2019 (4) TMI 130 - AT - Service Tax

CENVAT Credit - common input services used in both taxable and non-taxable services - exempted value of services provided to Jammu & Kashmir - short levy of Service Tax under reverse charge mechanism - extended period of limitation - Held that - If no input credit is availed on input services used for rendering exempted services, then there may not be any revenue loss - Further, It is also a matter of record that an Order-in-Original dated 21.09.2015 came to be passed covering a similar issue for earlier periods and hence, the arguments of the Consultant that there was no suppression or fraud etc., and that therefore larger period of limitation could not be invoked, merits consideration. There is no dispute with regard to the payments evidenced by the tax payers counterfoils on which there is no discussion nor any finding and in any case, the same will have to be given due credit, which is not done here - matter requires reconsideration - appeal allowed by way of remand.

Summary

Issues Involved:
1. Delay in filing the first appeal before the Commissioner (A).
2. Correctness of the demand of Service Tax of ?95,063/- raised against the appellant related to non-reversal of CENVAT credit under Rule 6 (3) (i) of the CCR, 2004 for the period April 2011 to March 2015.

Analysis:
1. Delay in Filing First Appeal:
The appellant contended that there was a delay of only 06 days in filing the first appeal before the Commissioner (A), while the appeal was dismissed citing a delay of 66 days without passing any order on merits. The Tribunal noted this discrepancy and found it crucial to address this issue as it affected the appellant's right to appeal and have their case heard on merits.

2. Correctness of Service Tax Demand:
The main issue revolved around the correctness of the demand of Service Tax amounting to ?95,063/- against the appellant for non-reversal of CENVAT credit under Rule 6 (3) (i) of the CCR, 2004. The appellant argued that they were providing "ZULO" services to Vodafone and Aircel in Jammu & Kashmir without the need for a physical office there. They claimed to have not taken any input credit into the CENVAT account for the exempted services and were in compliance with Rule 6(1) of CCR. The appellant asserted that since no CENVAT credit was availed for the exempted services, there was no requirement for reversal under Rule 6(3). Additionally, they highlighted that they had paid taxes before the issuance of the Show Cause Notice (SCN), which was not considered while calculating the demand.

3. Adjudication and Decision:
After considering the arguments presented by both parties, the Tribunal found merit in the contentions of the appellant. The Tribunal observed that if no input credit was availed for the input services used in providing exempted services, there might not be any revenue loss. Furthermore, the Tribunal noted that an Order-in-Original had been passed previously covering a similar issue for earlier periods, indicating no suppression or fraud. The Tribunal emphasized the need for de novo adjudication and set aside the impugned order, directing the adjudicating authority to consider the legal arguments of the assessee and review all documentary evidence filed in support. The appeal was treated as allowed for statistical purposes.

In conclusion, the Tribunal's judgment addressed the issues of delay in filing the first appeal and the correctness of the Service Tax demand, ultimately leading to a decision for de novo adjudication based on the arguments and evidence presented by the appellant.