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TMI Blog2024 (10) TMI 1346X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004. Rs. 82,400/- (along with interest and equivalent penalty) 3. It has been alleged that suo moto recredit to the CENVAT Account in case where the service tax was paid twice/in excess of the service tax liability has been done without any documentary evidence in terms of Rule 9 of the CENVAT Credit Rules, 2004. Rs. 1,06,839/- (along with interest and equivalent penalty) 4. Penalty has been confirmed on "Intellectual Propery Service other than copyright". Rs. 1,49,822/- 2. The facts of the case are as under: - (i) Ms. Emami Limited (hereinafter referred to as the "Appellant") is the flagship company of the Emami group of Companies and is engaged, inter-alia, in the business of manufacture and sale of ayurvedic medicines and cosmetics falling under Chapter 30 and 33 of the Central Excise Tariff. The Appellant derives a significant share of its revenue from exports. Ms. Emami Paper Mills Limited (hereinafter referred to as "EPML") is one of the group companies of the Appellant and is engaged in the business of manufacture of newsprint paper. EPML primarily caters to the domestic market. During the period 2007-08, EPML availed the benefit of EPCG scheme to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority allowed cum-duty benefit on the Royalty payments received by the Appellant and appropriated the service tax already discharged thereon, the demand for penalty was also upheld, vide Order-in-Original No. 55/ADC/ST-II/Kol/2017-18 dated 02.01.2018. (iv) On appeal, the Ld. Commissioner (Appeals) sustained the findings of the ld. adjudicating authority vide the impugned order. 3. Aggrieved against the said order, the appellant is before us. 4. The Ld. Consultant appearing on behalf of the appellant submits as under: - I. The Appellant did not provide any service, much less business support service to EPML by undertaking export of its own goods in its usual course of business and the arrangement between the group companies was only to optimize Customs duty savings for the group. a. The Appellant has submitted that vide the understanding dated 08.02.2007, EPML and the Appellant agreed to fulfil the export obligation towards the EPCG license held by EPML and share the customs duty saved thereon. The essence of the agreement was to share the duty of customs saved at the group level in proportion to the exports undertaken by the group companies. Such an arrangement to jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frastructural support services and other transaction processing." d. Business Support Service is not an omnibus category, where all the receipts pertaining to a business could be taxed. Reliance in this regard is placed on the judgement of the Hon'ble Supreme Court in the case of Jamna Auto Industries Limited Vs. Commissioner of Customs, C. Ex and ST, Indore [(2023) 5 Centax 194], whereby, non-compete fees, which was also in the nature of providing support to business, was excluded from the meaning of Business Support Service. "Business support service" was not a residuary category which could have accommodated any activity, which was otherwise not taxable under any other taxable head, otherwise there would have been no requirement on the part of the legislature to introduce the negative list. Therefore, the definition of Business Support Service was an exclusive definition. Reliance in this regard is placed on the judgement of the Hon'ble Tribunal, Hyderabad in the case of M/s. Shriram Chits Private Limited Vs. Commissioner of Central Excise, Customs and Service Tax [2020 (1) TMI 187] as maintained by Hon'ble Supreme Court (2023) 3 Centax 12 (SC). e. Further reliance is placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity undertaken by the Appellant in the instant case could, at best, be classified as 'Declared Service' under the entry "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" which was brought under the service tax net for the first time w.e.f. 1st July 2012 under the negative list regime of taxing services a. Without prejudice, the said activity could, at best, constitute an agreement to do an act. In which case, the said activity could have been classified as "declared service" under the entry "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act". b. Since the impugned period is pertaining to the positive list regime, when service tax was leviable on selective approach basis, and the said "declared service" was introduced only with effect from 01 July 2012, under the negative list regime, no service tax could be levied on the said activity. III. The Appellant is eligible for CENVAT Credit on club membership as the same was used by the Appellant for business purpose and not for personal consumption. a. With effect from 01 April 2011, the definition of "input services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be." c. In terms of the said provision, service tax liability paid in excess during any particular month/quarter may be adjusted towards the liability in the subsequent month/quarter. d. Further, such suo-moto recredit of service tax paid twice or paid in excess of the service tax liability is duly allowed in terms of the following judgements of the Tribunal: * J.K. Lakshmi Cement Limited Vs. CCE & ST, Jaipur - II [2015 (4) S.T.R. 618 (Tri. - Delhi)] Maintained in 2018 (8) G.S.T.L. 231 (Raj) and 2019 (27) G.S.T.L. J147 (SC). * Esdee Paints Limited Vs. Commissioner of Central Excise, Ahmedabad [2010 (249) E.L.T. 225 (Tri. -Ahmd.)] V. Extended period of limitation cannot be invoked in the instant case as the receipt of the "duty saved" amount was duly disclosed in the Balance Sheet of the company for the financial year 2011-12 as "Miscellaneous Income" a. The Appellant had disclosed Rs. 15,02,67,464 received in the form o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise, Customs and Service Tax [2020 (43) G.S.T.L. 518]. 5. On the other hand, the Ld. Authorized Representative of the Revenue supported the findings in the impugned order and submits that the appellant has provided business support service to its group company by undertaking the export on their own account which saved duty arising on account of the group company availing the EPCG scheme. Therefore, he contended that the said activity qualifies as "business support service" as the appellant were providing various support services viz. evaluation of prospective customers, processing of purchase orders and fulfilment of services to their group company. 5.1. It is therefore his contention that the impugned demands are sustainable. 6. Heard the parties and considered their submissions. Issue No. I: Demand of Service Tax of Rs.1,54,77,549/- under the category of "Business Support Service": 6.1. We find that the facts are not in dispute that the appellant has exported their goods through their group company namely, EPML and had to fulfil their export obligation towards the EPCG Licence held by them and by export of goods through EPML, the appellant has saved Customs Duty, which was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has done, therefore, there is no violation of Customs laws in this case. 6.1.3. The only issue that remains for consideration is whether Service Tax can be demanded under the category of "business support service" or not. For that, we have to examine the definition of "business support service", which is incorporated hereunder: - (104c) "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [Operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts and were catering to two completely different sets of customers. As such, EPML could not have outsourced the activities of evaluation of prospective customers, processing of purchase orders and fulfilment of services to the Appellant, as alleged in the impugned Show Cause Notice. Moreover, the exports were not being made by the appellant to its own goods and accounting of the same was made in the books of the appellant only. It is an admitted position in the impugned order that none of the parties were undertaking the export of goods manufactured by the other. Therefore, by exporting its own goods, the appellant has not provided any kind of support service to EPML, but the same is to themselves only. 6.1.8. Furthermore, in terms of Paragraph 5.4 of the FTP, the export obligation could have been fulfilled by the license holder or by the group company of such license holder. The law did not permit outsourcing of fulfilment of export obligation to any other company. We find that the appellant was not undertaking the activity of evaluation of prospective customers, processing of purchase orders or fulfilment of service as the Appellant and EPML were dealing in varied products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of Rs.1,06,839/- is therefore set aside. Issue No.4: Imposition of penalty for non-payment of Service Tax under the category of "Intellectual Propery Service other than copyright" to the tune of Rs.1,49,822/-: 6.4. We find that the appellant has paid the entire amount of tax along with interest before issuance of the Show Cause Notice upon being pointed out by the audit. In these circumstances, no penalty is imposable on the appellant. Accordingly, the penalty of Rs.1,49,822/- imposed against the appellant is dropped. Limitation: 6.5. We further take note of the fact that periodical audits took place from time to time, at the premises of the appellant. Therefore, the Show Cause Notice issued on 15.12.2016 for the period 2011-12 is barred by limitation. Hence, the appellant also succeeds on the ground of limitation. 7. In view of the above discussion, we pass the following order: - (i) Demand of Service Tax of Rs.1,54,77,549/- under the category of 'Business Support Service' is dropped. (ii) The appellant is entitled to take CENVAT Credit of club membership renewal fees to the tune of Rs.82,400/-. (iii) Demand cannot be confirmed alleging that suo moto recredit to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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