9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 66 - AT - Service TaxWrong utilisation of cenvat credit of service tax paid on consulting engineering service - short payment of service tax found on reconciliation of commercial accounts with service tax returns - non payment of service tax on amounts received from Delhi Airport Metro Express Private Limited, under the head-Renting of Immovable property service - Non-payment of service tax on L.C. charges paid to foreign banks under reverse charge mechanism - levy of penalty. Disallowance of cenvat credit of Rs.30,12,86,790/- alleging wrong utilization of cenvat credit on receipt of consultancy engineering service - HELD THAT - The said issue already stands decided in favour of the appellant in appeal no.53176/2016 2023 (2) TMI 607 - CESTAT NEW DELHI . Thus, this ground is allowed in favour of appellant assessee and the demand is set aside. Short payment of service tax of Rs.8,17,58,940/- - HELD THAT - In reconciling the account of debtors with the amount offered for service tax in the ST-Returns, the same have been erroneously raised. As admittedly, the appellant maintained their accounts on accrual basis (Mercantile basis). Whereas service tax for the period was payable on cash basis or receipt basis in terms of Section 68 of the Finance Act read with Rule 6 of Service Tax Rules, 1944 upto 31.03.2011. With effect from 01.04.2011, there was change in the basis of charge of service tax, which became payable immediately following the calendar month, in which the service is deemed to be provided as per Rules framed (i.e. on Mercantile basis) or immediately on raising the invoice or providing of service, as amended vide Notification no. 3/2011-ST dated 01.03.2011 - this demand for alleged short payment of tax is erroneous and is set aside. Demand of service tax of Rs.5,93,02,321/- on account of amounts received from DAMEPL - HELD THAT - From perusal of the Concession Agreement, it is found that the appellant was entitled to receive certain amounts as concession fee and share a small percentage (1 to 5%) of the fare collection from the passengers. The arrangement between the parties have all the features of Joint Ventures or partnership - Both the parties have jointly rendered services to the passengers or users of the Metro line under the Concession Agreement. Both parties have undertaken their assigned rights and have performed their specified tasks to run the Metro line service on the Airport Metro line. Further, such service could not be run without active involvement of the appellant as the service was aligned with the existing Metro network of the appellant - no service has been provided by DAMEPL to the appellant. Accordingly, this ground is allowed in favour of the appellant and the demand is set aside. Service tax levy on the LC charges paid by the appellant to foreign bank (Bank of India-Tokyo), where the service tax is demanded under RCM - HELD THAT - Under the admitted facts, it is the Government of India, which have entered into loan agreement with Japan International Corporation Agencies (JICA) (formerly JAPAN Bank of International Corporation ) on 10.03.2008 to borrow money for establishment and implementation of Delhi Mass Rapid Transport System. The proceeds of loan has been used for purchase of eligible goods and service for implementation of the Metro Project. There is defacto privity of contract between the appellant and the Bank of India, Tokyo, accordingly, the LC charges are paid towards ensuring payment to suppliers from the loan amount sanctioned by JICA. Further, we find that loan agreement provides that in case of any dispute between the Government of India and Bank of India, relating to any provisions of the contract, the same shall be resolved by arbitration - the LC charges/fee paid to the bank are taxable, under Reverse Charge. However, as the appellant is entitled to cenvat credit, the demand for extended period is set aside. Eligibility of benefit of exemption Notification No. 25/2012-ST - HELD THAT - The same is not available to the appellant as this notification is effective from 01.07.2012, whereas the period in dispute is prior to this date. Appeal allowed in part.
Issues Involved:
1. Wrong utilization of Cenvat credit on service tax paid on consulting engineering services. 2. Short payment of service tax based on reconciliation of commercial accounts with service tax returns. 3. Non-payment of service tax on amounts received under the head Renting of Immovable Property Service. 4. Non-payment of service tax on L.C. charges paid to foreign banks under the reverse charge mechanism. 5. Penalty imposed under various sections of the Finance Act, 1994, and Cenvat Credit Rules, 2004. 6. Revenue appeal on omitted confirmation of admitted demand and interest. 7. Miscellaneous application for amendment of appeal memo regarding exemption under Notification No. 25/2012-ST. Detailed Analysis: 1. Wrong Utilization of Cenvat Credit: The Tribunal found that the issue of disallowance of Cenvat credit of Rs. 30,12,86,790/- for consulting engineering services had already been decided in favor of the appellant in a previous appeal (53176/2016). Hence, this ground was allowed in favor of the appellant, and the demand was set aside. 2. Short Payment of Service Tax: The demand of Rs. 8,17,58,940/- was based on the reconciliation of commercial accounts with service tax returns. The Tribunal noted that the appellant maintained accounts on an accrual basis, whereas service tax was payable on a cash basis until 31.03.2011. The Commissioner had not considered the change in the basis of taxation from 01.04.2011. The Tribunal found that the opening balance of debtors included both taxable and non-taxable amounts, and the reconciliation prepared by the appellant was rejected arbitrarily. Hence, the demand was set aside. 3. Non-payment of Service Tax on Amounts Received: The demand of Rs. 5,93,02,321/- was related to amounts received from DAMEPL under a Concession Agreement. The Tribunal found that the agreement was a joint venture, and both parties contributed capital and expertise. The arrangement had all the features of a joint venture, and no service was provided by DAMEPL to the appellant. Hence, the demand was set aside. 4. Non-payment of Service Tax on L.C. Charges: The Tribunal held that the L.C. charges paid to foreign banks were taxable under the reverse charge mechanism. However, as the appellant was entitled to Cenvat credit, the demand for the extended period was set aside. 5. Penalty Imposed: The penalties imposed under various sections were set aside by the Tribunal, considering the interpretational nature of the issues involved. 6. Revenue Appeal on Omitted Confirmation: The Tribunal confirmed the tax liability of Rs. 32,63,417/- under RCM, which the appellant had deposited during adjudication/investigation. The interest amount of Rs. 1,35,389/- was also confirmed. However, the Tribunal rejected the ground for imposing penalties under Section 78. 7. Miscellaneous Application for Amendment: The Tribunal admitted the ground raised by the appellant regarding exemption under Notification No. 25/2012-ST, but held that the exemption was not available as the notification was effective from 01.07.2012, whereas the period in dispute was prior to this date. Conclusion: The Tribunal allowed the appeal of the appellant-assessee in part, setting aside the demands and penalties related to wrong utilization of Cenvat credit, short payment of service tax, and non-payment of service tax on amounts received under the Concession Agreement. The demand for service tax on L.C. charges was upheld but limited to the normal period. The revenue appeal was allowed in part, confirming the tax liability and interest but rejecting the imposition of penalties. The miscellaneous application was disposed of, and the impugned order was modified accordingly.
|
