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2018 (5) TMI 1471 - AT - Service TaxBenefit of abatement - N/N. 1/2006 dated 1.3.2006 - Department was of the view that the respondents are not eligible for the benefit of notification for the reason that they have availed CENVAT credit on input services - Held that - the respondent has reversed the credit availed - The Hon ble High Court of Allahabad in the case of Hello Minerals Water (P) Ltd. 2004 (7) TMI 98 - ALLAHABAD HIGH COURT has held that reversal of Modvat credit amounts to non-taking of credit on the inputs - benefit of notification allowed. Benefit of N/N. 4/2004 dated 31.3.2004 - denial on the ground that they had provided services to units situated at SEZ - Held that - the respondents are eligible for benefit of N/N. 4/2004. Appeal dismissed - decided against Revenue.
Issues:
Department's appeal against the order of Commissioner (Appeals) setting aside demand, interest, and penalties under Notification No.1/2006 for services of rent-a-cab and tour operator services. Eligibility for Notification No.1/2006 due to availed CENVAT credit on input services and services provided to SEZ unit under Notification No.4/2004. Analysis: The department filed an appeal against the Commissioner (Appeals) order setting aside the demand, interest, and penalties. The respondents, engaged in air travel agent services, rent-a-cab services, and tour operator services, availed benefits under Notification No.1/2006 for service tax liability. The department contended that the respondents were not eligible for the notification due to availing CENVAT credit on input services and providing services to SEZ units. The department issued a show cause notice demanding differential service tax and penalties. The adjudicating authority confirmed the demand, interest, and penalties, leading to the appeal before the Tribunal. The department argued that the respondents, who initially availed CENVAT credit on input services, later reversed the credit, making them eligible for Notification No.1/2006 benefits. The respondent's counsel cited precedents to support the reversal of credit as equivalent to non-availment, thus satisfying the conditions for notification benefits. Regarding services provided to SEZ units, the counsel referenced Tribunal decisions in favor of the assessee, arguing for the eligibility of Notification No.4/2004 benefits. The counsel also highlighted that the Commissioner (Appeals) set aside the demand on both merit and limitation grounds, emphasizing no suppression of facts to evade service tax. The Tribunal noted that the respondents had reversed the availed credit, making them eligible for Notification No.1/2006 benefits as held in precedents. The issue of extending benefits under Notification No.4/2004 for services provided to SEZ units partially consumed within the SEZ was discussed, with Tribunal decisions supporting the eligibility of such benefits. Consequently, the Tribunal upheld the Commissioner (Appeals) order, dismissing the department's appeal and disposing of the respondent's cross-objection accordingly.
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