2008 (1) TMI 335 - AT - Service Tax

Outdoor Caterer short payment - Prima facie, invoices shows that the appellants have paid VAT on goods and materials sold. The same was eligible for deduction in terms of the Notification No. 12/2003 which grant exemption on the value of goods and materials sold by service provider to the recipient of service - Hence, the stay application is allowed

Summary

Issues:
1. Eligibility for abatement under Notification No. 20/2004-S.T.
2. Claim of exemption under Notification No. 12/2003-ST.
3. Production of documentary evidence.
4. Prima facie observation on VAT payment and eligibility for deduction.

Eligibility for Abatement under Notification No. 20/2004-S.T.:
The appellant, categorized as an "Outdoor Caterer" under Section 65(76) of the Finance Act, was required to pre-deposit Service Tax and penalties. Despite being granted abatement under Notification No. 20/2004-S.T., the total value of taxable service allegedly amounted to Rs. 3,17,90,006/-, on which tax remained unpaid. The appellant contested this, claiming eligibility for the benefit of Notification No. 12/2003-ST, which exempts the value of goods and materials sold to the recipient of service. The appellant argued that the correct calculation was made, deducting the amount of goods sold on which VAT had been paid. The Commissioner's rejection of their claim due to lack of documentary evidence was challenged by the appellant, who cited invoices showing VAT payments and referred to legal precedents and a Board's Circular supporting their position.

Claim of Exemption under Notification No. 12/2003-ST:
The appellant's contention centered on the availability of exemption under Notification No. 12/2003-ST for the value of goods and materials sold. They maintained that the invoices reflected VAT payments on goods sold, which were duly deducted as per the notification. The appellant argued that the Commissioner's denial of this benefit was erroneous, citing legal judgments and a Board's Circular in their favor. The appellant provided documentary evidence in the form of invoices to support their claim, emphasizing that the issue was covered in their favor.

Production of Documentary Evidence:
The appellant's failure to produce documentary evidence was a point of contention, with the Commissioner justifying the rejection of their claim on these grounds. The appellant's counsel referenced invoices showing VAT payments as evidence of compliance with Notification No. 12/2003-ST. The issue of documentary proof was crucial in determining the validity of the appellant's claim for exemption and abatement under the relevant notifications.

Prima Facie Observation on VAT Payment and Eligibility for Deduction:
Upon reviewing the invoices, the Tribunal noted that the appellants had indeed paid VAT on goods and materials sold, which were eligible for deduction as per Notification No. 12/2003-ST and supported by legal judgments. The Tribunal found the issue prima facie covered in favor of the appellant, leading to the allowance of the stay application, waiver of pre-deposit, and suspension of recovery pending appeal disposal. The matter was scheduled for final disposal on a specified date, indicating the Tribunal's preliminary assessment of the appellant's position regarding VAT payment and deduction eligibility.