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2025 (2) TMI 801 - AT - Service TaxCENVAT Credit - denial on the ground that the invoices were issued from an unregistered premises - various input services such as Architect services Event Management services etc. - Demand of service tax on training kits sales and whether these constitute commercial training or coaching - Demand of service tax on the sale of software declared as exempt in their books of account - Demand of service tax on services supplied to SEZ units and the applicability of exemption under N/N. 4/2004-S.T. - Limitation period for invoking extended period for demand and imposition of penalties under Section 78 of the Finance Act 1994. Whether the appellant is eligible for cenvat credit on the invoices issued from a premises which is not registered under their Centralized Registration Certificate? - HELD THAT - There is no dispute that these premises were not registered under the Centralized Registration Certificate. The appellant s claim is that the invoices from Mumbai Unit were addressed to their registered premises at Bangalore hence the same cannot be denied. The cenvat credit is related to the invoice where the rent was paid for the premises at Mumbai (Bandra) which was claimed to be used for marketing activities. There is no dispute of the fact that the appellant was well aware that all the premises that are used for the manufacturing/marketing purposes are to be registered under centralized registration procedures. Hence the rent paid on the premises which is not registered cannot be availed as cenvat credit for the simple reason that there is no evidence as such that the above premises was used for marketing or providing any output services except for stating that the premises used to facilitate business meetings with existing and prospective customers. In view of the specified procedures laid down under Centralized Registration Procedures read with Rule 4 (5) of Service Tax Rules 1994 and in accordance with the Cenvat Credit Rules the cenvat credit cannot be extended on rent paid on unregistered premises in both the premises of Mumbai. Similarly the premises at Bangalore were rented for training purpose space for support team space provided for telecommunication service and for support activity. From the description of the activities it is clear that in these premises also no output service activities undertaken except for renting them for various other purposes as mentioned above. Since these premises have nothing to do with manufacturing/output services of the appellant the question of extending cenvat credit for these premises does not arise hence rightly denied. Eligibility of cenvat credit on services - Architect service - Authorized Service Station Service - Event Management Service - denial of cenvat credit on the above services only on the ground that there is no nexus between the input service and the output service rendered by the appellant - HELD THAT - The convention services are also used for day-to-day business operations/meetings. Similarly design services event management services etc. are all services in relation to the activities undertaken by the appellant. Since individual invoices have not been verified to examine whether these were in relation to the operations rendered by the appellant the matter remanded to the Commissioner only to examine whether these services were rendered in connection with the operations of the appellant without questioning the one-to-one corelation. However all invoices issued from the 6 premises not registered under Centralized Registration are to be denied. Demand of service tax on training kits sales - HELD THAT - From the observations of the Commissioner in the impugned order there are no evidence or discussion on payment of VAT on the above participation fees hence the same is remanded for deciding the issue afresh after considering the fact that VAT is discharged on the value collected as participation fees taking into consideration the decisions relied upon by the appellant. Demand of service tax on sale of software where the turnover is declared as exempt in their books of account - HELD THAT - The appellant claims that this software was subject to VAT/CST and the recipient issues Form-C and based on the agreements the appellant carries out the replication of the software in a CD/DVD the same needs to be considered as exempted service. Since the agreements were not placed before the Commissioner to prove that they are exempted services and the Commissioner observes that the assessee failed to produce the entire documents during the audit in spite of several opportunities provided to them and always argued that they have claimed exemption in the ST-3 returns filed by them as the same is liable for VAT and not taxable under the Finance Act 1994 - the matter is remanded to the Commissioner for further examination based on the documents placed on record by the appellant to prove that VAT has been discharged on the above software. Demand of service tax on services supplied to SEZ units - HELD THAT - The period of dispute is from October 2008 to March 2009 and as rightly stated by the appellant they are eligible for the benefit of the exemption for the services rendered to the SEZ unit as per the Notification No. 4/2004 dated 31.03.2004. Since no documents were placed before the authorities that these services were used within the SEZ premises for the authorised operations the same is being remanded for this limited purpose of verification. Time Limitation - HELD THAT - Unless any positive allegation of misdeclaration or suppression with intention to evade is brought on record the question of suppression cannot be alleged. In the instant case audit visited the unit in December 2011 and January 2012 the show cause notice was issued in 2014. The show-cause notice clearly mentions that a letter dated 08.02.2013 was issued to the appellant followed by letter dated 25.02.2013. The appellant in his reply to show-cause notice submitted that vide letter dated 04.02.2013 a list of documents was submitted which was already placed before the audit team and again vide letter dated 22.02.2013 further documents such as Software Distribution Agreement Rental Agreement and sample purchase orders were filed. In response to the audit enquiry note dated 06.03.2013 a detailed reconciliation of expenses was filed vide their letters dated 09.05.2013 and 16.05.2013. In view of the above since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents the question of mis-declaration or suppression cannot be sustained. Conclusion - i) Cenvat credit is disallowed for invoices from unregistered premises. ii) Other issues were remanded for further examination. iii) Since there is no allegation that regular returns have not been filed alleging suppression of any of the specific documents the question of mis-declaration or suppression cannot be sustained. Appeal disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include: A. Eligibility of the appellant for Cenvat credit on invoices issued from premises not registered under their Centralized Registration Certificate. B. Eligibility of Cenvat credit on various input services such as Architect services, Event Management services, etc. C. Demand of service tax on training kits sales and whether these constitute commercial training or coaching. D. Demand of service tax on the sale of software declared as exempt in their books of account. E. Demand of service tax on services supplied to SEZ units and the applicability of exemption under Notification No. 4/2004-S.T. F. Limitation period for invoking extended period for demand and imposition of penalties under Section 78 of the Finance Act, 1994. ISSUE-WISE DETAILED ANALYSIS A. Eligibility for Cenvat credit on invoices from unregistered premises The relevant legal framework includes the Centralized Registration Procedures and Rule 4(5) of the Service Tax Rules, 1994. The appellant's claim was based on centralized billing for all premises in Bangalore. The Tribunal found that the appellant was aware of the requirement to register all premises used for manufacturing or marketing under centralized registration. The rent paid on unregistered premises could not be availed as Cenvat credit due to a lack of evidence that these premises were used for marketing or providing output services. B. Eligibility of Cenvat credit on various input services The Tribunal considered whether there was a nexus between input services and output services rendered by the appellant. The appellant argued that services such as architecture, cleaning, and event management were used in business operations. However, the Commissioner had denied credit due to the lack of demonstrated connection with output services. The Tribunal remanded the matter for further examination of whether these services were related to the appellant's operations, excluding invoices from unregistered premises. C. Demand of service tax on training kits sales The issue revolved around whether the training kits constituted commercial training or coaching. The appellant argued that these kits were goods subject to VAT/CST, not services. The Tribunal noted a lack of evidence or discussion on VAT payment in the Commissioner's order and remanded the issue for reconsideration, taking into account the appellant's reliance on the Imagic Creative Pvt. Ltd. case. D. Demand of service tax on software sales The appellant claimed that software sales were subject to VAT/CST and exempt from service tax. The Commissioner had observed insufficient documentation to classify these as exempt services. The Tribunal remanded the matter for further examination, instructing the Commissioner to consider agreements and VAT payments, referencing the Tata Consultancy Services case. E. Demand of service tax on services supplied to SEZ units The appellant argued that services to SEZ units were exempt under Notification No. 4/2004-S.T. The Commissioner had found a lack of documentary evidence to prove usage for authorized operations. The Tribunal agreed with the appellant's eligibility for exemption but remanded the issue for verification of service usage within SEZ premises. F. Limitation period and penalties The Tribunal considered whether the extended period for demand and penalties under Section 78 was justified. The appellant contended that regular returns were filed, and no suppression or misstatement occurred. The Tribunal found no evidence of misdeclaration or suppression, referencing the Swastik Engineering case, and concluded that the demand beyond the normal period was not sustainable. SIGNIFICANT HOLDINGS The Tribunal held that Cenvat credit is disallowed for invoices from unregistered premises. Other issues were remanded for further examination. The Tribunal emphasized the necessity of evidence to substantiate claims of service usage and compliance with exemptions. The Tribunal reiterated the principle that the extended period for demand requires evidence of suppression or misstatement, which was not present in this case. In conclusion, the appeal was disposed of with directions for further examination on specific issues, highlighting the importance of compliance with registration requirements and documentation for claiming exemptions and credits.
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