2020 (1) TMI 1306 - AT - Service Tax

Business Support Services - Appellant have provided all the infrastructure support facilities along with manpower to appellants against an agreed consideration - demand of service tax alongwith interest and penalty - HELD THAT - After allowing the deduction as claimed by the Appellants towards Loan Repayment received, Sale of Goods, Job Charges received, excise duty and education cess the aggregate value of taxable services provided should be taken for computing the taxable value in the respective years and service tax liabilities determined accordingly after allowing the benefit of Small Scale Exemption under notification No 6/2005-ST dated 01.03.2005 as amended from time to time, subject to appellant fulfilling conditions as prescribed - there are no force in the submissions made by the appellants on the issue of limitation because the facts which led to short payment of Service Tax were only in the knowledge of appellant and they had failed to determine and pay the Service Tax due from them. The deduction claimed by the appellant on account of loan repayment, sale value of goods, job charges, excise duty and education cess, for determining the aggregate value of taxable service during each year for which the demand has been made - benefit of exemption under notification No 6/2005-ST as amended from time to time will be available subject to fulfilment of other conditions as prescribed. Matter remanded back for re-computation of service tax payable - Appeal allowed by way of remand.

Issues Involved:
1. Classification of services provided by the appellant.
2. Applicability of Business Support Services under the Finance Act, 1994.
3. Eligibility for small-scale exemption.
4. Deductions from gross value for loan repayment, job charges, sale of goods, excise duty, and education cess.
5. Limitation period for demand of service tax.

Detailed Analysis:

1. Classification of Services Provided by the Appellant:
The primary issue was whether the services provided by the appellant, including renting premises and machinery, job charges, and other support services, fell under the category of "Business Support Services" as defined by Section 65 (104c) of the Finance Act, 1994. The Commissioner (Appeal) and the Joint Commissioner had classified these services as "Business Support Services," leading to a demand for service tax. The appellant argued that the services were merely renting of premises and should not be classified under Business Support Services.

2. Applicability of Business Support Services:
The tribunal examined the definition of "Business Support Services" and the Board Circular dated 28.02.2006, which clarified that such services include infrastructural support and other outsourced services. The tribunal found that the services provided by the appellant, including renting, electricity, wages, salaries, auditing, water charges, job charges, processing, and sale of goods, were composite in nature and supported the business of M/s Agro Fab. Hence, these services were rightly classified under "Business Support Services."

3. Eligibility for Small-Scale Exemption:
The appellant claimed the benefit of small-scale exemption under Notification No 6/2005-ST dated 01.03.2005, as amended. The tribunal noted that the appellant had provided a detailed breakup of amounts received and claimed deductions for loan repayment, sale of goods, job charges, excise duty, and education cess. The tribunal found that after allowing these deductions, the aggregate value of taxable services should be computed for each year, and the appellant should be eligible for the small-scale exemption, subject to fulfilling the prescribed conditions.

4. Deductions from Gross Value:
The tribunal allowed the deductions claimed by the appellant for loan repayment, sale of goods, job charges, excise duty, and education cess. The tribunal emphasized that these deductions should be considered while determining the aggregate value of taxable services for each year. The tribunal disagreed with the Commissioner (Appeal)'s logic of not allowing these deductions, stating that job work done on a principal-to-principal basis or the value of goods sold cannot be part of Business Support Services.

5. Limitation Period for Demand of Service Tax:
The tribunal did not find merit in the appellant's argument regarding the limitation period. The tribunal held that the facts leading to the short payment of service tax were only within the knowledge of the appellant, and they had failed to determine and pay the service tax due. Hence, the extended period for demand was justified.

Conclusion:
The tribunal partly allowed the appeal, setting aside the impugned order and remanding the matter back for re-computation of service tax payable after allowing the deductions claimed by the appellant. The benefit of small-scale exemption was also to be considered, subject to the fulfillment of prescribed conditions. The appeal was thus allowed to the extent of allowing the claimed deductions, and the matter was remanded for re-computation of service tax liabilities.

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