2019 (3) TMI 2030 - AT - Service Tax

CENVAT Credit - input services - architectural services - financial consultant services -Revenue by entertaining a view that inasmuch as the services of school education being provided by the appellant are not taxable the availment of cenvat credit in respect of input services which have been used for providing school education service was not available to assessee - Time Limitation - HELD THAT - Admittedly the plea of limitation was not raised before the authorities. However the same being a mixed question of fact and law we permit the appellant to raise the same at Tribunal level - It is further noted that as the various facts are required to be examined for arriving at the question of demand being barred by limitation and inasmuch as the same was not raised before the lower Authorities and as such the views of the Adjudicating Authority are not available we set aside the said part of the impugned order covered by the Show Cause Notice dated 18/04/13 and remand the matter to the Adjudicating Authority for fresh decision. Inasmuch as we have not gone through the merits of the case and the matter is being remanded only for consideration of the limitation fact the merits are left open for the appellant to contest the same before the Adjudicating Authority if they choose to do so. Demand to the extent of Rs. 7.35 Lakhs covered by second Show Cause Notice - HELD THAT - The same is upheld along with upholding of the interest as not contested by the Ld. Advocate - It is further noted that as the entire credit was being availed by the assessee by reflecting the same in their cenvat credit account and inasmuch as the issue involved is a bonafide issue of interpretation imposition of penalty was not justified. Accordingly while upholding the demand along with confirmation of interest we set aside the penalties imposed upon them in respect of said Show Cause Notice. The appeal is disposed of partly by way of remand and party rejected/allowed.

Summary

Issues:
1. Availment of Cenvat Credit for input services used in providing school education and franchisee services.
2. Denial of Cenvat Credit leading to demand of service tax.
3. Invocation of longer period of limitation for demand.
4. Imposition of penalties.

Analysis:
1. The appellant, engaged in providing school education and franchisee services, availed Cenvat Credit for service tax paid on input services like architectural and financial consultant services. The Revenue contended that since school education services were not taxable, the Cenvat Credit for input services used in providing school education was not available, leading to two Show Cause Notices raising demands for service tax.

2. The Commissioner confirmed the demand raised in the Show Cause Notices, along with interest and penalties. The appellant's advocate acknowledged that certain input services, like architectural services, were not cenvatable for school education purposes. The advocate did not contest the demand related to architectural services but argued against the invocation of the longer period of limitation for the first Show Cause Notice.

3. The advocate accepted that the issue of limitation was not raised before the authorities earlier but sought to raise it at the Tribunal level. The Tribunal allowed the appellant to raise the limitation issue, remanding the matter to the Adjudicating Authority for fresh consideration. The Tribunal did not delve into the merits of the case, leaving it open for the appellant to contest before the Adjudicating Authority.

4. Regarding the demand from the second Show Cause Notice, upheld by the Tribunal, the interest was confirmed as not contested by the appellant's advocate. The Tribunal noted that the appellant had availed the credit in good faith, and since the issue was a matter of interpretation, the imposition of penalties was deemed unjustified. Therefore, while upholding the demand and interest, the Tribunal set aside the penalties imposed on the appellant.

In conclusion, the Tribunal partially disposed of the appeal by remanding one part for fresh consideration and upholding the demand and interest from the second Show Cause Notice while setting aside the penalties imposed.