2022 (2) TMI 1125 - AT - Service Tax

Recovery of service tax - GTA Services - Rent-a-Cab service - applicability of N/N. 26/2012-ST dated 20/06/2012 - documents as produced by the Appellant with reply to the show cause notice, not appreciated - reverse charge mechanism - extended period of limitation - HELD THAT - From the case records, it is seen that for the expenses incurred under the head motor car expenses, contains miscellaneous expenses for running of motor car including cost of fuel, toll tax, car parking charges, miscellaneous repair charges for car servicing, taxi fare reimbursement to staff whereas the ledger for Vehicle Hire Charges relates to the expenses in relation to the GTA services availed by the Appellant for the transportation of goods to customers of the Appellant. Further there has been no contrary evidence produced before us to deny the above facts. Also from the reconciliations produced, it is clear that the amounts as disclosed by the Appellant for GTA services in its ST 3 returns are much more than the amounts of vehicle hire charges and that there are other ledgers also on which tax has been paid under GTA services. The claim of the department that the amount under vehicle hire charges does not corelate to the amount paid under GTA services cannot be accepted as no visible efforts have been made by the department to corelate the same whereas the Appellant has produced all possible reconciliations for the same and on account of no contrary evidence being produced we are inclined to accept the contentions of the Appellant. Rent-a-Cab service - reverse charge mechanism - HELD THAT - The demand was raised under the Rent-a-Cab service under reverse charge mechanism without actually identifying the supplier of service whereas the documents produced as part of appeal paper book and written submission shows the nature of expenses clearly not to be one of Rent-a-Cab service at all. Thus, the deeming fiction adopted by the Ld. Adjudicating authority cannot be sustained and thus, the demand cannot survive on this ground. As regards amount paid to Director for car hire charges, we find that the Appellant has not disputed the service tax liability on said amounts and that the same has been paid in the returns filed by the Appellant, we thus do not find any ground to make any observations on the same. Extended period of limitation - HELD THAT - The demand has been raised for the period 2012-13 to 2015-16 in 2018. No explanation has been furthered by the Department in respect of such gross delay in proceeding with the matter. Therefore, we find that invocation of the extended period of limitation is not justified. The demand for recovery of service tax on Rent-a-Cab service only on assumption and presumptions cannot be sustained is accordingly set aside. Since demand of recovery of service tax is set aside, penalty and interest are also not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax for the period 2012-13 to 2015-16 under reverse charge mechanism on services received from Rent-a-Cab service providers and other related expenses.

Analysis:
The appeal was filed by the assessee against the Order-in-Original confirming the demand of service tax amounting to ?2,44,41,749 for the period 2012-13 to 2015-16, along with interest and penalty. The appellant, engaged in the manufacture of aerated water and fruit-based beverages, was audited, leading to a discrepancy in service tax payment under reverse charge mechanism on services received from Rent-a-Cab service providers and other related expenses. The appellant provided detailed replies and reconciliations, contending that the expenses were not related to Rent-a-Cab services. Despite the explanations, the department issued a Show Cause Notice alleging non-payment of service tax, leading to the appeal before the Tribunal.

The appellant's advocate argued that the demand was not sustainable due to various reasons, including the absence of evidence regarding the service provider, assumptions by the adjudicating authority, and the already paid tax on certain expenses. The advocate presented documents and reconciliations supporting the appellant's claims, asserting that the demand was also time-barred. On the other hand, the authorized representative for the respondent supported the lower authority's order.

After hearing both sides and examining the records, the Tribunal found that the demand of recovery of service tax was confirmed without proper appreciation of the documents provided by the appellant. The expenses under motor car and vehicle hire charges were found to be unrelated to Rent-a-Cab services, with reconciliations supporting the appellant's position. The Tribunal rejected the department's claims due to lack of contrary evidence and accepted the appellant's contentions.

Moreover, the demand under Rent-a-Cab service was deemed unsustainable as the nature of expenses did not align with the service, and the demand for the period 2012-13 to 2015-16 in 2018 lacked justification for the extended period of limitation. Consequently, the Tribunal set aside the demand for recovery of service tax, rendering the penalty and interest also unsustainable. The appeal was allowed in favor of the appellant with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the lack of evidence supporting the demand of service tax and the unjustified invocation of the extended period of limitation, ultimately leading to the setting aside of the demand and associated penalties and interest.