2018 (5) TMI 886 - AT - Service Tax

Business Auxiliary services (BAS) - taxability of amount shown as other income in the Profit & Loss Account (P&L A/c) - whether the other income shown by the appellant was taxable under the category of Business Auxiliary Services or Transportation of Goods Services ? - extended period of limitation. Held that - Admittedly, Revenue has not shown any detailed evidences to reflect upon the fact that the said other income was taxable under the category of Business Auxiliary Services . There is nothing on record to show that the appellant has provided the services under the said category. Merely because the appellant agree to pay Service Tax under the said category would not be reflecting of the fact that the said other income was on account of services provided by the appellant under the said category. In the absence of any evidence to substantiate the stand of the Revenue that the said other income‟ was on account of services proved under the category of Business Auxiliary , the appellant stand of the other income having been arisen on account of the Transportation Activities has to be accepted in which case the appellant would be entitled to Cenvat credit of the same. Extended period of limitation - Held that - The credit was availed by reflecting the same in the Cenvat credit account, in which case it cannot be said that there was any mala-fide suppression on the part of the appellant - demand raised by invoking the longer period of limitation is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of Service Tax payment under "Business Auxiliary Services" or "Transport of Goods by Road Services".
2. Entitlement to avail Cenvat credit.
3. Validity of Show Cause Notice issued after the appellant took credit.
4. Interpretation of the Larger Bench decision regarding suo-motu refund.

Analysis:

Issue 1: Classification of Service Tax payment under "Business Auxiliary Services" or "Transport of Goods by Road Services"
The appellants paid Service Tax under "Business Auxiliary Services" but later claimed it should have been under "Transport of Goods by Road Services" due to differential cartage. The Revenue alleged the payment was incorrect. The Tribunal noted the lack of evidence supporting Revenue's claim and accepted appellant's explanation. The Tribunal held that since the "other income" was due to Transportation Activities, the Service Tax should be considered under "Transportation of Goods by Road Services," allowing Cenvat credit.

Issue 2: Entitlement to avail Cenvat credit
The appellant took credit after realizing the error in the initial payment. The Tribunal found the appellant entitled to Cenvat credit as the "other income" was related to Transportation Activities, making it a Cenvatable input service. The Tribunal rejected Revenue's argument against allowing the credit.

Issue 3: Validity of Show Cause Notice issued after the appellant took credit
The Show Cause Notice was issued after the appellant availed credit, invoking a longer period of limitation. The Lower Authorities alleged suppression by the appellant. However, the Tribunal disagreed, stating that the credit was reflected in the Cenvat account, indicating no mala-fide intent. The Tribunal held the demand based on the longer limitation period was unsustainable and set it aside.

Issue 4: Interpretation of the Larger Bench decision regarding suo-motu refund
The Commissioner (Appeals) cited a Larger Bench decision regarding refund permissions. However, the Tribunal clarified that the present case involved credit for Service Tax paid on GTA Services, a Cenvatable input service, not a refund. The Tribunal held that the decision on refund permissions did not apply to the appellant's case. The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant.