2013 (10) TMI 390 - AT - Service Tax

Time-barred Demand Extended Period of Limitation - Availing cenvat credit while availing benefit of abatement under Notification No.1/2006 Waiver of Pre-deposit Held that - As applicant in the statutory returns were giving a declaration that no credit in respect of the service tax paid on the input services used in or in relation to the providing of and Outdoor Catering Services was availed and fact that applicants were actually availing credit came to the knowledge of the Revenue only during the audit i.e. in the year 2008 and show-cause notice was issued within 5 years from the date of knowledge - prima facie no merit in the contention of applicant as time bar - Partial stay granted.

Summary

Issues:
1. Time-barred demand for service tax waiver
2. Availing benefit of Notification No.1/2006-ST
3. Compliance with conditions of Notification
4. Availability of CENVAT credit on input services

Analysis:
1. The applicant filed for waiver of service tax, interest, and penalties amounting to Rs.73,53,696/-, which was confirmed due to denial of Notification No.1/2006-ST. The Revenue contended that the Notification's benefit is unavailable if CENVAT credit on duty-paid goods or service tax on input services used for taxable services is taken. The applicant argued that the demand for the period October 2006 to March 2008 is time-barred, citing that the Revenue was aware of their Notification benefit during a 2008 audit, making the 2011 show-cause notice time-barred. The applicant also claimed that no evidence showed availing credit for service tax on input services for Mandap Keeper and Outdoor Catering Services, justifying their Notification benefit.

2. The Revenue countered that the applicant wrongly availed the Notification benefit by claiming abatement in monthly returns without disclosing credit for input services used in providing services. The Revenue discovered the discrepancy during a 2010 audit and issued a show-cause notice within 5 years from the date of knowledge, as per legal precedents. The Revenue maintained that the applicant failed to demonstrate compliance with Notification conditions and wrongly availed the benefit, justifying the demand.

3. The Tribunal found that the applicant failed to prove non-availment of credit for service tax on input services, as evidenced by contesting audit objections and requesting a show-cause notice. The applicant's false declaration in statutory returns led to the Revenue's knowledge of credit availing during the 2008 audit, justifying the 2011 notice within the extended limitation period. Consequently, the Tribunal directed the applicant to deposit 50% of the confirmed service tax amount within 8 weeks, with a waiver and stay subject to compliance, considering the lack of financial hardship and non-meritorious nature of the applicant's case.