2018 (9) TMI 1497 - AT - Service Tax

Manpower Supply Service/Security Agency Service - Reverse charge mechanism - CENVAT credit on the services - revenue neutral situation - Held that - Admittedly tax cannot be demanded or collected without any authority of law - When an appellant pleads that there is no loss to the Revenue, there can also be no case for suppression or fraud since admittedly the appellant has paid the duty along with interest on being pointed out which fact becomes evident from the fact that the adjudicating authority has appropriated the duty and interest paid by the assessee - demand set aside - appeal allowed.

Issues:
- Challenge to the order of Commissioner of Central Tax (Appeals)
- Liability to service tax under reverse charge mechanism
- Availability of credit for input services related to manufacturing activity
- Revenue-neutrality of the transaction
- Consideration of revenue-neutrality as an excuse for contravention of law
- Payment of duty and interest by the appellant
- Applicability of legal precedents in similar cases

Challenge to the order of Commissioner of Central Tax (Appeals):
The appellant challenged the order of the Commissioner of Central Tax (Appeals), arguing that they were liable to service tax under the reverse charge mechanism. The appellant contended that the services they received were covered under the definition of 'input services' related to manufacturing activity, making the credit available to them. They claimed that the transaction was revenue-neutral, and thus, there was no basis for a demand.

Liability to service tax under reverse charge mechanism:
The appellant asserted that they were liable to service tax under the reverse charge mechanism due to receiving Manpower Supply Service/Security Agency Service. They argued that these services fell within the definition of 'input services' related to manufacturing activity, allowing them to claim credit for the tax paid.

Availability of credit for input services related to manufacturing activity:
The appellant maintained that the services they received were directly related to their manufacturing activity, making them eligible for credit. They argued that since the services were covered under the definition of 'input services,' the credit should be available to them, resulting in a revenue-neutral transaction.

Revenue-neutrality of the transaction:
The appellant contended that the entire transaction was revenue-neutral, emphasizing that there was no loss to the Revenue. They highlighted that they had paid the duty along with interest upon being informed, indicating their compliance with the tax obligations.

Consideration of revenue-neutrality as an excuse for contravention of law:
The Tribunal noted that while the Commissioner (Appeals) acknowledged the plea of revenue-neutrality, they viewed it as an excuse for contravening the law and procedures. The Tribunal emphasized that tax cannot be demanded or collected without proper legal authority, and the absence of loss to the Revenue precluded any case for suppression or fraud.

Payment of duty and interest by the appellant:
It was observed that the appellant had paid the duty and interest upon being informed, demonstrating their willingness to comply with their tax liabilities. The adjudicating authority had acknowledged and appropriated the duty and interest paid by the appellant, further supporting the appellant's position.

Applicability of legal precedents in similar cases:
The Tribunal referenced legal precedents, including cases such as Marvelous Metals Pvt. Ltd. Vs. CCE and Jain Irrigation Systems Ltd. Vs. CCE, to support its decision. The Tribunal found that these precedents applied squarely to the facts of the present case, leading to the conclusion that the order of the lower appellate authority was unsustainable. Consequently, the penalty imposed and confirmed were set aside.

This detailed analysis of the judgment highlights the key issues involved in the case, the arguments presented by the appellant, and the Tribunal's reasoning in arriving at its decision.

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