim has also been contested. After considering the submissions, we note that these rival contentions with regard to reconciliation of accounts can be taken up at final hearing in the appeal. However, against the demand falling withing the normal period of limitation, pre-deposit ordered for an amount of Rs. 30 lakhs. - Partly in favor of assessee.

Summary

Issues:
1. Demand for irregular availment of credit
2. Demand for Business Auxiliary Service
3. Demand for Business Support Service (BSS)
4. Demand for Transportation of Goods by Road services (GTA)
5. Short payment of service tax on Business Auxiliary Service (BAS)

1. Irregular Availment of Credit:
The appellant was engaged in washing coal for power stations during the material period. The Department demanded service tax on excess yield charges and transportation costs. The appellant contested the demand on the ground of limitation, citing an audit report that indicated the Department was aware of the deductions made by the appellant prior to 2007. The appellant estimated the service tax within the normal period to be Rs. 16.4 lakhs.

2. Business Auxiliary Service (BAS) Demand:
A demand of over Rs. 1.23 crores arose from the denial of CENVAT credit, which was contested on procedural grounds. The denial was based on the availing of credit through debit notes issued by the Washeries. However, the denial was found to be unsustainable as the debit notes and invoices contained all required particulars as per the Service Tax Rules.

3. Business Support Service (BSS) Demand:
A demand of over Rs. 50.06 lakhs under 'BSS' for transporting washed coal was challenged by the appellant. The appellant argued that 'BSS' pertains to finished goods and output services, not inputs. However, the Tribunal found that the service provided was indeed in relation to business or commerce, as defined under Section 65(104c) of the law. The demand was partially sustained at Rs. 6 lakhs within the normal period.

4. Transportation of Goods by Road Services (GTA) Demand:
The demand of over Rs. 50.16 lakhs on GTA service was disputed by the appellant, claiming they paid the tax under the reverse charge mechanism and were entitled to CENVAT credit. The appellant also highlighted a plea of limitation, which the Department failed to rebut successfully. The sustainable part of the demand was determined to be Rs. 6.61 lakhs.

5. Short Payment of Service Tax on BAS:
The final demand of over Rs. 19.9 lakhs arising from reconciliation of accounts was contested by the appellant, claiming the demand would not be sustainable upon correct reconciliation. Both parties presented their arguments on this issue, which were deferred for final hearing in the appeal.

In conclusion, the Tribunal directed the appellant to pre-deposit Rs. 30 lakhs within six weeks for the amounts within the normal period where a prima facie case was not established. Compliance with this directive would result in a waiver and stay of recovery for penalties, service tax, education cess, and interest.