2023 (5) TMI 85 - AT - Service Tax

Levy of Service Tax - Business Support Services - additional amount received towards excess yield - transportation charges - business auxiliary services - Irregular availment of cenvat credit on debit notes - suppression of facts or not - extended period of limitation penalty. Irregular availment of cenvat credit on debit notes - HELD THAT - The appellants have produced copies of the Debit Notes and Invoices issued by their service provider. These Debit Notes as well as Invoices contain all the details required to enable them to take the credit. Therefore there is no error in the appellant taking the CENVAT credit of Rs 1,23,90,055/-. The appeal to this extent is allowed on merits. Demand of service tax under Business Support Services - HELD THAT - The appellant has submitted that as the matter pertains to the year 2005 and the appellant s company is non-functional now, they will not be in a position to provide a copy of the earlier CTA Agreements entered into between KPCL and the then CTA. In the absence of this important document, it may not be possible for the Tribunal to come to a conclusion on this issue on merits. It is on record that the appellant is a Pvt Limited Company and they have been maintaining proper records and filing Statutory Documents before various Authorities. There is no allegation that they have failed to file any returns with the Department. Apart from this, it is on record that Audit was taken up in 2007, wherein the CTA and other charges being collected and Excess Yield consideration were also noted and were allowed to be deducted from the total consideration value from the Service Tax to be paid by the appellant. This shows that even the Audit Team was carrying the same view till the audit was conducted in 2007. Extended period of limitation - suppression of facts or not - HELD THAT - There are no reason to fasten the allegation of suppression on the appellants. Accordingly, in respect of the confirmed demands the Appeal is allowed on limitation alone - As the appellant has submitted that they are not contesting these issues on merits, the Department is to work out the balance amount, if any, to be paid under these Heads for the normal period along with interest. Penalties - HELD THAT - Since there is no suppression in this case, the penalties are set aside. Appeal allowed in part.

Summary

Issues involved: Confirmed demands under five heads - service tax under Business Support Services, non-payment of service tax on excess yield, non-payment of service tax on transportation charges, short payment of service tax on business auxiliary services, irregular availment of cenvat credit on debit notes.

Business Support Services: The appellant argued that the services provided did not fall under Business Support Services but rather under Transport of Goods in container by Road. They cited specific clauses of the contract to support their claim.

Excess Yield Charges: The appellant contended that incentives received for exceeding yield specified in the contract were not subject to service tax, referencing a relevant case law.

Transportation Charges: The appellant disputed the classification of activities under transportation charges and contested the demand on its merits.

Short Payment of Service Tax: The appellant acknowledged the amount in their books but claimed an error in reflecting it in their ST-3 returns, leading to the confirmed demand.

Cenvat Credit: The appellant defended the cenvat credit taken based on debit notes, arguing that the requirements of CENVAT Credit Rules 2004 were fulfilled despite a procedural error.

Limitation: The appellant argued against the time bar, citing explanations provided during an audit in 2007 and asserting that the confirmed demands should be set aside due to the absence of suppression.

Respondent's Position: The respondent highlighted the appellant's failure to pay service tax on certain services and emphasized the discovery of specific clauses related to excess yield charges during a subsequent audit.

Tribunal's Decision: The Tribunal allowed the appeal on the cenvat credit issue, finding no error in the credit taken. For other confirmed demands, the appeal was allowed on limitation grounds, as there was no evidence of suppression. Penalties were set aside, and the appellant was directed to pay any balance amount under the relevant heads for the normal period with interest.