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TMI Blog2025 (2) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of taxable as well as exempted services. The Appellant did not reverse the CENVAT Credit attributable to exempted services as the applicability of Service Tax was new to the Appellant. After getting the SCN, they computed the amount of credit attributable to exempt service and paid a sum of Rs.10,26,482/- by way of reversal and paid a sum of Rs.14,75,879/- by cash along with applicable interest amounting to Rs.6,71,531/- and also communicated the same to the department. 2. After scrutinizing the Service Tax Returns and after obtaining the information and clarification, the department issued Show Cause Cum Demand Notice C. No. V(15) 107/ST-‐Adjn./Commr./13/9125dated 19.04.2013 by invoking extended period of limitation in terms of the proviso to Section 73(1) of the Act. The Appellant filed detail reply vide its letter dated 21.10.2013, explaining mistakes in certain calculations, furnishing evidences and relevant legal position against each allegation of the SCN. The Appellant, in its reply denied and disputed the allegations made in the SCN except to the extent admitted and paid. The Adjudicating authority passed the impugned OIO on 28.02.2014 confirming the entire prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESTAT Chandigarh)] [ Pg 42 - 48 of Index of Cases] 4 Demand under Health Care Service as Pure Agent 19,69,383 Clerical Error 1. Page-305(Vol-II), ST-3 Return where the amount was reported 2. Page -311 to 366 (Vol-II)- Details of Bills with Summary 5 Demand under Renting of immovable property 1,95,934 Cum Tax Benefit not given, The Appellant has already paid Rs. 167181/- under cum tax with Interest amounting to Rs.86,406/- before adjudication, however the same was not taken into consideration in OIO. No amount is payable by the Appellant Commissioner of Central Excise, Delhi Vs. Maruti Udyog Ltd. [(2002) 141 ELT 3] -Pg 54 to 57 of the Index of Cases [ Pg 54-57 of Index of Cases] 6 Demand under Health Care Service on Balance of Sundry Debtors on 31.03.2011 4,73,252 Tax Payment was done as and when amount is collected as per Rule 9 of POTR - CA Certificate enclosed in Pg 408 of Paper Book, Vol-II Rajasthan State Road Transport Corporation Vs. Joint Commissioner of Central Excise and Service Tax, Jaipur [ 2024 (3) TMI 1103 - CESTAT New Delhi] [ Pg 58-63 of Index of Cases] 7 Demand under Health Care Service in respect of Amount Received from corporates for treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax Authorities can choose one of the options on behalf of the service provider. At the most the authorities can reject the disputed Cenvat credit taken by the Appellant. In this regard the Appellant relies upon the decision of the Telangana and Andhra Pradesh High Court in the case of M/s. Tiara Advertising Vs. Union of India [2019 (10) TMI 27 - Telangana and Andhra Pradesh High Court]. (5) The Appellant further submits that the recovery of CENVAT credit amounting to Rs.1,00,76,186/- is highly disproportionate to the credit of Rs.25,02,361/- availed on common input services which could be attributed to the service on which no Service Tax was payable. The Appellant in this regard relies upon the decision of the Hon'ble High Court, Gujarat in the case of CCE, Ahmedabad-II Vs. Maize Products [2009 (234) E.L.T. 431 (Guj.)]. (6) The Appellant further submits that they have already reversed/paid the CENVAT Credit attributable to the exempted services along with applicable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to public at large visiting the said premises." (2) The Appellant submits that the scope and ambit of the service can be judged from the definition and the clarification given by the department. From the relevant definition and the clarification issued by the Department, it is clear that to classify any service under "Business Support Service", the very essential ingredient is that such service shall be an outsourced service which the entity instead of doing himself, preferred it to outsource to some other service provider for various reasons. Whereas, in the instant case M/s. Neotia Healthcare Pvt. Ltd. Has not outsourced any of its activities to the Appellant and instead it had taken a portion of the hospital space from the Appellant on rent to be calculated on the basis of 18% of the sale proceeds of the medicines on principal to principal basis. Therefore, by no stretch of imagination, this service can be classified under "Business Support Service". (3) The Appellant further submits that conjoint reading of the definition of "Support Services of business or commerce" along with the C.B.E.&C. Circular dated 28.02.2006 makes it clear that mere renting of air conditioned space ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned show cause notice, the department nowhere specified under which clause of the definition of "Business Auxiliary Service" the liability shall be fastened on the Appellant. It is well settled that to bring any activity under the definition of "Business Auxiliary Service" for levy of tax, it is to be clearly mentioned in the show cause notice under which clause of the definition shall apply to fasten that service under the classification of "Business Auxiliary Service". Since the demand has been proposed under omnibus definition of "Business Auxiliary Service" without specifying the clause under which the activity qualifies to be "Business Auxiliary Service", the impugned show cause notice is bad in law and therefore, the confirmation of demand by the Ld. Commissioner shall be set aside on this ground alone. (4) The Appellant in this regard relies upon the following Tribunal decisions: A. Balaji Enterprises Vs. Commissioner of Central Excise & Service Tax, Jaipur-I -2020 (3) TMI 17 (CESTAT New Delhi) B. Dr. Jagjit Singh Parwana Vs. Commissioner of Central Excise & Service Tax, Chandigarh -II-2023 (8) TMI 407 (CESTAT Chandigarh) (5) Without prejudice, the Appellant submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- under 'renting of immovable property service'. (1) The Appellant submits that due to ongoing controversy about the levy of service tax on renting of immovable property, during the relevant period the Appellant neither collected nor paid any service tax on the rent received from its various tenants. Considering the retrospective amendment in Section 65(105)(zzzz) of the Finance Act, 1994, the Appellant after admitting the service tax liability on the rent collected from the various tenants during the relevant period, calculated the service tax liability amounting to Rs.1,67,181/- under cum-tax basis in terms of Section 67(2) of the Act and deposited the same along with applicable interest amounting to Rs.86,406/- on 02.09.2013. [Copy of the receipted challans and the requisite calculations are available in Annexure -A/14, page no. 367 to 389 of the Appeal paper book.] (2) The Appellant submits that the Ld. Commissioner without any application of mind ignored the evidences submitted with the reply to show cause notice and arbitrarily did not give the benefit of cum-tax which otherwise is legally available to the Appellant since the Appellant had not charged and collected any ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealised at a later date. The service tax liability becomes due only on collection but not on raising the invoice. Therefore, the confirmation of the demand of Rs.4,73,252/- on the unrealised invoice is not permissible under the law and hence the demand is liable to be set aside. (3) The Appellant in this regard relies upon the decision of the CESTAT, New Delhi in the case of Rajasthan State Road Transport Corporation Vs. Joint Commissioner of Central Excise and Service Tax, Jaipur [ 2024 (3) TMI 1103 - CESTAT New Delhi] G. Demand of Rs.3,28,957/- under 'health care service' in respect of amount received from corporates for treatment of their employees. (1) The Appellant states that it is enlisted with various corporates who send their employees / family members for treatment. In terms of the agreement, the employees after the treatment, do not pay any consideration to the Appellant. After the patient is discharged, the appellant sends the bills of that particular employee patient to the concerned employer of such patient for payment. The Appellant states that during the years 2010-‐11 and 2011-‐12(upto30.4.2011) it collected Rs.28,41,936/-‐and Rs.3,52,792/-R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply to the SCN, the Ld. Commissioner finally retained Rs.7,27,129/- and Rs.1,38,583/- as expenditure in foreign currency for the years 2008-09 and 2010-11 respectively and confirmed demand of Rs.1,03,133/- under three taxable classifications namely 'Business Support Service', Commercial Coaching Centre and Tutorial Service' and 'Scientific or Technical Consultancy Service' knowing fully that the demand proposed in the impugned show cause notice without mentioning any taxable service under which the demand was proposed. (2) The Appellant submits that the Ld. Commissioner travelled beyond the show cause notice while confirming the demand under Section 66A in as much as the impugned show cause notice has not proposed the demand under any taxable classification of service but only mentioned that the assessee has incurred expenses towards payment of consultancy fees, travelling, training expenses in foreign currency to their overseas advisors/consultants. (3) Whereas, the Ld. Commissioner while confirming the demand, based on the details submitted by the Appellant, suo motu classified those foreign currency expenditures under various taxable classification going beyond the show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clear that there was no deliberate, wilful and fraudulent suppression of material facts and information with an intent to evade payment of service tax on the part of the Appellant as alleged in the impugned OIO. (3) All the data towards the quantification was gathered based on the details given in the ST 3 Returns, P & L Accounts and Balance Sheets. This shows that all the details were properly recorded in the books of account and there was no deliberate act of suppression in order evade payment of Service Tax. (4) The Appellant in this regard further relies upon the decisions of the Hon'ble Supreme Court if the case of Uniworth Textiles Ltd. Vs. CCE, Raipur [2013] 31 Taxmann.com 67 (S.C.), wherein the Apex Court observed and held that 'Every non-payment /non-levy of duty does not attract extended period, there must be deliberate default. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is untenable. If that were to be true, then it was beyond understanding, which form of non-payment would amount to ordinary default." (5) The Appellant further submits that the Department at the time of issue of the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit on proportionate basis. For this they have given the explanation that since the appellant was not required to be registered as they were Hospital and were providing the related services, they were not aware of the statutory provisions. Had they known the same, they would have ensured that the cenvat credit is taken only in respect of the taxable output services. After the Show Cause Notice was issued, on their own they have reversed Rs.25,02,361/-‐[Rs.14,75,879 + Rs.10,26,482] along with applicable interest of Rs.6,71,531/- on 2nd September, 2013. This fact is also certified by their Chartered Accountant. We have gone through page 464 to 484 of the Appeal and find the claim of the appellant to be correct. We find that Tribunals and High Courts have been consistently holding that reversal of Cenvat Credit would amount non-availment of the same. It is also held that the demand of 6% to 8% percent of the value of the exempted services which is way above the proportionate credit to be reversed on account of exempted services, and hence is legally not sustainable. 9.2 We have gone through some of the decisions of the High Courts and Tribunals, which are discussed below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India, Final Order No. 795/2002, wherein the specific issue was whether the reversal of credit subsequent to removal of goods, was fetal to the extension of benefits of the notification considered the matter at length. The majority decision upheld the argument of the assessee therein and held that reversal of credit subsequent to the clearance of exempted product is in line with the ratio of the Supreme Court judgment laid down in Chandrapur Magnet Wires Co. (supra). 31. In view of the above decision the writ petition is allowed and the demand of duty and penalty created by order dated 30-10-2001 and confirmed by the Tribunal is set aside. Any amount already deposited by the petitioner shall be refunded to the petitioner forthwith with interest at 10% per annum from the date of deposit to the date of refund, and this refund must be made within two months from today. The petitioner is also entitled for any consequential benefits. 2019 (30) G.S.T.L. 474 (Telangana) TIARA ADVERTISING Vs UNION OF INDIA 9. It may be noted that there is no controversy with regard to the entitlement of the petitioner to avail Cenvat Credit but for this disputed amount of Rs. 17,15,489/- out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der-in-Original, to the extent that it proceeded on these lines, therefore cannot be countenanced. Tuticorin Alkali Chemicals & Fertilisers Ltd. Vs. CCE, Tirunelveli 2009 (248) E.L.T. 514 (Tri. - Chennai) 2. We have heard both sides. We find that the assessees reversed the credit taken on the input services used in non-dutiable goods subsequent to the clearance of such goods. They have also paid interest for the delay in reversal of the credit. In this circumstance, applying the ratio of the decision of the larger Bench of the Tribunal in Franco Italian Co. Pvt. Ltd. v. CCE - 2000 (120) E.L.T. 792 and the recent decision of the Tribunal in Mount Mettur Pharmaceuticals Ltd. vide Final Order No. 879/2008, dated 8-8-2008 [2009 (235) E.L.T. 664 (Tri.) = 2009 (13) S.T.R. 414 (Tri.)] and the Hon'ble Gujarat High Court in CCE v. Maize Products - 2009 (234) E.L.T. 431 (Guj.), the reversal of credit by the appellants subsequent to the clearance of the goods is as good as not taking any credit. The Revenue is also compensated for the delay in reversal of credit by payment of interest. Therefore, the demand for 10% of the net sale price of the exempted goods cannot be sustained. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her ahead holding that there is no statutory provision available to demand 6% / 8 %/ 10% in case the assessee does not fullfil the conditions of Rule 6 (3). It went on to hold that at the most the cenvat credit taken can be asked to be reversed. We also find that these decisions have been followed by the Chennai Tribunal and Kolkata Tribunal. Therefore, applying the ratio of these case laws, we hold that the confirmed demand of Rs. Rs.1,00,76,186/-, is legally not sustainable. Accordingly, we set aside the demand and allow the appeal to this extent. 10. The next confirmed demand being considered is as under : B. Demand of Rs.42,94,470/- under 'business support service'. 10.1 We have gone through the Agreement dated 19th December 2009, between the appellant and Neotia Healthcare [Page 270 of the Appeal book], wherein the relevant portion of the service is given as under : " In terms of this arrangement, the first party will allow the second party to use the specified space, being the demarcated and independent centrally air-conditioned built up space measuring 330 sqft more or less situated and lying in the lobby portion of Ground floor OF THE Premises No. 2. Sarojini Naidu Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance 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 of office space along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security." 5.9 A reading of the above definition makes it very clear that mere renting of office space does not come within the definition. Such providing of space should be along with other facilities specified therein. It is not the case of the department such facilities have been provided to the book makers or the caterer. Therefore, we do not find any merit in the argument that the renting of office space to the caterer/book maker is liable to be classified as "business support service". 10.5 We find that for the factual matrix of the present case, the ratio of the cited case law is squarely applicable. Therefore, we set aside the demand of Rs.42,94,470/- made under 'business support service' and allow the Appeal to this extent. 11. The next conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is that it was necessary for the Department to specify the activity and the nature of service that was to be taxed and for this it was necessary for the Department to point out the specific clause out of seven clauses mentioned in Section 65(19) of the Act but that was not mentioned in the show cause notice. In support of this contention, Learned Counsel has placed reliance upon the decisions of the Tribunal in Commissioner of Customs & Central Excise, Goa v. Swapnil Asnodkar [2018 (10) G..S.T.L. 479 (Tri. - Mumbai)] and United Telecoms Ltd. v. Commissioner of Service Tax, Hyderabad [2011 (22) S.T.R. 571 (Tri. - Bang.)]. 22. In Swapnil Asnodkar, a Division Bench of the Tribunal observed as follows :- "4. We have carefully considered the submission made by both sides. We find that though in the SCN the Respondent was made liable to pay Service Tax but as rightly held by the adjudicating authority, no specific clause of Section 65(19) defining Business Auxiliary service has been shown to be applicable to levy Service Tax. It is not appearing from the show cause notice as to what goods or services the Respondent has promoted or helped to promote. The Appellate Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentions that "the assessee is an authorized distributor appointed by M/s. TTSL for selling CDMA handsets along with connection to the customers. The expenditure incurred by the distributor is reimbursed by M/s. TTSL in the guise of subsidy and the same appears to be covered under the definition of "Business Auxiliary Service" and chargeable to Service Tax since, the amount received by the assessee was in respect of providing Business Auxiliary Service to M/s. TTSL." 29. The impugned order, therefore, can be set aside only on this ground as the show cause notice does not mention which service out of the seven services specified in Section 65(19) of the Act was undertaken by the Appellant. 11.4 Applying the ratio of this case law to the factual matrix of the present case, we set aside the demand of Rs.887242 and allow the appeal to this extent. 12. The next confirmed demand considered by us is as under : D. Demand of Rs.19,69,383/- under 'health care service' as pure agent. 12.1 The Appellant submits that while filing the ST 3 Return Form for the month of April,2011, by mistake they have shown the exempted income to the tune of Rs.1,91,20,228/ in the line no. 3F(I)(iii) which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold that the demand is required to be re-quantified as Rs.1,67,181 and not at Rs.1,95,934/- as calculated by the Revenue. We find the appellant has also paid the interest of Rs.86,406 on account of delayed payment to the Service Tax amount. Hence, we direct the Adjudicating authority to appropriate the amount of Rs.1,67,181 of Service Tax and Rs.86,046 towards interest and we set aside the balance confirmed demand, interest and the entire penalty under this category of confirmed demand. 14. We take up the next issue of demand under ' Health Care service' : F. Demand of Rs.4,73,252/- under 'health care service' in respect of sundry debtors 14.1 We find that the Revenue has confirmed the demand of service tax on the entire outstanding balance of Rs. 45,94,677/- as on 31st March 2011 against bills raised for taxable service till 31.03.2011. The Adjudicating authority has failed to appreciate that such outstanding are liable to service tax only on receipt basis during the period under litigation. 14.2 The appellant shows by way of documentary evidence, along with the Chartered Accountant's Certification, that as and when the amounts were realized from the debtors, the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - under Section 66A of the Act. 16.1 The appellant during the period 2007-08 to 2010-11 incurred various expenses in foreign currency to the tune of Rs.47,00,048/-. The SCN proposed to levy service tax under Section 66A without mentioning any specific classification whatsoever. However, on production of the documentary evidences along with the reply to the SCN, the Adjudcating authority dropped a portion of the demand and confirmed the demand on Rs.7,27,129/- and Rs.1,38,583/- as expenditure incurred in foreign currency for the years 2008-09 and 2010-11. On such payments, he has confirmed the demand of Rs.1,03,133/- under three taxable classifications namely 'Business Support Service', Commercial Coaching Centre and Tutorial Service' and 'Scientific or Technical Consultancy Service' knowing fully that the demand proposed in the impugned show cause notice without mentioning any taxable service under which the demand was proposed. 16.2 We find that while such sub-classification was not part of the Show Cause Notice, the Adjudicating authority has traversed beyond the scope of the show cause notice, while confirming the demand under Section 66A. 16.3 Since the appellant was not put ..... X X X X Extracts X X X X X X X X Extracts X X X X
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