2023 (1) TMI 935 - AT - Service Tax

Short payment/nonpayment of service tax under RCM - Tour Operator Services - Event Management Service - Business Auxiliary Service - Business Support Services - extended period of limitation - revenue neutrality - Imposition of penalty under Section 78 and 78 A on the Director - HELD THAT - The appellant is entitled to and have rightly taken cenvat credit on the invoices addressed to the Bangalore office and the invoices in the name of the Director due to business exigency. Further admittedly the appellant have received services in question and the payments have been made for such services by the appellant/assessee only. Further the service is qualified as input service. Accordingly the cenvat credit of Rs.3, 01, 045/- is allowed. Disallowance alleging short payment of service tax - short payment is due to non-recognition by Revenue of the ST-3 Return for the period April to September 2015 which was filed manually - HELD THAT - The ground has been allowed by way of remand for re-quantification of the demand after allowing the abatement. So far the adjustment of tax is concerned the order is modified to the extent that the appellant shall be entitled for cenvat credit as well as cash. The Adjudicating Authority shall verify the payments made through invoices by the appellant and allow the credit after verifying the same. Disallowance of Rs.12, 27, 087/- - amount relates to import of package software which are goods as defined and has been explained by the Revenue - HELD THAT - Service tax of Rs.2, 150/- in respect of receipt of package software from INVATOMARKET is not taxable being goods. Further the services received from Cloudinary Ltd. and Amazon Web Services involving service tax of Rs.1, 16, 063/- and Rs.3, 67, 045/- are not liable to be taxed as the services have been provided in the nature of immovable property as the server has been located outside India. Accordingly the demand of Rs.4, 85, 258/- being not taxable to service tax is set aside - So far the balance demand is concerned of Rs.12, 27, 087 4, 85, 769 Rs.7, 41, 821/- is concerned it is found that the appellant have maintained proper books of accounts and transactions were duly reflected in books of accounts and proper vouchers were maintained. Further situation is wholly Revenue neutral as the appellant was entitled to cenvat credit on the same. Further admittedly the appellant have discharged their service tax liability on the taxable services provided by them. Accordingly the balance demand is also set aside on the ground of Revenue neutrality. Time Limitation - HELD THAT - The appellants have maintained proper records and earlier also they were subjected to audit in the month of Feb. March 2016. In this view of the matter it is held that the demand upto the period October 2015 is time barred and extended period of limitation is not available. Imposition of penalty under Section 78 and 78 A on the Director - HELD THAT - The show cause notice has been issued by way of interpretation and/or change of opinion. The appellant company was set up in the year 2010-2011 and have been availing similar credits and filing ST-3 Returns accordingly from year to year and in the past never such dispute was raised by Revenue till the period 31.03.2014. Hence the show cause notice has been issued by way of change of opinion or change of interpretation at the end of the Revenue - the benefit of extended period of limitation is not available to Revenue. The demand is confirmed only for the normal period. Accordingly penalties under Section 78 and 78 A (on the Directors) are set aside. Penalty under Rule 15(3) of CCR is also set aside. Appeal disposed off.

Summary

Issues Involved:
1. Limitation
2. Demand of Rs.72,99,444/- for wrong availment of abatement
3. Dispute of CENVAT credit of Rs.9,34,836/-
4. Disallowance of Rs.28,49,800/- alleging short payment of service tax
5. Disallowance of Rs.12,27,087/- for import of services
6. Imposition of penalties under Sections 77, 78, and 78A

Detailed Analysis:

1. Limitation:
The appellant argued that the demand for the period up to March 2016 is time-barred as they maintained proper books and records, and no audit report was issued after the 2016 audit. The show cause notice issued in 2019 was due to a change of opinion. The Tribunal agreed, stating the demand up to October 2015 is time-barred, and the extended period of limitation is not applicable.

2. Demand of Rs.72,99,444/- for wrong availment of abatement:
The Commissioner (Appeals) set aside this demand as the appellant reversed the proportionate CENVAT credit attributable to Tour Operator Service, amounting to Rs.6,33,791/-, which amounts to not taking CENVAT credit at all. This decision attained finality as Revenue did not appeal against it.

3. Dispute of CENVAT credit of Rs.9,34,836/-:
The appellant contested the disallowance of Rs.9,34,836/-, stating they had already paid back Rs.6,33,791/-, leaving a balance dispute of Rs.3,01,045/-. The Tribunal found that the appellant rightly took CENVAT credit on invoices addressed to the Bangalore office and in the name of the Director due to business exigency. The Tribunal allowed the CENVAT credit of Rs.3,01,045/-.

4. Disallowance of Rs.28,49,800/- alleging short payment of service tax:
The Commissioner (Appeals) remanded this issue to the Adjudicating Authority for re-quantification of the demand after allowing abatement under Notification No.26/2012-ST and considering the tax paid in cash. The Tribunal modified the order to include consideration of CENVAT credit as well.

5. Disallowance of Rs.12,27,087/- for import of services:
The appellant contested Rs.4,85,769/- of this amount, arguing it related to non-taxable goods and services provided outside India. The Tribunal agreed, setting aside the demand of Rs.4,85,258/- as non-taxable. The balance demand of Rs.7,41,821/- was also set aside on the grounds of Revenue neutrality as the appellant maintained proper records and was entitled to CENVAT credit.

6. Imposition of penalties under Sections 77, 78, and 78A:
The Tribunal found that the show cause notice was issued due to a change of interpretation by Revenue. Since the appellant maintained proper records and was previously compliant, the extended period of limitation was not applicable. Consequently, penalties under Sections 78 and 78A were set aside. The penalty under Section 77(2) was reduced to Rs.5,000/-.

Summary of Judgments:
- Demand of Rs.12,27,087/- is set aside.
- Demand of Rs.9,34,836/- is set aside.
- Claim of abatement under Notification No.26/2012-ST is upheld.
- Demand of Rs.28,49,800/- is remanded with directions.
- All penalties are set aside except under Section 77(2), which is reduced to Rs.5,000/-.
- Appeal allowed.