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2019 (5) TMI 914 - AT - Service TaxNon-payment of service tax - Commercial Training or Coaching Service - period from July 2003 to March 2009 - irregular CENVAT Credit availed - training on SAP/ERP module provided to graduates and professionals - exemption under N/N. 9/2003-ST dated 20th June 2003 and Notification No. 01/2004-ST dated 28.2.2004 - ground on which appellant seek exemption is that the software training provided by the appellant is covered under the scope of computer training institute or vocational training institute as the case may be. Exemption under N/N. 9/2003-ST dated 20th June 2003 and Notification No. 01/2004-ST dated 28.2.2004 - HELD THAT - The exemption is not available to the appellant since neither the appellant s institute can be designated as a computer institute rendering services imparting the knowledge in computer nor the courses offered by them are recognized by law prevailing in India. Also they would not qualify for exemption being an establishment authorized to issue a certificate recognized by law - the exemption is not available to the appellant for the period in dispute, that is, from 01/07/2003 to 10/09/2004. The appellant has discharged duty accepting the liability from 10/09/2004 to March 2009 with interest. Levy of service tax - amount paid for receiving Management Consultancy Service , and Intellectual Property Rights Services from the overseas buyer under reverse charge mechanism - HELD THAT - Disputing the said demand the appellant has submitted that even though the disputed amount has been reflected in the balance it but since the same were subsequently reversed being not paid hence no service tax liability could be fastened on them. Further, it is their contention that the demand on these services have been confirmed by the learned Commissioner on the basis of a report received from the service tax Commissionerate, however, copy of the same was not passed on them - therefore both the issues requires reconsideration by the Commissioner after passing on copy of the report collected from the service tax Commissionerate to the appellant. Management, Maintenance or Repair Service relating to software provided to their clients - levy of service tax - HELD THAT - This aspect has not been examined by the adjudicating authority while confirming the demand on the said service. Therefore, to ascertain the liability post 01st June 2007 the matter is remanded to the adjudicating authority. CENVAT Credit - denied on the ground that the input service invoices were issued in the addresses of the appellant which was not registered with the department nor the appellant during the relevant period possessed centralized Registration as required under the Relevant Rules - HELD THAT - Centralized accounting system has been operated from the Head Office at Mumbai where credit has been availed and utilized in discharging service tax liability from the Head Office - merely because the Mumbai office has not obtained centralized registration under the Relevant Rules, CENVAT credit availed on the service tax paid on input services which are undisputedly utilized by the appellant in providing the taxable output services cannot be disallowed - credit allowed. Penalty - HELD THAT - Considering that the appellant had paid the entire amount of service tax with interest and does not dispute the liability for the period 10th September 2004 to March 2009, we are of the view that penalty under Section 76 for the said period on the liability relating to Commercial Coaching or Training Service is justifiable. But, for the earlier period i.e. 01st July 2003 to 10th September 2004 since the appellant neither intimated the department about the rendering of service and availing exemption involving suppression the fact, accordingly, the demand is sustainable invoking extended period of limitation and penalty is imposable under Section 78 of the Finance Act, 1994. Appeal allowed in part and part matter on remand.
Issues Involved:
1. Service Tax liability on 'Commercial Training or Coaching Services' from July 2003 to March 2009. 2. Service Tax liability on 'Management Consultancy Services' and 'Intellectual Property Rights Services' received from overseas providers. 3. Service Tax liability on 'Management, Maintenance or Repair Services' related to software. 4. Admissibility of CENVAT credit. 5. Imposition of penalties and limitation period. Detailed Analysis: 1. Service Tax Liability on 'Commercial Training or Coaching Services': The appellant provided SAP-ERP training services from July 2003 to March 2009. They registered for service tax on 25.03.2005 and paid tax from 10.09.2004 to March 2009. The appellant claimed exemption for the period July 2003 to 10.09.2004 under Notification No. 9/2003-ST and 1/2004-ST, arguing that their training constituted 'computer training' or 'vocational training'. The Revenue contended that the training was for specialized software (ERP) used by corporate clients, not basic computer operation, and thus did not qualify for exemption. The Tribunal upheld the Revenue's view, confirming the tax liability for the disputed period. 2. Service Tax Liability on 'Management Consultancy Services' and 'Intellectual Property Rights Services': The appellant received these services from overseas providers but did not discharge service tax under Section 66A of the Finance Act, 1994. The Commissioner confirmed the demand based on a verification report from the service tax Commissionerate, which was not shared with the appellant. The Tribunal remanded this issue for reconsideration, instructing the Commissioner to provide the appellant with the report and reassess the liability. 3. Service Tax Liability on 'Management, Maintenance or Repair Services' Related to Software: The appellant argued that service tax on 'Repair and Maintenance of Computer Software' was applicable only from 01.06.2007. They also claimed that they had not received full payment for these services and had written off some dues. The Tribunal agreed that the adjudicating authority had not thoroughly examined these aspects and remanded the matter for reassessment post-01.06.2007. 4. Admissibility of CENVAT Credit: The Commissioner disallowed CENVAT credit of ?3,54,91,292/- on the grounds that invoices were issued to unregistered addresses and the appellant lacked centralized registration. The Tribunal cited the Gujarat High Court's decision in Commissioner of Central Excise v. Dashion Ltd, which held that procedural lapses like non-registration should not automatically disqualify CENVAT credit if records were maintained and verifiable. The Tribunal allowed the CENVAT credit, noting that the appellant maintained centralized accounts and paid service tax from the head office. 5. Imposition of Penalties and Limitation Period: The appellant argued that penalties should not be imposed due to the interpretative nature of the issues. The Revenue countered that the appellant delayed registration and filing returns, and did not provide requested information. The Tribunal found that penalties under Section 76 were justified for the period 10.09.2004 to March 2009 due to delayed tax payments. For the period 01.07.2003 to 10.09.2004, the Tribunal upheld penalties under Section 78, citing suppression of facts and invoking the extended limitation period. Summary of Findings: - The demand for 'Commercial Training or Coaching Services' from 01.07.2003 to 10.09.2004 is upheld with interest and penalty under Section 78. - The demands for 'Management Consultancy Services', 'Intellectual Property Rights Services', and 'Management, Maintenance or Repair Services' are remanded for reconsideration. - The disallowance of CENVAT credit is set aside. - Penalties for late filing of returns under Section 77 and late payments under Section 76 for the period 10.09.2004 to 31.03.2009 are upheld. The impugned order is modified accordingly, and the appeal is partly allowed.
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