2017 (7) TMI 63 - AT - Service Tax

Refund claim - GTA services - reverse charge mechanism - extended period of limitation - Held that - since the goods were exported by the appellant and the disputed service was utilized for exportation of the goods. Thus, the present case is entirely revenue neutral. Therefore, demand, if any, should be confined to the normal period provided under Section 73 ibid. Since the show cause proceedings were initiated beyond the normal period, I am of the considered view that the same is clearly barred by limitation of time - appeal allowed - decided in favor of appellant.

Summary

Issues: Service tax demand confirmation, imposition of penalties, limitation period for show cause notice, revenue neutrality, applicability of extended period of limitation.

Service Tax Demand Confirmation and Penalties:
The appeal challenged an order confirming a Service Tax demand of ?49,78,833 along with interest against the appellant, who was engaged in manufacturing iron and steel products. The demand was related to the utilization of services of a goods transport agency for transporting iron ore fines for export. Penalties under the Finance Act were also imposed. The appellant argued that the demand was revenue neutral as the Service Tax paid was eligible for refund under Cenvat Credit Rules and an exemption notification. The Tribunal noted that the case was indeed revenue neutral, and the demand should have been confined to the normal period under Section 73, as the extended period of limitation was not applicable in such situations. Citing precedents, the Tribunal held that in revenue-neutral cases, the extended period of limitation cannot be invoked, as there is no intention to evade payment of duty.

Limitation Period for Show Cause Notice:
The appellant contended that the show cause notice for the disputed period was time-barred, being issued beyond the normal one-year period prescribed in Section 73. The Tribunal agreed, emphasizing that since the case was revenue neutral and the tax paid was eligible for immediate credit and refund, the extended period of limitation was not justified. The Tribunal referred to various judgments, including Reliance Industries Ltd. v. CCE, to support its decision that in cases where credit is available to the assessee, there is no intention to evade payment of duty, thus precluding the invocation of the extended period of limitation.

Conclusion:
After considering the submissions and case records, the Tribunal found no merit in the impugned order. It set aside the order and allowed the appeal in favor of the appellant, emphasizing the revenue neutrality of the case and the inapplicability of the extended period of limitation. The Tribunal's decision was based on the principle that in revenue-neutral situations, where there is no intention to evade payment of duty, the extended period of limitation cannot be invoked.