2019 (1) TMI 826 - AT - Service Tax

Non-payment of service tax - services received from abroad in respect of Management Consultancy Services - Export Sales Commission - GTA services - Held that - It is also undisputed that the returns were filed by the appellant with the authorities indicate such debits made towards service tax liability on GTA services. As was the law during the relevant period i.e. upto 18.04.2006, service tax liability on GTA services needs to be discharged by the service recipient. A clarity as to whether the said service tax has to be discharged by debit in CENVAT Credit account or by cash was made by an explanation inserted on 18.04.2006 - As regards the amount of tax liability post 18.04.2006, which the appellant assessee should have paid through PLA or cash, we do find that appellant has been keeping the department informed about the discharge of tax liability in their returns. It cannot be said that appellant had suppressed or misstated any information or evaded tax. Having debited the amount in CENVAT Credit, the intention of the assessee is very clear that he wanted to discharge the service tax. This being the factual position, we hold that the demand of service tax liability under GTA services post 18.04.2006 is hit by limitation. Management Consultancy Services and Export Sales Commission - Held that - It is a well settled law that prior to 18.04.2006, no service tax liability arises on the recipient of services in India as provisions of Section 66A were brought into statute w.e.f. 18.4.2006. In view of this, the demands raised on the appellant for the period pre 18.04.2006 is unsustainable and liable to be set aside - For the demand of the tax liability post 18.4.2006, it is seen from the records that appellant is a manufacturer of various excisable products and have availed the expert knowledge of Management Consultancy and paid export sales commission to various agents for marketing their goods abroad. These two services are directly related to the manufacture and clearance of the products, hence appellant can avail the CENVAT Credit of the service tax paid on these services, even under reverse charge mechanism - the demand of service tax liability for the period post 18.4.2006, we hold that it is hit by limitation but at the same time we hold that the demand for service tax liability if any within the period of limitation from the date of issuance of show cause notice is liable to be discharged with interest and appellant is liable to avail the credit of tax amount - Since the issue involved in this case was purely of interpretation, we hold that no penalty is leviable on appellant. Any activity undertaken between DTA and EOU units cannot be considered as services rendered to any outsider, in fact it would amount to self service. We find that the adjudicating authority was correct in coming to such a conclusion and we do not find any reason to interfere in reasoned findings given by him to drop the demands raised on this account. In short, Revenue s appeal is devoid of merits and stands rejected. Appeal dismissed - decided against Revenue.

Summary

Issues involved:
1. Dispute over service tax liability on Goods Transport Agency (GTA) services.
2. Service tax liability on Management Consultancy Services and Export Sales Commission.
3. Appeal by Revenue regarding transactions between DTA and EOU units.

Analysis:

Issue 1: Service tax liability on GTA services
The appellant used CENVAT Credit to discharge GTA services tax liability. The law allowed this practice until 18.04.2006. The appellant maintained records and filed returns indicating the tax payments. The Tribunal held that the demands raised against the appellant for this period were unsustainable on merits. Post 18.04.2006, the appellant continued to discharge tax liability, keeping the department informed. The Tribunal found no suppression or evasion of tax, thus holding the demand post 18.04.2006 as hit by limitation.

Issue 2: Service tax liability on Management Consultancy Services and Export Sales Commission
The services were rendered by entities abroad. Before 18.04.2006, no service tax liability arose on the recipient in India. Post 18.04.2006, the appellant, a manufacturer, availed expert knowledge and paid commissions for marketing goods abroad. The Tribunal held that the demands for the period post 18.04.2006 were hit by limitation. However, the appellant was liable to discharge any service tax liability within the limitation period from the date of the show cause notice.

Issue 3: Appeal by Revenue regarding transactions between DTA and EOU units
The DTA and EOU units operated under the same entity. The transactions between these units were considered self-service, not services rendered to outsiders. The Tribunal upheld the adjudicating authority's decision to drop the demands raised by Revenue on this account, finding no reason to interfere with the reasoned findings. Thus, Revenue's appeal was rejected.

In conclusion, the appellant's appeal was allowed concerning service tax liabilities on GTA services, Management Consultancy Services, and Export Sales Commission. On the other hand, Revenue's appeal regarding transactions between DTA and EOU units was rejected. The Tribunal pronounced the judgment on 16.01.2019.