2023 (8) TMI 853 - AT - Service Tax

Wrongful payment of Service Tax - Business Auxiliary Services - Transportation of goods by Rail Services - demand has been confirmed by the Ld. Commissioner only on the ground of Rule 5 of the Service tax Determination of Value Rules, 2006 - benefit of N/N. 1/ 2006 ST - Extended period of limitation - HELD THAT - The issue involved in this case is regarding the demand of service tax for the period April 2008 to March 2011 on the ground that the appellant has availed in-eligible benefit of notification No. 1/2006-ST dated 01.03.2006 by discharging the service tax liability by availing Cenvat Credit and paid service tax after availing abatement of 70% of the gross amount - it is found from the records and copy of ST-3 produced, that appellant had been filing the ST-3 returns regularly to the Jurisdictional Range officers. It is on record that the appellant shown all the details in ST-3 returns. It becomes clear from the ST-3 return that the fact that appellant were discharging Service tax on Transport of Goods in container by Rail service and availing Cenvat credit and utilized the Cenvat credit was in the knowledge of the Revenue. However show cause notice to the Appellant was issued on 26.02.2013. Inasmuch as the entire information was in the knowledge of the Revenue, the longer period of limitation is not available - the show cause notice should have been issued within the normal period of one year as prescribed under Section 73(1), whereas the show cause notice for the period April 2008 to March 2009 was issued on 26.02.2013 i.e. after prescribed limit of one year. As per the fact, there is no suppression of fact on the part of the appellant. It is admitted fact that the appellant have taken service tax registration and are filing the periodical returns regularly. The appellant have maintained proper books of accounts in the normal course of business. It is pertinent to note that the entire case of the department on merit is that since appellant have availed Cenvat Credit, they violated the condition of abatement notification No. 01/2006-ST - availment of Cenvat Credit and payment of Service Tax on the abated value were declared in the ST-3 return. Hence, having all the facts were disclosed to the department, nothing prevented department from issue of show cause notice within normal period of one year. Therefore, the demand raised in the show cause notice is clearly time-barred. The impugned order is set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the availing of Cenvat credit on input services in contravention of Notification No. 1/2006, liability for service tax on commission income for handling railway container rake, and the imposition of penalties.

Availing of Cenvat credit:
The appellant, engaged in container handling services, had availed Cenvat credit on input services in contravention of Notification No. 1/2006, leading to a service tax demand. The appellant argued that they had not actually availed any CENVAT credit for the period under consideration and that the service tax paid on transportation charges was wrongly reflected as CENVAT in returns. The Tribunal found that the appellant had regularly filed ST-3 returns, disclosing details of Cenvat credit and service tax payment, and that the Revenue was aware of these details. As the show cause notice was issued after the prescribed one-year limit, the demand was deemed time-barred, and the Tribunal set aside the order on this ground.

Liability for service tax on commission income:
The appellant contended that they acted only as a mediator/facilitator for procuring space in railway racks and were liable for tax only on their facilitation/commission charges, not the entire amount. They argued that the demand was raised under the wrong category of service and cited legal principles and judgments to support their case. The Tribunal observed that the case could be disposed of on the ground of limitation, as the show cause notice was issued beyond the normal one-year period. Since the demand was not sustainable on limitation alone, the Tribunal refrained from giving a finding on the merits of the case.

Imposition of penalties:
The appellant maintained that there was no suppression of facts or intent to evade payment of taxes, as they had regularly filed returns and disclosed all relevant information. They argued that the demand was based on wrong reporting in ST-3 returns due to a bonafide interpretation of their activities. The Tribunal found that as all facts were disclosed to the department, the demand was time-barred, and there was no evidence of fraud, collusion, suppression, or willful misstatement on the part of the appellant. The impugned order was set aside, and the appeal was allowed with consequential relief, if any as per law.