2015 (10) TMI 1855 - AT - Service Tax

Availment of CENVAT Credit input services - service tax paid on the Activity of providing/selling SIM cards/recharge coupons was availed and utilized for payment of service tax on commission income under Business Auxiliary Service - Penalty under Section 76 - Held that - the service tax paid by M/s Aircel Digilink India Ltd. Co. was on services which were clearly neither provided to the appellant/assessee nor were eligible to be called input service in its (appellant/assessees) respect. - Impugned CENVAT credit is inadmissible; services on which it was taken were not input services for the assessee but also because the output service of the appellant assessee was not taxable including under Business Auxiliary Service - Penalty under Section 76 cannot be sustained as no service tax is held to be payable by the assessee as per Section 68 ibid Cenvat Credit inadmissible and recoverable and penalty imposed as such ₹ 2,000/- under Rule 15 (3) ibid Decided in favour of Revenue.

Summary

Issues:
1. Appeal against Order-in-Revision dated 16/10/2009 regarding recovery of inadmissible Cenvat credit.
2. Revenue's appeal against order-in-appeal dated 31/03/2009 regarding the taxability of commission received for selling SIM cards/recharge vouchers.

Issue 1 - Appeal against Order-in-Revision:
The appellant challenged the Order-in-Revision seeking recovery of inadmissible Cenvat credit wrongly availed and utilized during specific periods. The primary Adjudicating Authority held that the appellant did not receive any service from the service provider, making the service tax credit inadmissible. The Commissioner (Appeals) rejected the appeal, stating that the credit was not admissible as the services were not input services. CESTAT remanded the matter for fresh consideration, emphasizing the need to decide the taxability issue. The subsequent order by the Commissioner (Appeals) held that the service was not taxable, leading to the Revenue's appeal. The Tribunal analyzed the situation, citing relevant judgments, and concluded that the service tax on commission was not leviable under Business Auxiliary Service. The Cenvat credit was deemed inadmissible due to the services not being input services for the appellant. However, the Order-in-Revision was found unsustainable due to procedural issues, leading to the dismissal of the penalty exceeding the prescribed limit.

Issue 2 - Revenue's Appeal against Order-in-Appeal:
The Revenue appealed against the order-in-appeal that determined the commission received by the appellant for selling SIM cards/recharge vouchers as not taxable under Business Auxiliary Service. The Tribunal reviewed various judgments supporting the non-taxability of such commissions. It was established that the service tax paid by the service provider was not applicable to the appellant, rendering the Revenue's appeal unsustainable. The Tribunal, therefore, upheld the order-in-appeal, stating that the service tax on the appellant under Business Auxiliary Service was not leviable.

In conclusion, the Tribunal ruled in favor of the appellant regarding the inadmissible Cenvat credit and the non-taxability of the commission under Business Auxiliary Service. The Revenue's appeal was dismissed due to the lack of tax liability on the appellant. The penalty imposed was reduced to the prescribed limit, emphasizing compliance with statutory provisions.