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TMI Blog2024 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] . The above view has consistently been taken by this Tribunal in various other cases. The issue is therefore no more res integra. We therefore, hold that the Appellants are eligible for benefit of Rule 6 (3A) of CCR, 2004, even if they have not exercised their option before the beginning of the year . Demand of service tax on logistic charges recovered from the buyers of car - We have perused the copy of invoice for sale of car as well as invoice for logistic charges. Both these invoices have been raised simultaneously at the time of sale of vehicle. We also note that the VAT Tribunal vide order dt. 25-01-2014, in their own case for A/Y 2009-10, had held that the logistic charges recovered at the time of sale of car is liable to be included in the sale price of vehicle. It therefore held that VAT was payable on logistic charges. It is the settled principal of law that service tax and VAT are mutually exclusive and a transaction can either be taxed under service tax or under VAT. Once VAT has been paid, service tax cannot be demanded. Similar issue had come up for consideration before the Commissioner (Appeals) in the case of Appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, we set aside the entire demand of Rs. 4.26 crores on account of other income. SCN dt 17-10-17 for the period 2012-13 to 2014-15 has been issued under proviso of Section 73 (1) by invoking extended period of limitation. The order invokes the extended period of limitation on the ground that the Appellants had contravened the facts to evade payment of service tax willfully. Appellants never approached the department till departmental officers demanded the records in respect of business conducted by them. Therefore, intension of suppressing the transaction and thereby service provided itself is proved beyond any doubt. Thus, we hold that demand for the period 2012-13 to 2014-15 is not sustainable on the ground of limitation also. However since Appellants have voluntary paid an amount of Rs. 34,72,629/- under Rule 6 (3) (A) and Rs. 26,30,230/- towards interest for the period 2012-13 to 2014-15, the same will not be refundable. Interest and penalty - We find that the issue is no more res integra. Once demand is not sustainable, interest and penalty u/s 78 would not be imposable. Partial demand has been confirmed under Rule 6(3)(A) of CCR, 2004. In this connection, Appellant have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rules 2004 [CCR], nor they had paid an amount as determined under Rule 6 (3A) of CCR, 2004. Accordingly, demands were raised by issuing Show Cause Notice [SCN]. It was further observed that the Appellants had received logistic charges on account of providing customer care services and handling charges. These logistic charges were charged from the customer over and above the ex-show room price of the cars. It was alleged that the logistics charges were being received against providing services. The liability of service tax as defined under Business Auxiliary Services was applicable on the same. During scrutiny of records of the Appellants, it was also observed that the Appellants had provided service of Collection of Toll Charges to the National Highways Authority of India [NHAI] and had not discharged service tax liability on such collection charges. Appellants entered into a contract with NHAI secured though competitive bidding for engagement as the user fee collecting agency for collection of user fee and remittance of fixed weekly amount for collection of said user fee. Reliance was placed on CBIC Circular No. 152/3/2012 dt. 22-02-2012 wherein it was clarified that if the SPV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deliberately ignored all the options available to them and now they have no option but to pay an amount equal to 6% of exempted services. It has also been held that in fact the Appellants had availed much lesser credit during the relevant period, is not relevant and there is no bar/limitation in Rule 6 (3)(1) of CCR, 2004 for demanding higher amount. For the period 2015-16, demand has been raised @7% for the period 2016-17, demand has been raised @ 7% but has been restricted to the amount of opening balance of credit as on 01-04-2016 and the credit taken during April 2016 to March 2017. 6. Appellants in their grounds of appeal and written submission submitted that they have been maintaining separate records of input services availed at workshop and services availed at show rooms. They submitted that services availed at workshop were exclusively related to provision of taxable services. However, services availed at show room can be said to be common to taxable and exempted services. It was submitted that during 2012-13 to 2014-15, they availed credit of Rs. 80.37 lakhs which included services of Rs. 23.94 lakhs availed at workshop and Rs. 56.43 lakhs at showroom. They have also subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn, proportionate payment had been accepted as deposit under Rule 6 (3A). No appeal has been filed against the said order of Commissioner (Appeals). 9. The learned Departmental Representative reiterated the findings of the Order-in-Original. 10. Heard both sides and perused the appeal records. 11. The main issue in the present case is as to whether the option of 6% or 7% as given in Rule 6 (3) of CCR, 2004 can be thrust upon the Appellant if they had failed to exercise the option under Rule 6 (3A) of CCR, 2004. This issue has come up for consideration before various Benches of the Tribunal, wherein it has consistently been held that the benefit of Rule 6 (3A) cannot be denied even if the assessee has not exercised the said option in the beginning of the year. Reliance in this connection is placed on the judgement of Hon ble High Court of Telengana in the case of Tiara Advertising Vs. UOI reported in 2019 (30) G.S.T.L. 474. Relevant paras are reproduced for ready reference: 14. Further, we may reiterate that Rule 6 (3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. We are also of the view that there is no condition provided in the rule that if a particular option, out of three options are not opted, then only option of payment of 5% provided under Rule 6 (3) (i) shall be compulsorily made applicable, therefore we are of the view that Revenue could not insist the appellant to avail a particular option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6 (3) (ii). The meaning of the option as argued by the Ld. Sr. Counsel is that option of right of choosing, something that may be or is chosen, choice, the act of choosing . From the said meaning of the term option , it is clear that it is the appellant who have liberty to decide which option to be exercised and not the Revenue to decide the same. 5.4. We find that the appellant admittedly paid an amount of Rs. 4,06,785/- plus interest, this is not under dispute. Therefore in our view, the appellant have complied with the condition prescribed under Rule 6 (3) (ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of Rs. 24,71,93,529/- of the total value of the vehicle amounting Rs. 494,38,70,57 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellants have also submitted a certificate from the Chartered Accountant certifying that Appellants have been maintaining separate records of Cenvat credit in workshop and their showroom at head office. We find that a similar issue had come up in the case of Appellant s sister concern wherein it was submitted that the Cenvat credit pertaining to the workshop was exclusively related to taxable services and was not liable for reversal under Rule 6 (3) of CCR, 2004. Vide order dt. 15-09-2021, the Commissioner (Appeals) in the said case held that appellants were not required to reverse input services availed in workshop. The learned DR has also not disputed the Appellants contention that no exempted services are provided from workshop. Even otherwise, it is well known that workshops are used for providing services of repair and maintenance of vehicles and trading of vehicles is carried out from showrooms. We hold that services availed at workshop were exclusively related to provision of taxable services and therefore Appellants were not liable for reversal of any amount out of the Cenvat credit availed at workshop under Rule 6 (3) of CCR, 2004. For the period 2012-13 to 2014-15, Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These charges are part of sale invoice and VAT is collected on the same. They also submitted that there can be no service till the goods are sold to another person. 16. We have perused the copy of invoice for sale of car as well as invoice for logistic charges. Both these invoices have been raised simultaneously at the time of sale of vehicle. We also note that the VAT Tribunal vide order dt. 25-01-2014, in their own case for A/Y 2009-10, had held that the logistic charges recovered at the time of sale of car is liable to be included in the sale price of vehicle. It therefore held that VAT was payable on logistic charges. It is the settled principal of law that service tax and VAT are mutually exclusive and a transaction can either be taxed under service tax or under VAT. Once VAT has been paid, service tax cannot be demanded. 17. The Hon ble Delhi High Court in the case of Tim Delhi Airport Advertising Pvt. Ltd. Vs. Special Commr II 2016 (44) S.T.R 399 (Del.) held that levy of service tax and VAT are mutually exclusive. The intention of the party to the transaction would be material. If a transaction has been held to be one of providing services, then the same was not chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include reference to a service used for providing such service. Therefore, the service by way of access to a road or a bridge on payment of toll charges is outside of service tax ambit, but the charges received / retained for providing service of collection of toll tax is well within the sphere of taxable service. In view of the above observation, demand of service tax had been confirmed on the amount retained after payment to NHAI. 21. Appellants have vehemently contended that the collection of toll charges in terms of contract with NHAI falls in negative list under section 66D (h) of Finance Act, 1994. They also contended that they have collected toll charges in its independent capacity as a contractor. It obtained right to collect toll under a contract. It has neither rendered any service to NHAI nor has acted as commission agent for NHAI. Payment had been received from vehicle owners and not from NHAI. Negative list entry under section 66D (h) reads as under: 66D Negative list of services The negative list shall comprise of the following services namely a to g . h service by way of access to a road or a bridge on payment of toll charges. 22. We find that the aforesaid issue rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntum of toll amount. The respondents had to pay NHAI/MSRDC the bid amount irrespective of the fact whether such activity would earn him profit or loss. The NHAI/MSRDC were in no way concerned with the collection made by the respondents. As a result of same we find that though in case of respondent M/s. MEP income from toll collection was in negative during the year 2007-08, 2008-09 and 2011-12 but they had to pay the bid amount to NHAI/MSRDC. This leaves no doubt in our mind that the activity of toll collection by the respondents was not on behalf of NHAI/MSRDC but on their own account once they had secured the right to collect the toll. We also find that the activity of NHAI/MSRDC is of developing, maintaining and management of national state highways which is a statutory function. They have not been engaged in the said activity as business. In such case it cannot be said that the respondents has been providing auxiliary service to any business . 4.2. We also find that the respondent s case is not even concerned with charging commission from NHAI or MSRDC unlike the judgments cited above. They stand on better footing than the cases cited by the Counsel for the respondents as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The toll collection is their own income and is not parted with NHAI/MSRDC as they are concerned only with the bid amount finalized in auction and therefore cannot be termed as activity of Business Auxiliary Service. In view of above findings and judgments cited by the respondents we hold that the activity of the respondent cannot be considered as Business Auxiliary Service and cannot be taxed to service tax. Thus, the appeals filed by the Revenue is not sustainable on merits and accordingly dismissed. 25. We find that Appellants case is squarely covered by the aforesaid decisions of the Tribunal. We therefore set aside the demand on toll collection and allow the appeal on this issue. Issue No.4 Demand of Service tax Rs.4.26 crores on other taxable services for the period 2015-16 and 2016-17. 26. In Appeal No. ST/70378 /2019, Statement of Demand have been issued on 23-04-2018 for the year 2015-16 and 2016-17. The said Statement of Demand had been issued on the basis of SCN dt. 17-10-2017 which was issued on the basis of observations of the audit for the period 2012-13 to 2014-2015. Appellants have vehemently submitted that on the basis of Statement of Demand issued under section 73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er operating Revenues, Rent received, Misc. Income Auxiliary Business Income as per Balance Sheet (In Rs) Differential Amount of Various services provided on which service tax has not been paid (D-C) Service tax (Including Cess) payable @ 14.5 % on the differential amount of services provided (E) A B C D E F 1 Business Auxiliary Services 3,34,36,105 28,29,13,433 15,62,21,439 22,26,52,109 2 Renting of immoveable property services 19,84,903 3 Repair, reconditioning restoration or decoration 6,45,85,025 4 Work Contract Services 26685961 Total 12,66,91,994 28,29,13,433 15,62,21,439 2,26,52,109 For Financial Year 2016-17 : (Amount in Rs.) SI.No. Various Services provided by the Noticee Amount received as per ST-3 Returns Amount received under heads Sale of Services, other operating Revenues, Rent received, Misc. Income Auxiliary Business Income as per Balance Sheet (In Rs) Differential Amount of Various services provided on which service tax has not been paid (D-C) Service tax (Including Cess) payable @ 14.5 % on the differential amount of services provided (E) A B C D E F 1 Business Auxiliary Services 3,64,25,530 27,70,50,334 13,77,31,518 2,06,59,728 2 Renting of immoveable property se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of liability for payment of service tax on various discounts received by dealers of motor vehicles stands settled in series of decisions. Some of them are as under:- (a) CCE Vs. Sai Service Station Ltd. reported in 2014 (35) S.T.R. 625 . (b) My Car (P) Ltd. Vs. CCE reported in 2015 (40) S.T.R. 1018. (c) Sharyu Motors Vs. CCE reported in 2016 (43) S.T.R. 158. 31. In case of My Car (P) Ltd. vs. CCE reported in 2015 (40) S.T.R. 1018 (Tri Delhi), the Tribunal has held that incentives received by authorized dealers of Maruti Udyog Limited were not taxable under the category of business auxiliary services. Para 4 (iv) of the order reads as under:- For incentive on spare parts it is the case of the appellant that these incentives are given to the appellant for achieving certain targets of purchase of spare parts which is purely an activity of buying and selling on which local VAT is paid at the time of sale. Appellant strongly argued that such an incentive is only a trade discount based on performance. Appellant has relied upon the case law Deputy Commissioner of sales tax vs. Motor Industries Co. Ernakulam (supra). Similarly appellant is getting incentives on MGA, incentive on Free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r invokes the extended period of limitation on the ground that the Appellants had contravened the facts to evade payment of service tax willfully. Appellants never approached the department till departmental officers demanded the records in respect of business conducted by them. Therefore, intension of suppressing the transaction and thereby service provided itself is proved beyond any doubt. 35. We find that all the issues in Appeal No. ST/70362/ 2019 involved interpretation of CCR and provisions of Service tax law. It cannot be said that Appellants have deliberately suppressed any information to evade payment of service tax. All receipts on which service tax is proposed to be demanded had duly been accounted for in Appellant books of accounts. 36. In the case of Continental Foundation JT Venture reported in 2007 (216) E.L.T. 177 (SC), the Hon ble Supreme Court held that suppression means failure to disclose full information with the intent to evade payment of duty. Relevant paras of the order are as under:- 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as fraud or collusion and, therefore, has to be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or willful misstatement or suppression or contravention if any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The assessee declared the goods on the basis of their belief of interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the department had full knowledge of the facts about manufacture of all the goods manufactured by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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