2019 (2) TMI 573 - AT - Service Tax

CENVAT Credit - non-payment of service tax - Business auxiliary services - denial of credit on various services on the ground of nexus - Held that - The credit cannot be denied to the appellant as all these services has been availed by the appellant in the course of their business of manufacturing in terms of the decision of Hon ble Bombay High court in the case of Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT wherein it was held hat any service availed by the assessee during the course of their business of manufacturing, the assessee is entitled to avail credit - credit allowed. CENVAT credit - denial on various services on the ground that the said services have been availed by the appellant outside their unit - Held that - There is no provision in the Cenvat Credit Rules to deny credit if any service is availed outside the business premises. In fact, the assessee can avail the service outside the factory premises during the course of their business of manufacturing. Admittedly, the said services have been received by the assessee during the course of their business of manufacturing, therefore, they are entitled to avail credit on these services - credit allowed. Business Auxiliary services - commission recovered from insurance companies and banks - period October, 2003 to March, 2008 - Held that - Similar issue came up before this Tribunal in the case of Ashok Auto Sales Ltd. 2013 (7) TMI 965 - ITAT AGRA , wherein the assessee was engaged in the same activity of providing table space, carrying out minimal paper work etc. for the banks and for the same, consideration was received from the bank. In the said case, this Tribunal held that the assessee was not providing Business Auxiliary services to the bank and hence, no service tax is leviable. The service tax cannot be demanded from the appellant on the value of spare parts/consumables utilized during the course of provision of services in the capacity of Authorized Service Station. Business Auxiliary services - Held that - In the present case, the appellant is acting on principal to principal basis and appellant buys vehicle from M/s.TKML subsequently sale them in the market, therefore, the appellant is getting incentive on account of discounts for excess sale effected by the appellant. Such amount of discount which cannot be held Business Auxiliary Service in terms of Section 65 (19) of the Finance Act, 1994 as the appellant is not promoting or marketing or selling the goods on behalf of their client. In fact, the appellant is marketing their own goods as the appellant is the owner of the goods in question - demand of service on this ground is not sustainable against the appellant. Penalty - Held that - The credit cannot be denied to the appellant and no service tax can be demanded from the appellant, therefore, no penalty is imposable on the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of Cenvat credit on various services
- Demand of service tax

Denial of Cenvat credit on various services:
The appellant filed appeals against orders denying credit and demanding service tax. The audit team found the appellant wrongly availed Cenvat credit and did not pay service tax under Business Auxiliary Service. The issues were adjudicated, and demands were confirmed with penalties. The appellant argued that services availed were related to their manufacturing business, entitling them to credit. The Tribunal cited a Bombay High Court decision, stating any service availed during manufacturing allows credit. It was noted that services availed outside the unit are permissible if related to the manufacturing business. The appellant had reversed some credit, which was not discussed. Therefore, the credit denial was rejected.

Demand of service tax:
The demand was confirmed based on commissions received from insurance and banking companies under Business Auxiliary Service. The Tribunal found discrepancies in the show cause notices and noted the demand was beyond the scope. Additionally, the demand for the period was time-barred. Regarding commissions from banks, the appellant's activities were deemed not Business Auxiliary Service, following a precedent. The demand on warranty charges was deemed unsustainable, citing a circular. The demand on spare parts/consumables was rejected based on a High Court ruling and a CBEC circular. The incentive received for excess vehicle sales was not considered Business Auxiliary Service, as the appellant was acting as a dealer, not a promoter. The demand was deemed unsustainable, and the extended limitation period was not applicable. As no credit denial or service tax demand was upheld, no penalties were imposed. Consequently, the impugned orders were set aside, and the appeals were allowed.

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