2018 (7) TMI 432 - AT - Service Tax

Valuation - benefit of abatement - hotel and accomodation services from 1st May, 2011 - N/N. 1/2006-ST - CENVAT credit on inputs/input services and common input services availed - Held that - There is no dispute that the appellant has not availed CENVAT Credit on any inputs or input services specifically towards provision of accommodation services. They had availed credit on common input services used for accommodation services (when it was not taxable) and other services - The utilization of common input services by the appellant does not disentitle them to the benefit of abatement under N/N. 1/2006-ST. - benefit of abatement allowed. Liability of Service tax - Laundry services - Held that - When any show cause notice is issued, the burden of alleging and proving the allegations in the show cause notice that a taxable service has been rendered is on the revenue and it is not on the assessee to prove otherwise - In this case, the words used were the laundry services and there is no evidence or investigation report to show that under the garb of laundry services dry cleaning services were provided by the appellant and hence they are chargeable to service tax - demand withheld. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim of CENVAT Credit on common input services, abatement under Notification No. 1/2006-ST, service tax liability on accommodation services, telephone services, and laundry services.

Analysis:
The appellant, a hotel providing accommodation services, appealed against an Order-in-Appeal regarding service tax liability. The issue revolved around the appellant's entitlement to abatement under Notification No. 1/2006-ST and the utilization of CENVAT Credit on common input services. The appellant had availed CENVAT Credit on common input services used for both taxable and exempted services. The department alleged irregular CENVAT Credit on construction services and non-payment of service tax on accommodation, telephone, and laundry services.

The lower authority confirmed demands for service tax, interest, and penalty. The Commissioner (Appeals) partially allowed the appeal, setting aside the demand on telephone services but upholding the rest. The appellant argued for abatement based on a similar case precedent and contended that laundry services were not taxable during the relevant period. The appellant's Chartered Accountant cited a case where abatement was allowed despite availing common input service credit.

The Tribunal analyzed the abatement issue and cited precedents to rule in favor of the appellant, allowing abatement on the total value of services provided. Regarding laundry services, the Tribunal disagreed with the Commissioner (Appeals) and held that the burden of proving taxable services lies with the revenue. As there was no evidence that laundry services included taxable dry cleaning services, the Tribunal concluded that laundry services were not chargeable to service tax. Consequently, the appeal was allowed, setting aside the Order-in-Appeal.

In conclusion, the Tribunal's judgment clarified the appellant's entitlement to abatement under Notification No. 1/2006-ST despite availing common input service credit. Additionally, the Tribunal determined that laundry services were not subject to service tax, emphasizing the revenue's burden of proof in establishing taxable services. The decision provided clarity on the disputed issues and set aside the Order-in-Appeal in favor of the appellant.