2023 (9) TMI 925 - AT - Service Tax

Seeking the amount (Service tax) paid to be deposited and appropriated in terms of Section 73A(2) of Finance Act, 1994 - Not availing the benefit of exemption from service tax on the job work - Exemption as per the N/N. 8/2005-ST dated 01.03.2005 - HELD THAT - From the sub Rule-2, it is clear that even if any amount of service tax is not required to be paid and the same is collected, it needs to be credited in the Central Government account. In the present case, there is no dispute whether or not service tax payable by the appellant and if the same is collected by the service recipient, it was admittedly deposited to the Central Government. Therefore, no further appropriation under Section 73A(2) is required. Section 73A(2) is required only when the assessee, if not required to pay any service tax but collected from the service recipient and not deposited to the Central Government, same needs to be recovered. In the present case, there is no dispute that the appellant have deposited service tax recovered from the service recipient to the central Government. Therefore, no further action is required. The entire case has been made out as the appellant was not supposed to pay service tax in terms of Notification No. 8/2005-ST. On this ground, it is not disputed that the service provided by the appellant is taxable service but by virtue of Notification No. 8/2005-ST, since the Notification No. 8/2005-ST exempts but the same is admittedly on certain conditions and is not absolutely exemption notification and in terms of Section 5A of Central Excise Act, 1944 which is applicable to the service tax matters. It is option for the assessee to avail or not to avail the conditional exemption, therefore, the appellant opted not to avail Notification No. 08/2005-ST is not illegal or incorrect. For this reason also the entire proceedings against the appellant is not sustainable. The issuance of show cause notice and adjudication thereupon vide the impugned order was not correct - appeal allowed.

Summary

Issues Involved:
The issue involved in the present case is whether the Adjudicating Authority correctly held that an amount paid by the assessee should be deposited and appropriated under Section 73A(2) of Finance Act, 1994, due to the appellant not being required to pay service tax on job work as per exemption Notification No. 8/2005-ST.

Details of the Judgment:

Issue 1: Correctness of Adjudicating Authority's Holding
The appellant argued that they charged service tax to the recipient and paid it to the government, thus the proposal to treat the amount under Section 73A was not applicable. They contended that since the payment was not mandatory under Notification No. 8/2005-ST, the Adjudicating Authority's decision was incorrect. The appellant's payment was legal and correct as per the conditions of the notification.

Issue 2: Revenue's Position
The Revenue supported the findings of the impugned order, maintaining the stance taken by the Adjudicating Authority.

Issue 3: Analysis and Decision
Upon reviewing the submissions and records, it was observed that the Commissioner treated the service tax paid by the appellant as a deposit under Section 73A(2) of the Finance Act, 1994. However, it was noted that as per Section 73A(2), if an amount is collected but not required to be paid, it should be credited to the Central Government account. In this case, the appellant had deposited the service tax collected from the recipient to the Central Government, eliminating the need for further appropriation under Section 73A(2). Additionally, it was acknowledged that the appellant was not obligated to pay service tax under Notification No. 8/2005-ST, which provided conditional exemption. Since the notification was not absolute and the appellant chose not to avail it, their actions were deemed legal. Consequently, the issuance of the show cause notice and the adjudication in the impugned order were deemed incorrect. The impugned order was set aside, and the appeal of the appellant was allowed.

Conclusion
The judgment rendered on 12.09.2023 by the Appellate Tribunal CESTAT AHMEDABAD favored the appellant, emphasizing that the amount paid by them was not subject to further appropriation under Section 73A(2) as they had already deposited the service tax collected. The decision highlighted the legality of the appellant's actions in light of the conditional exemption provided under Notification No. 8/2005-ST.