2023 (3) TMI 11 - AT - Service Tax

SCN is time-barred or not - Department issued SCN by invoking the extended clause on the ground that the services provided for the clients at Jammu and Kashmir would be exempted services - HELD THAT - Since the Appellant is not pressing their Appeal on account of merits, I confine myself to issue of time bar alone. As rightly pointed out by the Ld. Advocate, there are various decisions of the co-ordinate Benches of Tribunal on this issue, therefore the Appellant cannot be fastened with the burden of any demand pertaining to the extended period. Accordingly, the demand pertaining to the extended period is required to be set aside. As the Appellant is not contesting the Appeal on merits, the demand confirmed and interest thereon for the normal period sustains. The penalties imposed under Section 78 and 77 are set aside - Appeal disposed off.

Summary

Issues:
1. Whether services provided to clients in Jammu and Kashmir are exempted services?
2. Whether Cenvat Credit reversal is required for services provided to clients in Jammu and Kashmir?
3. Whether the Show Cause Notice issued is time-barred?

Analysis:
1. The appellant provided map-making services to clients in Jammu and Kashmir and other parts of India. The Department issued a Show Cause Notice invoking the extended clause, treating services to Jammu and Kashmir clients as exempted services. The Adjudicating Authority dropped the demand for services to SEZ but confirmed it for Jammu and Kashmir clients. On appeal, the Commissioner dismissed the appeal, leading the case to the Tribunal.

2. The appellant relied on the case law Ramboll Imisoft Pvt. Ltd. where it was held that services to Jammu and Kashmir are not exempted. However, the Authorized Representative cited Adecco Flexione Workforce Solutions Ltd. and ECIL Rapiscan Ltd., stating that services to Jammu and Kashmir clients are exempted, necessitating Cenvat Credit reversal. The appellant argued that the Show Cause Notice was time-barred due to their belief and previous favorable decisions.

3. The Tribunal, after considering both sides and the case laws, focused on the issue of time-bar. It noted conflicting decisions by co-ordinate Benches on the matter. As the appellant did not contest the appeal on merits, the Tribunal set aside the demand for the extended period. However, the demand for the normal period was upheld, with penalties under Section 78 and 77 being set aside. The appeal was disposed of accordingly.