2018 (5) TMI 917 - AT - Service Tax

Demand of service tax - erection, commissioning and installation service - business auxiliary services - GTA services - Benefit of abatement under N/N. 1/2006 dated 01/03/2006 - penalty. Held that - the benefit of N/N. 1/2006 is available to the appellant, but he has not produced any evidence before the lower authorities as well as before the Tribunal to come to a conclusion that abatement as provided in the notification needs to be extended. The evidences which are contemplated in the notification are inputs issued for providing of service. In the absence of any such evidence, the tax liability as fastened by the lower authorities is correct. Penalty - Held that - the appellant may Have entertained a bonafide belief that they are eligible for the benefit of N/N. 1/2006, could have misconstrued the provisions and hence did not discharge the tax liability - penalty not warranted. Appeal allowed in part.

Summary

Issues:
Demand of service tax for the period 2007-08 to 2010-11 on 'erection, commissioning and installation service', 'business auxiliary services', and 'GTA services'.

Analysis:
The appeal challenged the order-in-Appeal passed by the Commissioner of Central Excise & Customs regarding the service tax liability for the mentioned services. The appellant contested the tax liability on 'erection, commissioning and installation service' based on the benefit of Notification No. 1/2006, claiming that certain supplied items should be exempt. The appellant also argued that the tax liability on 'business auxiliary service' and 'GTA services' was miscalculated as the cum-tax price benefit was not considered. The lower authorities and the Authorized Representative upheld the tax liabilities. The Tribunal found that the first appellate authority had provided detailed reasons for not extending the cum-tax benefit to 'business auxiliary service' and 'GTA service'. The tax liability on 'GTA service' was deemed correct, and for 'business auxiliary service', the contract indicated that the amount was received without considering service tax liability.

Regarding the 'erection, commissioning and installation service', the Tribunal noted that the appellant failed to provide evidence to support the claim for abatement under Notification No. 1/2006. The notification required evidence of inputs issued for providing the service, which was not produced. Consequently, the Tribunal upheld the tax liability determined by the lower authorities. However, considering that the appellant may have genuinely believed they were eligible for the notification's benefit and misinterpreted the provisions, the Tribunal set aside the penalty imposed under section 80 of the Finance Act, 1994.

In conclusion, the Tribunal disposed of the appeal, upholding the tax liabilities for 'erection, commissioning and installation service', 'business auxiliary services', and 'GTA services'. The penalty imposed on the appellant was revoked due to a genuine misunderstanding of the provisions, as per section 80 of the Finance Act, 1994.