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TMI Blog2011 (3) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. D.P. Nagendra Kumar for the Respondent. ORDER Rakesh Kumar, Technical Member. The facts leading to this appeal are, in brief, as under : 1.1 The appellant, a public limited company, has obtained Centralized Service Tax Registration at Guntur for its 114 branches located in Andhra Pradesh, Karnataka, Tamilnadu and Rajasthan. As per the provisions of section 68(2) of the Finance Act, 1994 read with rule 2(1)(d)(v) of the Service Tax Rules, 1994, the appellants were liable to pay service tax on Goods Transport Agency (GTA) services received by them from various GTA service providers as service recipient. It was found that while they are neither providing any output service to any customers or client during the period from 1-4-2005 to 31-3-2007; nor manufacturing any dutiable final product, they had taken service tax credit under Cenvat Credit Rules, 2004 of the service tax paid on a number of "input services", such as security service, scientific and technical consultancy service, repair and maintenance service, telephone service, courier services, accounts service, etc., and had used this credit for payment of service tax on GTA services received by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax" and, therefore, by virtue of rule 2(r) of the Cenvat Credit Rules, 2004 is also "provider of taxable service", as he is a person liable for paying service tax, that during the period till 18-4-2006, the Explanation to rule 2(p), containing the definition of term "output service" provided that for the removal of doubt, it is clarified that if a person liable for paying service tax does not provide any service, or does not manufacture any final products, the service on which he is liable to pay service tax as service receiver, shall deemed to be his "output service", that in view of this and Explanation to rule 2(p), during the period till 18-4-2006, there is absolutely no doubt that the appellant, being the person liable to pay service tax on GTA service received by him, would have to be treated as "provider of taxable service" and GTA service would be treated as his "output service", that though with effect from 19-4-2006, by Notification No. 8/2006-ST (NT), dated 19-4-2006, Explanation to rule 2(p) was deleted, rule 2(1)(d)(v) of Service Tax Rules, 1994 and rule 2(r) and rule 2(q) of the Cenvat Credit Rules, 2004 still remain in force and, thus, the appellant continues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to rule 2(p) has been deleted, the GTA service received by the appellant cannot be treated as their "output service" and, hence, for this period, the service tax should have been paid by them in cash and could not be paid by utilizing Cenvat credit, that the Circular, dated 3-10-2005, of Tax Research Unit of Central Board of Excise Customs, states the correct legal position in this regard and that in the case of Panchmahal Steel Ltd. v. CCE C [2008] 17 STT 455 (Ahd. - CESTAT), the Hon'ble Member (Technical) has also expressed the view that the GTA service received by a person, who is liable to pay service tax on the same as service recipient, cannot be treated as "output service" and the tax on the same cannot be paid by utilizing Cenvat credit. 6. We have carefully considered the submissions from both sides and perused the records. The main point to be decided in this case is as to whether during the period from April 2005 to March 2007, when the appellants as recipient of GTA service, were liable to pay service tax on the same by virtue of section 68(2) of Finance Act, 1994 read with rule 2(1)(d)(v) of Service Tax Rules, 1994, the GTA service received by the appellant could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng recipient of certain taxable services, are liable to pay the service tax on the same. The point of dispute is as to whether the taxable service received by a person, in respect of which the person, being "the person liable for paying service tax" is the "deemed provider of taxable service", can be treated as his output service. 8. There can be two type of persons receiving taxable service who are "deemed provider of taxable service" under rule 2(r) by virtue of being the "person liable for paying service tax" under rule 2(q) of Cenvat Credit Rules, 2004 read with rule 2(1)(d) of Service Tax Rules, 1994 (a) Those who provide a taxable service/services or manufacture dutiable final products or provide taxable service/services as well as manufacture dutiable final products. (b) Those who do not provide any taxable service or manufacture any dutiable final products - the category to which the appellant belong. 8.1 During period prior to 19-4-2006 by virtue of the legal fiction of Explanation to rule 2(p), for a person falling in category (b) above, who is liable to pay service tax as service recipient in respect of some taxable service received by him, the service recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able services received by them cannot be deemed to be the input services, as for this, another legal fiction will be required, which is not there in the Cenvat Credit Rules, 2004. In the present case, since the appellants are not manufacturing any final product or providing any taxable services, the services of telephone, security services, repair and maintenance services, scientific or technical consultancy services, etc., cannot be treated as the input services for their "deemed output service", i.e., the GTA services received by them. Therefore, in respect of GTA service received by the appellant, there is no question of payment of service tax through Cenvat Credit account and the same has to be paid in cash. 8.2 Thus, during the period prior to 19-4-2006 irrespective of whether a person provided taxable service and/or manufactured dutiable final products or did not provide any taxable service or manufactured any dutiable final products, he was required to pay the service tax on the GTA service received by him in cash, not through Cenvat Credit. 9. As regards the period with effect from 19-4-2006, "output service", as defined in rule 2(p) during this period, means any taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". But the taxable service received by a person, who is "deemed provider of taxable service" under rule 2(r) by virtue of being the 'person liable for paying the service tax' on the same, cannot be further deemed to be his output service - for this, another legal fiction would be required, which was there earlier [only in respect of persons of category (b) mentioned in para 8 above] in form of Explanation to rule 2(p) of Cenvat Credit Rules, 2004, but this Explanation has been deleted with effect from 19-4-2006. Hon'ble Supreme Court in case of CIT v. Moon Mills Ltd. AIR 1966 SC 870, has held that a legal fiction cannot be extended by importing another legal fiction. What is permissible under the law is to act on all the logical consequences of a legal fiction, but while doing so, another legal fiction cannot be created. (2) Rule 2(p), after defining the "output service" states that the expressions - "provider" and "provided" shall be construed accordingly. Thus the "provider of output service" under rule 2(p) is the person who provides any taxable service to a customer, client, subscribe, policy holder or any other person, or in other words, actually provides some taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax demand raised by the show-cause notice is time barred. During the period of dispute, the limitation period for raising demand of short paid or non-paid service tax was one year from the 'relevant date', as defined in section 73(1) of the Finance Act, 1994. Since the appellants were filing periodical six monthly ST-3 returns, the relevant date was the date on which such return was to be filed. ST-3 return for the six monthly period ending 30th September is required to be filed by 25 th October and for the period ending 31st March is required to be filed by 25th April. We find that all the show-cause notices were issued within the limitation period of one year from the respective relevant date and, therefore, we do not find any infirmity in Commissioner's order holding that show-cause notices are within time. 14. As regards imposition of penalty on the appellants under section 78 of the Finance Act, 1994, the penalty under this section is attracted where any service tax has not been levied, short levied or short paid or paid erroneously by reason of fraud, collusion, wilful mis-statement or suppression of facts or contravention of any provisions of the Finance Act, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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