2013 (10) TMI 1265 - AT - Service Tax

Demand - Utilization of more than 20% CENVAT Credit in payment of service tax - Held that - demand of Rs. 58,30,168/- is on the ground that the appellant utilised CENVAT credit in excess of 20%. Extended period cannot be invoked since, in fact, appellant was filing ST-3 returns regularly which would show the CENVAT credit taken and utilised. In these circumstances, the appellant has made out a prima facie case in respect of this demand - Decided in favour of assessee. Storage and warehousing services - Storage of soya bean meal as agricultural produce - Held that - as per the definition of agriculture produce in terms of the notification, storage of soya bean meal in the appellant s premises as agricultural produce , prima facie, cannot be accepted. - As regards limitation, we find that appellant simply claimed exemption without mentioning notification number or further details. Therefore, it would be appropriate to take a view that the appellant has exercised their own judgment to determine their eligibility for exemption - Mere collection of rent cannot be considered as storage and warehousing charges. However, ongoing through the invoices, we find that what they charged is stock management charges for storing soya bean meal and further, they charged in terms of quantity of soya bean meal . The invoice does not mention actual space provided at all. Therefore, we find that appellants do not have a case on merits - stay granted partly.

Summary

Issues:
1. Demand of service tax on 'Storage and Warehousing Service' for 'Soya Bean Meal stock management charges'.
2. Demand related to utilization of CENVAT credit for payment of service tax.
3. Applicability of exemption on 'storage and warehousing services' for 'agricultural produce'.
4. Financial difficulty faced by the appellant.
5. Pre-deposit amount offered by the appellant.

Analysis:
1. The appellant faced two show-cause notices demanding service tax. The first notice sought Rs. 16,00,168 for 'Soya Bean Meal stock management charges' under 'Storage and Warehousing Service'. The second notice included demands for engaging in exempted and dutiable services, exceeding CENVAT credit utilization, and charging for exempted services. The demands were confirmed with interest and penalties under the Finance Act, 1994.

2. The consultant argued for a limitation on the demand of Rs. 58,30,168 due to excess CENVAT credit utilization. The Tribunal found the appellant regularly filed ST-3 returns, indicating credit usage, thus limiting the demand. The consultant also contested the Rs. 16,00,168 demand, claiming exemption under Notification No. 1/2006 for 'agricultural produce'. However, the Tribunal ruled against the appellant as 'soya bean meal' did not qualify as agricultural produce under the notification.

3. The consultant further argued that the appellant only charged rent for space, not 'storage and warehousing' services. However, invoices revealed charges for stock management of 'soya bean meal' based on quantity, not space provided. The Tribunal found the appellant's judgment flawed, making the extended period applicable. The appellant's financial difficulties were raised, but without substantial evidence.

4. The consultant offered Rs. 5 lakhs as a pre-deposit, which was accepted by the Tribunal. The appellant was directed to deposit the amount within six weeks. Upon compliance, the pre-deposit of the balance dues was waived, and a stay on recovery was granted during the appeal's pendency.