2024 (7) TMI 314 - AT - Service Tax

Levy of service tax - Non-inclusion of value of such goods for determination of service tax which were sold under invoices and on which VAT was paid - HELD THAT - During the relevant period, sub-section (4A) of Section 73 of Finance Act, 1994 was operational and the said provision has provided for payment of service tax by the service tax assessee voluntarily. It is noted that Right Resources have paid the said amounts which were not paid before issue of show cause notices along with interest. Therefore, there are no infirmity in the order passed by learned original authority insofar as it has not confirmed the demand in respect of all the show cause notices where the service tax amounts were already paid by Right Resources before adjudication. Insofar as the appeal filed by Right Resources is concerned which is against the confirmation of demand of Rs.19,42,737/-, it is noted from para 15 and 16 of show cause notice dated 09.10.2012 that the said demand is a part of the demand raised on such value which represents sale of consumables to the clients and it is satisfying that such value is exempted from payment of service tax through Notification No.12/2003-ST dated 20.06.2003. The appeal filed by M/s. Right Resources Corporate Support Services Pvt. Ltd. is allowed.

Summary

Issues:
Appeal against demand of service tax on goods sold, confirmation of demand by original authority, applicability of exemptions under Notification No.12/2003-ST, invocation of provisions of Finance Act, 1994, penalties imposition, consideration of subsection (4A) of Section 73, and grounds for dismissal of Revenue's appeal.

Analysis:
The case involved two appeals arising from a common impugned order dated 26.05.2016. One appeal was filed by the Service Tax assessee, M/s. Right Resources Corporate Support Services Pvt. Ltd., and the other by the Revenue. Right Resources provided cleaning and housekeeping services, also selling goods to clients, paying VAT on sales but not including the value for service tax calculation. Revenue issued show cause notices demanding service tax for the period April 2007 to March 2015. Right Resources contended that service tax was not payable on goods sold with VAT paid. The original authority confirmed a demand of Rs. 19,42,737/- and dropped the rest under the provisions of the Finance Act, 1994. Right Resources appealed against the confirmed demand, while Revenue appealed against the dropped demand.

The Advocate for Right Resources argued that the confirmed demand was on goods sold with VAT paid, exempted under Notification No.12/2003-ST. Revenue contended that the demand should have been confirmed and penalties imposed. The Tribunal noted that sub-section (4A) of Section 73 allowed voluntary payment of service tax, which Right Resources had done before adjudication. The Tribunal found no legal flaw in the original authority's decision to drop demands already paid. Revenue failed to cite any legal basis for challenging this decision, leading to the dismissal of their appeal.

Regarding Right Resources' appeal, the Tribunal reviewed the show cause notice and found the demand was on the value of consumables sold to clients, exempted under Notification No.12/2003-ST. Consequently, the Tribunal set aside the part of the order confirming the demand and allowed Right Resources' appeal. In conclusion, Right Resources' appeal was allowed, and Revenue's appeal was dismissed.

This judgment addressed the issues of demand for service tax on goods sold, confirmation of demands by the original authority, applicability of exemptions under Notification No.12/2003-ST, invocation of provisions of the Finance Act, 1994, penalties imposition, consideration of subsection (4A) of Section 73, and the grounds for dismissing Revenue's appeal.