2019 (3) TMI 1382 - AT - Service Tax

Short payment of service tax - Management, Maintenance or Repair Service - October 2004 to September 2008 - Held that - The services involved are in the nature of composite work contract including supply of material - reliance placed in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , where it was held that Works contract were not chargeable to service tax prior to 1.6.2007 - demand do not sustain. Demand of service tax - job work charges - Business auxiliary service - Held that - During the disputed period service tax is required to be paid on receipt basis but the SCN has proposed to demand service tax even on amounts not received - The appellant have contended that against billed amount of ₹ 46,17,956/- during the year 2004-05, out of which an amount of ₹ 38,13,398/- is outstanding as on 31.03.2009 and have submitted the C.A certificate certifying the same. This being so, Ld. Consultant is correct in his assertion that demand relating to the amount outstanding will not sustain - the demand of ₹ 10,16,862/- relating to alleged BAS provided by the appellants will not survive - demand do not sustain. GTA service - demand of service tax - liability of interest - Held that - Demand of ₹ 2,00,218/- relating to GTA and interest liability amounting to ₹ 13,861/- has been conceded by the Ld. Consultant and hence demand on that score are not interfered with and upheld. Demand of service tax - consumables - Held that - In respect of demand of ₹ 1,96,952/- on consumables admittedly used in the composite contracts, the same will also not survive - said demand is also set aside. Penalty - Held that - It cannot be denied that there was some amount of confusion with respect to the taxability or otherwise of the concerned demands during the period of dispute. It cannot then be said that service tax had been evaded on account of wilful suppression or misstatement etc. - the imposition of penalty in respect to the remaining demands which are not interfered with, will also not survive. Appeal allowed in part.

Summary

Issues:
1. Short payment of service tax on Management, Maintenance or Repair Service (MMRS).
2. Wrong availment of cenvat credit without proper documents.
3. Non-payment of service tax on Business Auxiliary Service (BAS).
4. Non-inclusion of value of consumables in maintenance/repair work.
5. Non-payment of service tax on commission received.
6. Non-payment of service tax under Transport of Goods service.
7. Non-payment of interest towards belated payment of service tax.

Issue 1: Short payment of service tax on MMRS:
The appellants were engaged in the manufacture of gas cylinders registered for providing MMRS. The show cause notice proposed recovery of amounts due to apparent discrepancies in service tax payments. The Commissioner confirmed a reduced amount of demand, dropping certain components. The Tribunal agreed with the appellant's argument that the services were in the nature of a composite work contract, setting aside the demand.

Issue 2: Wrong availment of cenvat credit:
The demand for recovery of cenvat credit was dropped as the verification of documents confirmed the availment was in order. The Tribunal upheld this decision, stating that the demand was not sustainable.

Issue 3: Non-payment of service tax on BAS:
The demand for service tax on BAS was upheld as the appellant failed to provide necessary proof to support their claim of exemption. The Tribunal confirmed this demand.

Issue 4: Non-inclusion of value of consumables:
The demand for service tax due to non-inclusion of consumables in maintenance/repair work was confirmed. However, the Tribunal set aside this demand, stating that the services were in the nature of a composite work contract.

Issue 5: Non-payment of service tax on commission:
The demand for service tax on commission received was dropped as the appellant provided proof of payment for a portion of the amount. The Tribunal upheld this decision.

Issue 6: Non-payment of service tax under Transport of Goods service:
The demand for service tax under Transport of Goods service was confirmed as the appellant admitted liability. The Tribunal upheld this demand.

Issue 7: Non-payment of interest:
The demand for interest towards belated payment of service tax was confirmed. The Tribunal upheld this demand.

The Tribunal partially allowed the appeal, setting aside demands related to MMRS and consumables. The demand for job work charges was also set aside due to an exemption notification. However, demands related to GTA and interest were not interfered with. Penalties were set aside for demands not interfered with, as there was confusion regarding taxability during the disputed period.