2023 (1) TMI 593 - AT - Service Tax

Levy of service tax - GTA Service - Business Auxiliary Service (Commission received) - denial of Cenvat credit on account of documents defects of not mentioning the service tax registration number. CENVAT Credit - input services - GTA Services - From the order it is noticed that the adjudicating authority has rejected the CA Certificate for the reason that the supporting document has not been given by the appellant. The purpose of getting the service from the CA is that a summary of the findings can be obtained. In case the adjudicating authority had any doubt regarding the CA certificate he could have asked for the supporting document or any other explanation - it is found that no such documents have been sought by the adjudicating authority. In these circumstances summary rejection of chartered accountant certificate is not right. Learned counsel argued that the situation is revenue neutral as the appellant would have been entitled to cenvat credit on the tax paid on the GTA services. It is not entirely correct argument as part of the GTA services could have been availed for the purpose of clearance of finished goods and the admissibility of cenvat credit on such service tax depends on many factors. In this circumstance the argument of revenue neutrality does not survive - the order confirming demand on service tax on GTA services is set aside and the matter is remanded back to the Original Adjudicating Authority to decide a fresh. The doubt raised on the CA certificate may be highlighted and if the necessary supporting need document can be called. Demand of service tax has been made under the category of Business Auxiliary service on the commission received by the appellant - HELD THAT - The demand has been made without examining the nature of commission received. The show cause notice does not mention the nature of the commission received by the appellant. The SCN merely picks up the head of commission in the balance sheet and compares it with the ST- 3 return. The Order-In Original also makes the vague reference to commission received in respect of repairs and attending to customers complaints. It is not understood how the services would become taxable under the business auxiliary service. The appellant has also not produced any documents to show the exact nature of the services provided by them - matter remanded back to the Original Adjudicating Authority to decide a fresh after examining the actual contract under which such payment has been received and specifically examine the nature of services provided an its taxability. The appeal is allowed by way of remand. Denial of cenvat credit on account of certain defects in the documents on the strength of which the credit was taken - HELD THAT - The revenue has placed on record letter dated 21.01.2013 of Commissioner of Service Tax Ahmedabad - It is noticed that this report has been obtained after adjudication of the case by the adjudicating authority and the same was not available at the time of adjudication. Since this report was not available with the adjudicating authority the decision could not have been taken after examining complete facts. Consequently the demand on this issue is also set aside and the matter is remanded back to the original Adjudicating Authority. The appeals are allowed by way of remand.

Summary

Issues:
1. Demand of service tax on GTA services and denial of cenvat credit.
2. Demand of service tax on Business Auxiliary Service (Commission received).
3. Denial of cenvat credit on account of defects in documents.

Analysis:

Issue 1: Demand of service tax on GTA services and denial of cenvat credit:
The appeal was filed against the demand of service tax and denial of cenvat credit by M/s Stelmec. The demand was based on figures reported in the ST-3 return and balance sheet/P&L Account. The appellant argued that the demand was speculative and submitted a reconciliation certificate from a chartered accountant, which was summarily rejected. The Tribunal found the rejection unjustified as no supporting documents were requested by the adjudicating authority. The revenue neutrality argument was dismissed as the eligibility of cenvat credit depended on various factors. The order confirming the demand was set aside, and the matter was remanded for fresh consideration.

Issue 2: Demand of service tax on Business Auxiliary Service (Commission received):
The demand was made on the commission received by the appellant under Business Auxiliary Service category. The appellant claimed to have discharged the necessary service tax liability and provided detailed reconciliation to the auditors. They argued that the commission amount was for services provided before a certain date and was exempt under a specific notification. The Tribunal noted discrepancies in the order and remanded the matter to examine the nature of the commission received and its taxability, as the services provided were not clearly defined in the show cause notice.

Issue 3: Denial of cenvat credit on account of defects in documents:
The denial of cenvat credit amounting to Rs. 45,97,501 was based on defects in documents related to debit notes issued by certain entities. The appellant contended that the service providers were registered for service tax at the time of issuing the debit notes. The Tribunal referred to previous cases and a verification report indicating discrepancies in the issuance of debit notes. As the report was obtained after adjudication and not available during the initial decision, the demand was set aside, and the matter was remanded for further examination.

In conclusion, the Tribunal set aside the demands and allowed the appeals by way of remand, emphasizing the need for a thorough reevaluation of the issues raised in the case.