2013 (12) TMI 1177 - AT - Service Tax

Denial of benefit of Notification No.12/2003-ST - Bar of limitation - Payment of VAT and CST - Held that - Notification No.12/2003-ST dated 20/06/2003 provides for excluding the value of goods and materials sold by the assessee to the recipient of service for the purpose of computation of service tax liability. This notification applies to all the services including completion and finishing services rendered by the appellant herein. If that be so, benefit of notification cannot be denied to the assessee and has to be allowed, if the assessee has fulfilled the terms and conditions of the notification. The only condition which needs to be satisfied for availing the benefit is that no credit of duty paid on such goods and material sold has been taken under the provisions of Cenvat Credit Rules, 2004. From VAT returns, copies of balance sheets, copies of purchase invoices and sample copies of sale invoices, it is evident that the appellant has discharged VAT/CST liability. In view of this, the matter has to go back to the adjudicating authority to verify the claim of the appellant that they have paid VAT/CST in respect of the goods sold by them during rendering of completion and finishing services and therefore, they are eligible for the benefit of notification No.12/2003-ST - Matter remanded back - Decided in favour of assessee.

Issues:
1. Interpretation of Notification No.1/2006-T and Notification No.12/2003-ST for abatement claims.
2. Rejection of abatement claim by the adjudicating authority.
3. Disallowance of benefit under Notification No.12/2003 and confirmation of service tax demand.
4. Rejection of documentary evidence by the adjudicating authority.
5. Payment of service tax on completion and finishing services.
6. Invocation of extended period for confirming the demand.
7. Consideration of additional grounds/evidences by the appellant.

Analysis:

1. The Tribunal considered the appeal and stay application against the order-in-original passed by the Commissioner of (TAR), Mumbai. The appellant was directed to make a pre-deposit based on a previous order, which was challenged in the Hon'ble High Court of Bombay. The High Court set aside the stay order and directed the Tribunal to reconsider the application, noting that the appellant had produced documentary evidence regarding the value of goods and materials provided for services.

2. The appellant, engaged in completion and finishing services, claimed abatement under Notification No.1/2006-T, which was denied by the department. They also sought benefit under Notification No.12/2003-ST, excluding the value of goods sold while rendering services. However, the adjudicating authority disallowed this claim, confirming a service tax demand and imposing penalties under relevant sections of the Finance Act, 1994.

3. The appellant submitted documentary evidence, including VAT returns and purchase documents, to support their claim of selling goods during services. Despite this evidence, the adjudicating authority rejected the claim, stating that completion and finishing services did not involve the sale of goods. The appellant also highlighted their compliance with service tax payments since a specific date.

4. The Tribunal analyzed Notification No.12/2003-ST, which allows the exclusion of goods sold for computing service tax liability, applicable to completion and finishing services. Considering the evidence provided by the appellant, the Tribunal remanded the case to the adjudicating authority to verify the VAT/CST payments made on goods sold during services. The issue of time bar was left open for further consideration.

5. Ultimately, the appeal was allowed by way of remand, and the stay application was disposed of. The appellant was permitted to submit additional grounds/evidences, which would be reviewed by the adjudicating authority. The cross objection filed by the Revenue was also resolved in the process.

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