2019 (1) TMI 251 - AT - Service Tax

Recovery of short payment of Service tax - Partial reverse charge (RCM) - Department noticed that appellant has been making payment on 75% instead of 100% on total value/ expenses towards payment made to the labour contractor under Manpower, Recruitment And Supply Service - N/N. 30/2012 dated 20.06.2012 as amended - Revenue neutrality - time limitation - penalty - Held that - It is the admitted fact that till 31.03.2015, the service recipients were to discharge the liability to the extent of 75% of the total value of service received and 25% thereof was to be paid by the service provider. It is also an admitted fact that the appellant and his service provider were discharging their liability throughout - The change in the present case came into effect from 01.04.2015. The period of demand is April 2015 to December 2015. The pleaded inadvertence of the appellant that the amendment was not in the notice of the appellant cannot be ruled out. Otherwise also, there is no apparent evidence on record to prove the alleged intention of the appellant to not to discharge his liability. It is apparent from the record that the appellant has been impressing upon the challans for the month of April 2015 to December 2015, about payment of 25% of the value of service received by the service provider during said period itself but the authorities below have been silent about the said evidences. Revenue neutrality - reduction in quantum of penalty - extended period of limitation - Held that - There is no apparent intention of the appellant to evade the payment of duty. No evidence Department could produce to prove the same despite it was the Department s own onus. In absence of the discharge of their onus the silence of the authorities below about the documents reflecting 100% payment is sufficient to hold that Department has wrongly invoked the extended period of limitation - The period of demand is w.e.f. April 2015 to December 2015. The impugned Show Cause Notice is dated 31.03.2017. Since the proviso to Section 73 Central Excise Act, 1944 was not available to the Department as discussed, the Show Cause Notice is definitely barred by time. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of the appellant to discharge 100% payment under Notification No. 30/2012.
2. Allegation of short payment by the Department.
3. Reduction of penalty by the Commissioner (Appeals).
4. Bar on Show Cause Notice by time.

Analysis:
1. The appellant, engaged in manufacturing welding products, availed cenvat credit and service tax registration. The Department alleged short payment by the appellant to a labor contractor under Manpower, Recruitment And Supply Service. The Show Cause Notice proposed recovery of &8377; 4,48,272 for the period from April 2015 to December 2015. The Order-in-Original confirmed the demand, leading to an appeal before the Commissioner (Appeals) who upheld the demand but reduced the penalty from &8377; 44,800 to &8377; 5,000. The appellant contended that they continued to pay 75% of the liability even after an amendment making them liable for 100%, citing revenue neutrality and lack of knowledge about the change.

2. The Department argued that the demand was rightly confirmed as the appellant was now liable for 100% payment post-amendment. However, the appellant maintained that they continued to pay as per the pre-amendment terms, supported by evidence of the service provider's 25% payment. The Tribunal noted the appellant's consistent discharge of liability and the lack of evidence proving intentional evasion. The authorities failed to consider the challans provided by the appellant, indicating full payment during the disputed period. The Tribunal deemed the Department's invocation of extended limitation period as erroneous.

3. The appellant's plea for revenue neutrality was considered by the Commissioner (Appeals) who reduced the penalty based on this ground. The Tribunal found no apparent intention to evade payment, and the Department failed to meet its burden of proof. The Tribunal held that the Department wrongly invoked the extended limitation period, as the Show Cause Notice was dated after the limitation period, barring its validity.

4. Considering the above points, the Tribunal set aside the Order under challenge and allowed the appeal, emphasizing the lack of evidence supporting the Department's claim of short payment and the incorrect application of the extended limitation period.

[Dictated and pronounced in the open Court]