9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 73 - AT - Service TaxLevy of Service Tax - Business auxiliary services (BAS) - Purchase and sale booked in the books of appellant - Direct sale by Mercury and only margin booked in the books of the appellant - Warranty Repairs - period Financial Year 2010-11 to Financial Year 2013-14 - Extended period of limitation - penalty - HELD THAT - Law is well settled that set off /adjustment against payables is to be considered as receipt of convertible foreign exchange and needs no reiteration as held by Hon ble SC in JB. BODA AND COMPANY PRIVATE LIMITED VERSUS CENTRAL BOARD OF DIRECT TAXES 1996 (10) TMI 70 - SUPREME COURT and followed in several decisions for service tax in COMMISSIONER OF CENTRAL EXCISE JAIPUR-1 VERSUS M/S NATIONAL ENGINEERING INDUSTRIES LTD. 2017 (10) TMI 1496 - RAJASTHAN HIGH COURT , BHARAT RE-INSURANCE BROKERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, HYDERABAD-II 2020 (6) TMI 259 - CESTAT HYDERABAD . Having accepted in SCN OIO, that payments are received and adjusted in running account against the payables in foreign currency to the same foreign party outside India, there are no reason to deviate from the settled law, that set off is sufficient fulfilment of the condition of receipt in convertible foreign exchange. In absence of any other contradiction alleged in the SCN/OIO, the demand raised under BAS category for the subject period does not sustain. Even for the period after 01.07.2012, the above legal position holds good and cannot be made subject to service tax more so when Section 66B, ibid provides no levy for the services rendered outside India. Demand made under renting category - HELD THAT - Perusal of the agreements and related documents makes it clear that transaction is in the nature of cold storage facility not mere renting. Accordingly, the demand does not sustain under renting category. Demand made under the category of MMRS on services rendered to Navy / coastal guards - HELD THAT - The Appellant admittedly paid service tax when provided to other service recipient, and claimed exemption when provided to Navy /coastal guards etc. Perusal of the relevant work orders and invoices clearly evidences that services are rendered to Navy/coastal guards only and rightly eligible for the exemption from service tax during the subject period. When the demands were raised after detailed audit of the records, it is inherent that department was in possession of the related work orders, invoices, ledgers and bank statements etc. Viewing from that background, it is incorrect to say that Appellant did not submit the supporting documents for the exemptions claimed. Demands made under MMRS category for warranty claims - HELD THAT - Warranty claims were raised for the composite works involving service material portion, the demand cannot be made under service category of MMRS . There are force in both arguments of the Appellant and accordingly set aside the demands. Time limitation - penalties - HELD THAT - There are force in the submissions of the Appellant, that the facts were known to the department as evident from the previous SCN s. The issues are subject to varied interpretations and confusion was prevailing. Further, appellant maintained proper books of accounts and the present demand have been raised based on the records maintained by the appellant and there is no mis representation, or any suppression or mis statement or fraud on the part of the appellant. Accordingly, extended period of limitation is not invocable in the present case. For the same reasons, all the penalties needs to be set aside. The impugned order is set aside - appeal allowed.
Issues Involved:
1. Classification of services under 'Business Auxiliary Services' (BAS) 2. Classification of services under 'Renting of Immovable Property' 3. Classification of services under 'Management, Maintenance & Repair Services' (MMRS) 4. Applicability of exemptions for services provided to Navy/Coast Guard 5. Extended period of limitation and penalties Summary: 1. Classification of services under 'Business Auxiliary Services' (BAS): The Appellant, a distributor for M/s Mercury Marine Singapore Pvt Ltd., was issued a show cause notice (SCN) for the period FY 2010-11 to 2013-14, demanding service tax on 'Dealers margin/sales incentives' under BAS. The Tribunal found that the post-sale incentives/discounts given by Mercury to the Appellant, by way of adjustment note/credit note, cannot be subjected to service tax as these were related to trading of goods. The Tribunal also held that adjustment against payables is considered as receipt of convertible foreign exchange, as established by the Supreme Court in J.B. Boda - 1997 (223) ITR 271 (SC). Consequently, the demand under BAS was set aside. 2. Classification of services under 'Renting of Immovable Property': The demand under this category was confirmed due to the alleged failure to provide documentary evidence. However, the Tribunal observed that the Appellant provided a cold storage facility, which includes maintenance and security, thus classifying it as a 'cold storage facility' service rather than renting of immovable property. The demand under the renting category was therefore not sustained. 3. Classification of services under 'Management, Maintenance & Repair Services' (MMRS): The Appellant provided warranty repairs on behalf of Mercury and claimed these should be classified under BAS. The Tribunal agreed, stating that the services were composite works involving both service and material portions, and thus could not be classified under MMRS. The demand under MMRS for warranty claims was set aside. 4. Applicability of exemptions for services provided to Navy/Coast Guard: The Tribunal found that services provided to the Navy and Coast Guard were exempt from service tax under Notification No. 31/2010-ST and Notification No. 25/2012-ST. The Appellant had submitted relevant work orders and invoices, which evidenced that the services were indeed rendered to the Navy/Coast Guard. The demand under MMRS for these services was thus not sustainable. 5. Extended period of limitation and penalties: The Tribunal held that the extended period of limitation was not invocable as the facts were known to the department from previous SCNs, and there was no misrepresentation or suppression of facts by the Appellant. The issues were subject to varied interpretations, and the Appellant maintained proper books of accounts. Consequently, all penalties were set aside. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and granting the Appellant consequential benefits in accordance with the law. The order was pronounced in open court on 29.02.2024.
|
