2019 (4) TMI 179 - AT - Service Tax

Demand of service tax - amount of food charges collected from the clients and shown separately on the invoices as being VAT paid thereon - N/N. 12/2003-ST dated 20.06.2003 - case of the revenue is that as the appellant is providing Mandap Keeper s Service and Catering Service , therefore, they are liable to pay service tax on the full amount charged by them form the clients - Held that - The appellant has charged hall rent separately on which service tax has been paid and also charged for supply of food on which VAT has been paid, therefore, in terms of N/N. 12/2003-ST dated 20.06.2003, the appellant is entitled to claim deduction on the value of the foods supplied. Admittedly, on full value of food supplied, the appellant has paid VAT, therefore, in terms of N/N. 12/2003-ST dated 20.06.2003, the appellant is entitled to claim deduction - the appellant are not liable to pay differential service tax as demanded in the impugned order on account of Catering Service which are sought to be included in the value of service on which the appellant has already paid VAT. In these circumstances, the demand on account of short payment of service tax is set-aside. As per Section 65B (44) (a) (ii), supply of goods which is deemed to be sale is excluded from payment of service tax. Admittedly, on the basis of the foods supplied by the appellant has paid VAT holding that the same is sale of food, therefore, in terms of Section 65B of Finance Act, 1994, the appellant is not liable to pay service tax on the value of foods supplied. CENVAT Credit - credit denied for want of documents - Rule 9 of the Cenvat Credit Rules, 2004 - Held that - The appellant took cenvat credit during the period October 2006 and September 2010 and was filing statutory returns from time to time and periodical audit took place and no objection was raised for availment of cenvat credit. Therefore, the show cause notice issued to the appellant on 30.03.2012 for the period October 2006 to September 2010 is barred by limitation. As the fact of the availment of the cenvat credit was in the knowledge of the department. Therefore, the cenvat credit cannot be denied to the appellant. As extended period of limitation is not invokable and demand is not sustainable against the appellant. Therefore, no penalty is imposable on the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax on the appellant for denial of cenvat credit.
2. Demand of service tax under the category of 'Mandap Keeper's Service'.
3. Denial of cenvat credit for want of documents under Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Demand of service tax on the appellant for denial of cenvat credit.
The appellant appealed against the order confirming the demand of service tax due to the denial of cenvat credit claimed by them. The appellant provided Catering Services, Pandal & Samiana Services, and Mandap Keeping Service. The appellant charged separately for hall rent and food in the invoices, paying service tax on hall rent but not on food charges, citing VAT payment on food. The revenue alleged that as the appellant provided 'Mandap Keeper's Service' and 'Catering Service', they were liable to pay service tax on the full amount charged. The appellant's defense included reliance on Notification No. 12/2003-ST and judicial precedents to support their position. The tribunal examined the invoices and held that the appellant was entitled to claim deduction on the value of food supplied as VAT was paid, setting aside the demand for service tax on food charges.

Issue 2: Demand of service tax under the category of 'Mandap Keeper's Service'.
The demand under the category of 'Mandap Keeper Service' was also raised against the appellant. The appellant argued that they were not liable to pay service tax on the value of foods supplied, as they had paid VAT on the same. The tribunal, considering Section 65B (44) of the Finance Act, 1994, concluded that the appellant was not liable to pay service tax on the value of foods supplied, as VAT had been paid. Consequently, the demand on account of short payment of service tax was set aside.

Issue 3: Denial of cenvat credit for want of documents under Cenvat Credit Rules, 2004.
Regarding the denial of cenvat credit for want of documents under Cenvat Credit Rules, 2004, the appellant claimed cenvat credit during a specific period and filed returns accordingly. The appellant argued that no objection was raised during audits conducted, and the demand was barred by limitation. Citing legal precedent, the tribunal held that the show cause notice issued to the appellant was time-barred, as the department was aware of the cenvat credit availed. Consequently, the denial of cenvat credit was set aside, and no penalty was imposed on the appellant due to the non-applicability of the extended period of limitation.

In conclusion, the tribunal set aside the impugned order, allowing the appeal filed by the appellant with consequential relief, if any.