2018 (8) TMI 360 - AT - Service Tax

Levy of service tax - Since appellant have some excess capacity and they also engaged in Bullet proofing and Mine proofing vehicles for Para military force and CRPF and BSF - benefit of N/N. 12/2003-ST - Extended period of limitation - Held that - The appellant is liable to pay the service tax w.e.f 16.05.2005 as they were processing the goods for their clients namely the Para Military forces, CRPF etc. However, these activities of the appellant were fully in the knowledge of the Department and they have not suppressed any facts. In fact, the Department had themselves issued a show cause notices alleging that these activities amount to manufacture activity excise duties and subsequently, dropped those demands. Therefore, the extended period of limitation cannot be invoked in this regard and no penalty can also be imposed on the appellant for the same reason. Benefit of N/N. 12/2003-ST - Held that - The Original Authority was fully willing to extended benefit of the abatement under the notification but the process had not submitted the relevant documents to substantiate for claim the abatement - It is a fit case to be remanded back to the Original Authority to enable the assessee to produce necessary documents. Appeal allowed in part and part matter on remand.

Issues:
- Liability to pay Central Excise duty on manufacturing activities.
- Demand of service tax on Business Auxiliary Services.
- Invocation of extended period of limitation.
- Eligibility for abatement under Notification No. 12/2003-ST.
- Burden of proof for claiming abatement.

Liability to pay Central Excise duty on manufacturing activities:
The case involved the appellant, a unit of the Indian Ordnance Factory engaged in producing Infantry Combat vehicles and bullet proofing and mine proofing vehicles for Para military forces. The Department issued show cause notices alleging manufacturing activity and demanding excise duty, which were later dropped. The Tribunal held that the appellant's activities were known to the Department, and no fraud or collusion was established. Therefore, the extended period of limitation could not be invoked, and no penalty could be imposed. The demand of service tax and interest was upheld within the normal period of limitation.

Demand of service tax on Business Auxiliary Services:
Subsequent show cause notices demanded service tax on the appellant's activities classified as Business Auxiliary Services. The Tribunal noted that the appellant was liable to pay service tax from a specific date as they were processing goods for clients. However, since the Department was aware of these activities and had previously issued and dropped similar demands, no extended period of demand could be levied. The Tribunal ruled that no penalty could be imposed as there was no intention to evade service tax.

Invocation of extended period of limitation:
The Tribunal found that since the appellant's activities were fully known to the Department, the extended period of limitation could not be invoked for demanding service tax or imposing penalties. The demand of service tax and interest was deemed sustainable within the normal period of limitation.

Eligibility for abatement under Notification No. 12/2003-ST:
Regarding the appellant's claim for abatement under Notification No. 12/2003-ST, the Tribunal observed that the appellant had not submitted documentary proof specifically indicating the value of goods and materials used to provide the service. As the burden of proving eligibility for abatement rested on the appellant, and they failed to discharge this burden, the benefit of the notification was denied.

Burden of proof for claiming abatement:
The Tribunal ruled that the appellant's failure to submit relevant documents to substantiate their claim for abatement necessitated a remand back to the Original Authority. The appellant was directed to produce necessary documents to claim the benefit of abatement under Notification No. 12/2003-ST. The penalties imposed were set aside, and the demand was to be recalculated after allowing the benefit of abatement based on the documentary evidence provided by the appellant.

In conclusion, the Tribunal partly allowed the appeals, confirming the demand within the normal period of limitation, setting aside the demand for the extended period, and also setting aside the penalties imposed. One appeal was remanded back to the Original Authority for recalculating the duty liability based on the evidence provided by the appellant. The penalty imposed in the Orders-in-Original was set aside, and the appeals were disposed of accordingly.

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