2021 (3) TMI 1050 - AT - Service Tax

CENVAT Credit - common input services used in taxable as well as exempt services - exempted activity - sale of space or time for advertisement in print media - input services - Air travel - accommodation charges - taxi hire charges - AMC for flat at Delhi - time limitation. CENVAT Credit - common input services used in taxable as well as exempt services - exempted activity - sale of space or time for advertisement in print media - applicability of Rule 6(3) of CCR - HELD THAT - As per the Department noted in the impugned order in para 7.1 by relying upon Notification 15/2006-ST dated 24/04/2006 read with Notification 03/2011-CE dated 01/03/2011, the definition of exempted service has been granted to the effect that an explanation has been inserted to the said rule clarifying that exempted service includes sale of space or time for advertisement in print media - the activity of sale of space or time for advertisement in print media is specifically covered under the negative list in terms of Section 66D of the Finance Act, 1994 and therefore the same cannot be said to be an exempted service and the provisions of Rule 6(3) is not applicable to an activity which is in the negative list. Further, the appellant during the stage of the audit itself has produced record before the audit saying that appellant has duly prepared separate accounts for cenvat credit availed in respect of taxable service, common credit availed for exempted services and taxable services. CENVAT Credit - input services - Air travel - accommodation charges - taxi hire charges - AMC for flat at Delhi - HELD THAT - As far as Air travel/visa, accommodation and AMC for flat at Delhi is concerned, keeping in view the nature of output service rendered by the appellant the employees have to travel to places to organize business exhibitions and events and hence the travel is in relation to the output service provided and moreover these services have been held to be input service in the case of M/S EMCON TECHNOLOGIES INDIA PVT LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, BANGALORE 2012 (11) TMI 1019 - CESTAT BANGALORE . AMC charges for the flat - HELD THAT - When the accommodation bears a direct nexus with the output service, hence the AMC charges for the flat will also fall within the input service and registration of the premises where the said service is availed is not required in view of the decision of the Karnataka High Court in the case of Mportal India Wireless Solutions Pvt. Ltd. 2011 (9) TMI 450 - KARNATAKA HIGH COURT . Extended period of limitation - HELD THAT - The extended period cannot be invoked because the show-cause notice was issued on the basis of departmental audit undertaken for the period October 2011 to September 2015 and all the facts were disclosed in the audit. Hence, suppression of fact with intent to evade service tax cannot be alleged against the appellant - the appellant has also produced a certificate from the CA computing the cenvat credit to be reversed under Rule 6(3A) of CCR, 2004 and has reversed more than what was required to be reversed. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Applicability of Rule 6(3) of CCR, 2004 to the exempted activity of sale of space or time for advertisement in print media.
2. Inadmissible Cenvat credit of input services availed in respect of Air travel, accommodation charges, taxi hire charges, AMC for flat at Delhi.
3. Limitation period for issuing the show-cause notice.

Issue-wise Detailed Analysis:

1. Applicability of Rule 6(3) of CCR, 2004:
The appellant argued that the activity of sale of space or time for advertisement in print media is covered under the negative list in terms of Section 66D(g) of the Finance Act, 1994, and thus cannot be treated as an exempted service under Rule 2(e) of CCR, 2004. The appellant claimed that Rule 6(3) of CCR, 2004, is not applicable to this activity, as it is not an exempted service. The Tribunal found that the Department's reliance on Notification 15/2006-ST and Notification 03/2011-CE was incorrect. The Tribunal noted that the appellant had reversed the proportionate credit as per Rule 6(3A) of CCR, 2004, and thus, the Department should not have issued a show-cause notice demanding reversal of 6/7% of the exempted turnover. The Tribunal upheld that Rule 6(3) gives an option to the manufacturer/service provider, and the appellant had complied with the requirement by reversing the necessary amount.

2. Inadmissible Cenvat Credit on Input Services:
The appellant contended that the services on which Cenvat credit was availed were directly attributable to the output service and thus eligible. The Tribunal examined the nature of the output service and found that air travel, accommodation, and AMC for the flat at Delhi were necessary for organizing business exhibitions and events, thereby having a direct nexus with the output service. The Tribunal relied on previous decisions, such as Emcom Technologies Pvt. Ltd. and Fine Care Biosystems, which supported the appellant's claim. The Tribunal also noted that the registration of the premises where the service is availed is not required, referencing the Karnataka High Court's decision in Mportal India Wireless Solutions Pvt. Ltd.

3. Limitation Period for Issuing the Show-Cause Notice:
The appellant argued that the extended period of limitation was wrongly invoked as the show-cause notice was based on a departmental audit, and all facts were already within the Department's knowledge. The Tribunal agreed, citing decisions like LANDIS + GYR Ltd. and GAC Shipping India Pvt. Ltd., which established that extended periods cannot be invoked when facts are disclosed during an audit. The Tribunal found no suppression of facts with intent to evade service tax by the appellant.

Conclusion:
The Tribunal concluded that the impugned order was not sustainable in law. The appellant had complied with the requirements of Rule 6(3A) of CCR, 2004, and the Cenvat credit on input services was admissible. The extended period of limitation was also not applicable. Consequently, the appeal was allowed, and the impugned order was set aside with consequential relief to the appellant.