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2025 (2) TMI 419 - AT - Service TaxNon-reversal of CENVAT Credit attributable to exempted services - classification and taxability of services under Business Support Service and Business Auxiliary Service - demand under Health Care Service as a Pure Agent - applicability of Service Tax on Renting of Immovable Property and under Health Care Service for amounts received from corporates - demand under Import of Service without specific classification in the Show Cause Notice (SCN) - Invocation of extended period under Section 73(1) of the Act. Demand of Rs.1, 00, 76, 186 on account of Cenvat Taken - Non-reversal of CENVAT Credit attributable to exempted services - HELD THAT - The facts of the case show that the Modvat credit taken on the inputs was reversed by the petitioner. Since the reversal of Modvat credit has been done by the petitioner hence in our opinion it has to be treated that no credit was taken by the petitioner on the inputs namely PVC granules used in the manufacture of PVC/PP bottles as contemplated under the Notification No. 15/94-C.E. dated 1-3-1994. There is no dispute that the appellant has reversed the entire credit of Rs.25, 02, 361/- taken on exempted output services along with interest of Rs.6, 71, 531 in September 2013 after the Show Cause Notice was issued. These details have been certified by the Chartered Accountant and they are not being disputed by the Revenue - the confirmed demand of Rs. Rs.1, 00, 76, 186/- is legally not sustainable. Demand of Rs.42, 94, 470/- under business support service - Classification and taxability of services under Business Support Service and Business Auxiliary Service - HELD THAT - It is not found that the appellant apart from making available the above space has provided any other infrastructure facilities to the client. In fact it is clear from the Agreement that all such infrastructure facilities will have to be created by the client with their own cost. It is more akin to letting out the space on rent to the client for which the consideration is arrived @ 18% of the sale proceeds of the medicines. Therefore on factual matrix there are no justification to classify the service as Business Support Service the classification under which the present demand has been made and confirmed - the demand of Rs.42, 94, 470/- made under business support service set aside. Demand of Rs.8, 87, 242/- under business auxiliary service - HELD THAT - The collection of blood samples prima facie does not fall under any of the above seven categories. Further in the show cause notice the department has nowhere specified under which clause of the definition of Business Auxiliary Service the liability shall be fastened on the Appellant. It is well settled that to bring any activity under the definition of Business Auxiliary Service for levy of tax it is to be clearly mentioned in the show cause notice under which clause of the definition shall apply to fasten that service under the classification of Business Auxiliary Service - demand set aside. Demand of Rs.19, 69, 383/- under health care service as pure agent - HELD THAT - On going through the copy of the ST 3 enclosed it is found that indeed it is an inadvertent error on their part because of which they have shown an amount of Rs.1, 91, 20, 228/- under Sl.3F(l)(iii) instead of at S.No. 3F(l)(ii) wherein it should have been shown since this amount was received on account of diagnostic and treatment provided to admitted inpatients which is an exempted service - the demand of Rs.19, 69, 383 set aside. Demand of Rs.1, 95, 934/- under renting of immovable property service - HELD THAT - On going through the challans and calculation sheet provided by the appellant at page Nos.367 to 389 and find the appellant s claims to be correct. Since the Revenue has not adduced any evidence to the effect that the appellants have charged and recovered the Service Tax from their tenants it is held that they are entitled for cum-tax benefit in terms of Section 67(2) of the Finance Act 1994 - the demand is required to be re-quantified as Rs.1, 67, 181 and not at Rs.1, 95, 934/- as calculated by the Revenue. Demand of Rs.4, 73, 252/- under health care service in respect of sundry debtors - HELD THAT - The appellant shows by way of documentary evidence along with the Chartered Accountant s Certification that as and when the amounts were realized from the debtors the same have been properly accounted for and Service Tax has been paid. The Appellant submits that during the material period service tax was payable on collection basis and not on the invoice basis - the confirmed demand of Rs.4, 73, 252/- on the unrealised sundry debtors set aside. Demand of Rs.3, 28, 957/- under health care service in respect of amount received from corporates for treatment of their employees - HELD THAT - If the payment is made towards health checkup and preventive care then such service would become taxable under the category health service . In the present case it is found that the amount being paid by the corporates is not account of such services but is on account of in-patient hospitalization charges which is being paid by the corporates to the appellant - demand set aside. Demand of Rs.1, 03, 133/- under Section 66A of the Act - HELD THAT - The SCN proposed to levy service tax under Section 66A without mentioning any specific classification whatsoever. However on production of the documentary evidences along with the reply to the SCN the Adjudcating authority dropped a portion of the demand and confirmed the demand on Rs.7, 27, 129/- and Rs.1, 38, 583/- as expenditure incurred in foreign currency for the years 2008-09 and 2010-11. On such payments he has confirmed the demand of Rs.1, 03, 133/- under three taxable classifications namely Business Support Service Commercial Coaching Centre and Tutorial Service and Scientific or Technical Consultancy Service knowing fully that the demand proposed in the impugned show cause notice without mentioning any taxable service under which the demand was proposed - Since the appellant was not put to notice about the sub-classification of the import of service in the Show Cause Notice the confirmed demand of Rs.1, 03, 133/- set aside. Time limitation - HELD THAT - In this case the appellant has reversed the cenvat taken along with interest and the decision are in their favour. Further all the cenvat credit taken whether for the exempted services or for the taxable services have been recorded by them in their books of account. All these make it clear that the Dept has not brought in any evidence to the effect that the appellant was indulging in suppression with an intent to evade Service Tax payment. Similarly in case of import of service even if the same payable which is not in the present case the same would be available as Cenvat Credit to the appellant. Hence there would not be any motive to suppress. The entry of Rs.19 lacs is on account of their clerical mistake while filing the ST3 Returns. In respect of Renting of immovable property services due to the confusion prevailing at that time they have neither collected the Service Tax nor paid the same. Subsequently on getting clarification they have paid the Service Tax along with interest. Thus if all the facts are considered together we find that the Revenue has not made out any case of suppression and the non-payment / short payment if any has been purely on account of interpretational difficulties. The appellant has also shown their bonafides by making the payment of Service Tax wherever payable along with interest. Therefore the confirmed demand for the extended period is legally not sustainable. Conclusion - All the demands are set aside. The Appeal succeeds on merits and on account of time-bar. Appeal allowed.
The judgment from the Appellate Tribunal CESTAT Kolkata involved several issues concerning the Service Tax liabilities of the appellant, a healthcare service provider. The Tribunal addressed each issue, providing detailed reasoning and decisions based on legal precedents and the facts presented. Here's a detailed analysis of the judgment:
Issues Presented and Considered: The core legal questions considered were:
Issue-Wise Detailed Analysis: A. Demand of CENVAT Credit:
B. Demand under 'Business Support Service':
C. Demand under 'Business Auxiliary Service':
D. Demand under 'Health Care Service' as Pure Agent:
E. Demand under 'Renting of Immovable Property':
F. Demand under 'Health Care Service' for Sundry Debtors:
G. Demand under 'Health Care Service' for Corporate Payments:
H. Demand under 'Import of Service':
Significant Holdings: The Tribunal established the principle that reversal of CENVAT Credit with interest is equivalent to non-availment, setting a precedent for similar cases. It emphasized the importance of specificity in SCNs and held that demands based on vague or incorrect classifications are unsustainable. The Tribunal also reinforced the interpretation that service tax on renting of immovable property should consider cum-tax benefits if not collected separately. Final Determinations:
The Tribunal allowed the appeal, granting consequential relief to the appellant as per law.
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