2018 (12) TMI 257 - AT - Service Tax

Reverse charge mechanism - non-payment of service tax - Business Auxiliary Service - Business Exhibition Service - Technical Inspection and Certification Services - Transport of Goods by Road Service - demand alongwith penalty - extended period of limitation - Revenue Neutral situation. Business auxiliary service - Reverse Charge Basis in respect of Commission Agent Services received by the appellant from the Foreign Service Providers - Held that - Admittedly there is an exemption available in terms of N/N. 18/2009-ST dated 07.07.2009. The same does not stand extended by the Adjudicating Authority on the ground of late filing of EXP-1 and EXP-2 forms/returns - an identical issue was considered by the Tribunal in the case of Coromandel Stampings & Stoned Ltd. vs. C.C.E. & S.T., Hyderabad-II 2016 (7) TMI 780 - CESTAT HYDERABAD . It was observed that non filing of EXP-1 and EXP-2 as required under exemption N/N. 18/2009-ST is only a procedural lapse and will not result in denial of substantive benefit, otherwise available in terms of notification - demand set aside. Business Exhibition Services - Held that - The same were admittedly held in Foreign Land and in terms of the Board s Circular cannot be considered to be taxable in India. It is well settled that the authorities cannot act against the Board s Circular. Otherwise also no service having been provided in India, the leviability of an tax of the same cannot be upheld - demand set aside. Technical Inspection and Certification Services provided from Abroad - period from April, 2008 to March, 2012 - Held that - Demand not sustainable inasmuch as no inspection or certification has taken place in the hands of the Foreign Service Provider - demand set aside. GTA services - Held that - The appellant have taken a categorical stand that such services were being provided by the individual truck owners and wherever they have availed the services of GTA, the service tax stands paid by them. The said plea of the appellant has not been rebutted by the Adjudicating Authority by any evidence to the contrary - demand set aside. Extended period of limitation - revenue neutrality - Held that - The period of demand is from October, 2007 to March, 2012 whereas the show cause notice has been issued on 23.04.2013 i.e., beyond the normal period of limitation. All the services were being received by them by duly reflecting the same in their records, in which case it cannot be said that there was any suppression or mis-statement on the part of the assessee with any mala fide intention, thus justifying the invocation of longer period of limitation - the service tax on all the above services was available as credit to the appellant, thus leading to a Revenue neutral situation in which case again no mala fide can be attributed and demands cannot be sustained. Appeal allowed in toto.

Summary

Issues:
1. Service tax liability on reverse charge basis for various services.
2. Exemption under Notification No. 18/2009-ST.
3. Taxability of Business Exhibition Services.
4. Technical Inspection and Certification Services taxability.
5. GTA services tax demand.
6. Time limitation for issuing show cause notice.

Analysis:
1. The appellants were engaged in the manufacture of shoes and major production was exported to European countries. The Department alleged non-payment of service tax on reverse charge basis for services like Business Auxiliary Service, Business Exhibition Service, Technical Inspection and Certification Services, and Transport of Goods by Road Service. The order confirmed a demand of around ?1.97 crores and imposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

2. The appellant contended that they were exempt from service tax under Notification No. 18/2009-ST for Business Auxiliary Service received from abroad. The late filing of EXP-1 and EXP-2 forms was the only reason for denying the exemption. The Tribunal held that procedural lapses cannot deny substantive benefits under the notification, citing similar precedents.

3. Business Exhibition Services held abroad were found non-taxable in India as per Board's Circular, and no service was provided in India. The demand for this service was not upheld.

4. Technical Inspection and Certification Services from abroad were deemed non-sustainable as no actual inspection or certification took place. Lack of evidence led to the dismissal of this demand.

5. The appellant argued that most transportation services were provided by individual truck owners, and service tax was paid when using transport agencies. The demand for GTA services was rejected due to lack of evidence to rebut the appellant's claim.

6. The demand period from October 2007 to March 2012 was beyond the normal limitation period, and no suppression or misstatement was proven. The service tax was available as credit to the appellant, resulting in a revenue-neutral situation. Therefore, the demands were not sustained, and the impugned order was set aside with relief to the appellant.