9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 1149 - AT - Service TaxCENVAT credit - period from 01/04/2008 to 30/04/2011 - demand confirmed alleging that the appellants are getting income from exempted services being accommodation income and restaurant income, both of which became taxable only w.e.f. 01/05/2011 and no reversal of CENVAT credit was made under Rule 6(3) of CCR - HELD THAT - The appellant was not liable to pay service tax because the accommodation service and restaurant service became taxable only from 01/05/2011 and no CENVAT credit reversal was required under Rule 6(3) of the CCR - Further during this period, there was a dispute that whether the restaurant service and accommodation service are subject to tax or not and the Kerala High Court in the case of KERALA CLASSIFIED HOTELS AND RESORTS ASSOCIATION OTHS. VERSUS UNION OF INDIA OTHS. 2013 (7) TMI 431 - KERALA HIGH COURT had held that both restaurant service and accommodation service cannot be subjected to service because they do not fall in the definition of exempted service and therefore the question of reversal of CENVAT credit does not arise - demand set aside. CENVAT Credit - period from 01/05/2011 to 30/06/2012 - abatement availed vide Notification No.1/2006-ST dt. 01/03/2006 - exempt services or not - Rule 6 of the CCR - HELD THAT - The appellant availed abatement with respect to restaurant service and accommodation service as per Notification No.1/2006-ST dt. 01/03/2006. During the relevant time, availment of abatement vide Notification No.1/2006-ST dt. 01/03/2006 cannot be considered as exempted service for the purpose of reversal of CENVAT credit as per Rule 6 of CCR - demand set aside. CENVAT credit - period from 01/07/2012 to 31/03/2013 - appellants have availed the benefit of abatement with respect of accommodation service as per Sl.No.6 of the Notification No.26/2012 dt. 20/06/2012 - exempt services or not - HELD THAT - For the demand for the period from 01/07/2012 to 31/03/2013, the definition of exempted service was again changed. The appellant during this time have availed the benefit of abatement with regard to accommodation service as per Sl.No.6 of the Notification No.26/2012 dt. 20/06/2012 which provides that 40% of the value of accommodation service has been exempted from the levy of service tax on the condition that credit on input and capital goods used for providing the taxable service have not been taken under the provisions of CCR. Further there was no restriction with respect to availment of CENVAT credit on input services as per the said notification and the only restriction was with respect to the availment of CENVAT credit on inputs and capital goods. The appellants are availing the benefit of abatement with respect to accommodation services under the Notification which cannot be considered as exempted services. Restaurant services - HELD THAT - The appellants are not availing any abatement notification. Further as per Rule 2C of Service Tax (Determination of Value) Rules, 2006, value of service portion involved in supply of food or any other article of human consumption or any drink in a restaurant has been fixed as 40% of the total value on the condition that CENVAT credit on inputs classified under Chapters 1 to 22 of CETA, 1985 are not taken. Further we find that when the statute itself prescribes a percentage as total value as the value of service, the remaining portion of the value would neither be considered as an abatement nor as an exemption and accordingly the restaurant service would not be covered under the definition of input service and hence the provisions of Rule 6 of CCR are not applicable. Time limitation - demand for the period from April 2008 to March 2013 whereas SCN was issued for the period April 2008 to March 2012 - HELD THAT - Extended period in the present case cannot be invoked because the law on the point was not clear and the definition of exempted service was changed from time to time and the interpretational issue was involved - Therefore, the substantial demand for the period from April 2008 to March 2012 amounting to ₹ 69,76,592/- is entirely time barred. Thus, the appellants are not required to comply with the provisions of Rule 6 of the CENVAT Credit Rules, 2004 - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Validity of the demand for service tax and penalties for the period April 2008 to March 2012. 2. Validity of the demand for service tax and penalties for the period April 2012 to March 2013. 3. Applicability of Rule 6 of the CENVAT Credit Rules (CCR) concerning exempted services. 4. Interpretation of "exempted services" under Rule 2(e) of the CCR. 5. Invocation of the extended period of limitation for the demand. Issue-wise Detailed Analysis: 1. Validity of the Demand for Service Tax and Penalties for the Period April 2008 to March 2012: The appellant argued that accommodation income and restaurant income were not taxable until 01/05/2011, and hence no reversal of CENVAT credit was required under Rule 6(3) of the CCR. The Tribunal agreed, noting that the Kerala High Court had ruled that these services were not subject to tax during this period. Consequently, the demand for this period was deemed unsustainable. 2. Validity of the Demand for Service Tax and Penalties for the Period April 2012 to March 2013: For this period, the appellant availed abatement under Notification No.1/2006-ST, which was argued not to be considered as an exempted service for the purpose of CENVAT credit reversal. The Tribunal found that the appellant's interpretation was correct and that the services should not be treated as exempted for the purpose of Rule 6 of the CCR. 3. Applicability of Rule 6 of the CENVAT Credit Rules (CCR) Concerning Exempted Services: The Tribunal analyzed the definition of "exempted services" under Rule 2(e) of the CCR during different periods. It concluded that the services provided by the appellant did not fall within this definition and, therefore, the appellant was not required to comply with Rule 6 of the CCR for the reversal of CENVAT credit. 4. Interpretation of "Exempted Services" Under Rule 2(e) of the CCR: The Tribunal examined the definition of "exempted services" as it evolved over time. It noted that the appellant's services were not covered under the definition of exempted services, particularly given the specific conditions laid out in the relevant notifications and rules. The Tribunal cited previous judgments, including those from the Kerala High Court, to support its interpretation. 5. Invocation of the Extended Period of Limitation for the Demand: The Tribunal found that the demand for the period April 2008 to March 2012 was time-barred. The show-cause notice was issued on 21/10/2013, beyond the normal one-year limitation period. The Tribunal ruled that the extended period could not be invoked due to the lack of clarity in the law and the evolving definition of exempted services, which involved interpretational issues. Conclusion: The Tribunal concluded that the appellant was not required to comply with Rule 6 of the CENVAT Credit Rules, 2004. Consequently, the impugned order was set aside, and both appeals were allowed. The Tribunal emphasized that the substantial demand for the period April 2008 to March 2012 was entirely time-barred and unsustainable.
|
