2023 (6) TMI 1085 - AT - Service Tax

Levy of Service Tax - Goods Transport Agency services - scope of SCN - denial of Cenvat credit on input services - penalty u/s 78 of FA, 1994. Scope of SCN - Ld. Commissioner while adjudicating the matter has clearly travelled beyond the allegations made in the SCN - only allegation that was made in the SCN that the appellant has not made payment of service tax on the expenditure incurred by them on lorry hire charges / freight charges, which were booked under the broad head operational expenses - Demand of Service Tax on GTA Services - HELD THAT - Rule 2(1)(d)(v) of the Service Tax Rules was invoked to propose demand under RCM since the appellant is a private limited company. However, in the impugned order, the demand has been confirmed on a different basis altogether that the appellant has earned freight income from its client and since the appellant has not issued consignment notes which they were statutorily required to do so, the appellant cannot claim any relief by not paying service tax - the impugned order has travelled beyond the scope of SCN, which is the very foundation in the matter of levy and recovery of duty and the authorities are required to restrict to the allegations what has been set out in the notice. Non-compliance with the said principles vitiates the entire proceedings which is legally not permissible. In any case, it is found that even the Ld. Commissioner has accepted in the order that the lorry suppliers were not required to issue consignment notes. Once the same is duly accepted, it cannot be said the appellant has received any GTA services from the lorry suppliers. In that case, Rule 2(1)(d)(v) prescribing liability under RCM cannot be invoked. Hence, the demand under GTA services cannot be sustained and thus set aside. CENVAT Credit - denial on the ground that the service providers could not be traced during the visit by the Department officers - HELD THAT - It is not known when such visits were made, what steps have been taken to ascertain whether tax amount has been ultimately deposited by the service providers. Both SCN and the impugned order are completely silent on the enquiry report has not been made available at any stage of the proceedings. Moreover, no allegation in the SCN has been made that there was any connivance between appellant and the service providers so as to facilitate availment of irregular or wrong credit - the allegation to deny credit is based on assumptions and conjectures which cannot be the reason to deprive the assessee from availing credit. Hence, the order for recovery of credit cannot be legally sustained. The impugned adjudication order is set aside - Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the demand of service tax on Goods Transport Agency (GTA) services and denial of Cenvat credit on input services.

Goods Transport Agency (GTA) Services:
The appellant, engaged in providing logistics services, was alleged to be liable to pay service tax under Reverse Charge Mechanism (RCM) for payments made to 'Lorry Suppliers'. The demand was raised based on expenses booked as 'Freight charges'. The appellant contended that no consignment note was issued by the Lorry Supplier, hence no service tax was payable under RCM. However, the Ld. Commissioner confirmed the demand of service tax under GTA services, stating that the appellant should have issued consignment notes for rendering the output GTA services to avoid tax liability.

Cenvat Credit on Input Services:
The appellant's Cenvat credit availed on invoices issued by service providers was disallowed as the said service providers were found to be non-existent at their office address. The appellant argued that no investigation report was made available regarding the non-existence of the service providers, and no connivance was alleged between the appellant and the service providers for availing irregular credit. The denial of credit was based on assumptions and conjectures, lacking concrete evidence to deprive the appellant from availing credit.

Decision:
The Tribunal found that the Ld. Commissioner exceeded the scope of the Show Cause Notice (SCN) in confirming the demand under GTA services. It was held that the demand was based on a different basis than what was alleged in the SCN, and the appellant cannot be held liable for GTA services when consignment notes were not issued by the Lorry Suppliers. Therefore, the demand under GTA services was set aside. Regarding the Cenvat credit matter, the Tribunal noted that no substantial evidence was provided to deny credit, and the denial was based on assumptions without allegations of connivance. Consequently, the order for recovery of credit was deemed legally unsustainable. The impugned adjudication order was set aside, and the appeal was allowed with consequential relief as per law.

Separate Judgment:
The judgment was delivered by Hon'ble Shri P.K. Choudhary, Member (Judicial) and Hon'ble Shri K. Anpazhakan, Member (Technical).