2017 (10) TMI 902 - AT - Service Tax

Time limitation - CENVAT credit - sub-contract service - Held that - the cenvat credit of service tax being demanded from the appellant was available as cenvat credit to the appellant themselves. Therefore, the appellants are clearly covered by the decision in the case of Jay Yushin Ltd. 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI , where it was held that once an assessee has chosen to pay duty, he has to take all the consequences of payment of duty. No intention to evade duty can be alleged. Demand is therefore clearly barred by limitation. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against dropping of demand, Classification of service, Liability to pay service tax, Applicability of extended period of limitation.

Analysis:
The appeal revolved around the dropping of demand against a company regarding service tax liability. The appellant argued that the respondent, a joint venture, entered into agreements for operation and maintenance services with another company, involving technical support and technology transfer. The key contention was whether the respondent could be considered a sub-contractor liable for service tax. The issues to be decided included the classification of services, liability for service tax, and the applicability of the extended period of limitation.

The appellant contended that the services received were akin to sub-contractor services, and prior to a certain date, no service tax could be demanded on a reverse charge basis. They highlighted circulars rescinding previous guidelines, arguing that no demand could be made for a specific period. The appellant presented service tax returns showing substantial payments made, suggesting no intention to evade duty. The crux was whether the show-cause notice was barred by limitation, considering the payments made and availability of cenvat credit.

The tribunal analyzed the facts and legal precedents, emphasizing the principle of revenue neutrality and the consequences of choosing a duty payment scheme. Referring to a specific case, the tribunal noted that the cenvat credit demanded was available to the appellant, leading to a revenue-neutral situation. Consequently, the tribunal concluded that no intention to evade duty could be alleged, and the demand was barred by limitation. As a result, the appeal based on limitation grounds was dismissed without delving into the merits of the case.

In conclusion, the judgment centered on the limitation aspect of the appeal, determining that the demand against the appellant was time-barred due to the availability of cenvat credit, leading to a revenue-neutral scenario. The decision highlighted the importance of establishing revenue neutrality in each case and upheld the principle that choosing a duty payment scheme entails accepting all consequences of duty payment.