2023 (5) TMI 338 - AT - Service Tax

Maintainability of appeal - extended period of limitation - whether the show cause notice (SCN) has been rightly issued invoking the extended period of limitation? - period of dispute is October 2014 to June 2017 - revenue neutrality - HELD THAT - The issues involved in the SCN are wholly interpretation in nature. Further it is found that out of the demands raised of tax, the major part of demand in respect of GTA service, the situation is revenue neutral as the appellant is entitled to Cenvat credit on payment of service tax in cash. Further, it is found that the only allegation in SCN for invocation of extended period of limitation is that the afore-mentioned omissions came to light in the course of audit, but for which tax would have escaped. It is found that such allegations do not stand, as admittedly appellant have deposited the tax and accepted the audit objection, prior to issue of SCN. The extended period of limitation is not available to Revenue for issue of SCN on 30.04.2020 - appeal allowed.

Issues involved:
The issues involved in this case are whether the show cause notice (SCN) has been rightly issued invoking the extended period of limitation and the correctness of various tax demands raised by the Revenue.

Extended period of limitation:
The appellant, a service provider registered with the Service Tax Department, faced allegations of non-payment of service tax, excess availment of abatement, inadmissible carry forward of E. Cess and S.H.E. Cess, wrong adjustment of liability of service tax under the Reverse Charge Mechanism, and late fees. The appellant contested the allegations, stating that they had deposited the service tax amount in question before the SCN was issued. The Tribunal found that the major part of the demand was in respect of GTA service, where the situation was revenue neutral as the appellant was entitled to Cenvat credit on payment of service tax in cash. The Tribunal held that the extended period of limitation was not available to the Revenue for issuing the SCN.

Excess availment of abatement:
Regarding the excess availment of abatement on the input GTA service, the appellant had mistakenly taken abatement at a higher rate for certain months. The appellant acknowledged the error and paid the differential tax liability amount. The Tribunal recognized the appellant's admission of the error and subsequent payment.

Utilization of Cenvat credit:
The issue of utilizing Cenvat credit for payment of service tax on GTA under RCM was raised. The appellant had paid the service tax on GTA using Cenvat credit but did not claim credit for such payment. The Tribunal noted that any amount paid for the period before 1st July, 2017, by way of service tax eligible for Cenvat credit, became refundable as such credit could not be claimed after that date.

Inadmissible carry forward of E. Cess and S.H.E. Cess:
The appellant was alleged to have inadmissibly carried forward E. Cess and S.H.E. Cess. The Tribunal examined the relevant notification and rules and found that the Revenue had misconceived the objection regarding the utilization of education cess and secondary cess credits.

Grounds for invoking extended period of limitation:
The appellant argued that the extended period of limitation should not be invoked as they had maintained proper books of accounts and filed returns, albeit with slight delays. The Tribunal agreed with the appellant, stating that the grounds for invoking the extended period, such as willful misstatement or suppression of facts, were not applicable in this case. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential benefit.

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