2023 (12) TMI 184 - AT - Service Tax

Denial of benefit of exemption for the value of Inputs used - Notification No. 39/2009 ST dated 23.09.2009 and Notification No. 43/2009 ST Dated 02.12.2009 - Business auxiliary Service - manufacture and sale of alcoholic liquor (Beer) for human consumption - period from 1.09.2009 till 30.06.2012 and the show cause notice dated 05.08.2014 - extended period of limitation - HELD THAT - The appellants have produced an affidavit by way of undertaking in relation to Notification No. 39/2009-ST dated 23.09.2009 read with Notification No. 43/2009-ST dated 02.12.2009. The affidavit was filed at the instance of this bench, so as to comply with condition that was found lacking by the adjudicating authority. The appellants have now categorically stated that, they have not taken any Cenvat Credit nor intend to take the same, as per requirement of the aforesaid notifications - It is found that this affidavit and undertaking should make them eligible for the benefit of notification as other conditions were not found to be unfulfilled by the adjudicating authority. Accordingly, the affidavit is allowed to be taken on record and direct the adjudicating authority to consider the same and allow the benefit of exemption notification as claimed by the appellants. The adjudicating authority shall appropriately consider the benefit of the notification to be allowed to the appellant in the light of affidavit having been filed with undertaking of not availing the credit, which has been stated to be not taken till date by the appellant - appeal allowed.

Summary

Issues:
The judgment involves issues related to the applicability of service tax on job work basis for manufacturing alcoholic liquor, denial of exemption for inputs used, invocation of larger period of limitation for issuing show cause notice, and the nature of business activities conducted by the appellant.

Applicability of Service Tax:
The appellant, engaged in manufacturing alcoholic liquor under job-work basis for M/s. United Breweries Limited, was found liable for service tax under the amended definition of "Business Auxiliary Service" from 1.09.2009. The dispute arose regarding the denial of exemption for the value of inputs used, despite the appellant not availing Cenvat Credit. The Tribunal allowed the benefit of exemption upon the filing of an affidavit confirming the non-availment of Cenvat Credit, as per relevant notifications.

Invocation of Larger Period of Limitation:
The show cause notice issued on 05.08.2014 demanding service tax for the period 1.09.2009 to 30.06.2012 was challenged as time-barred, exceeding the 18-month limitation. Citing a recent decision, the Tribunal held that the extended period of limitation could not be invoked, rendering the notice unsustainable. The appellant's tax liability had already been paid under protest, and a refund was sought due to the limitation issue.

Nature of Business Activities:
The appellant, Winsome Breweries Limited, was involved in manufacturing, brewing, and bottling alcoholic beverages under a contract with M/s. United Breweries Limited. Despite providing taxable services to M/s. UBL, the appellant had not registered for service tax, leading to the issuance of a show cause notice in 2014. The Tribunal acknowledged the taxable nature of the services provided by the appellant and directed the adjudicating authority to consider granting the benefit of exemption based on the filed affidavit.

Conclusion:
The Tribunal allowed the appeal in favor of the appellant, emphasizing compliance with exemption conditions regarding Cenvat Credit and the limitation period for issuing the show cause notice. The affidavit submitted by the appellant played a crucial role in establishing eligibility for exemption benefits. The judgment highlighted the importance of fulfilling statutory requirements for claiming exemptions and the necessity of timely issuance of show cause notices within the prescribed limitation period.