9911796707
TMI Blog2025 (2) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the petitioner on the inputs, namely PVC granules used in the manufacture of PVC/PP bottles as contemplated under the Notification No. 15/94-C.E., dated 1-3-1994. There is no dispute that the appellant has reversed the entire credit of Rs.25,02,361/-‐ taken on exempted output services along with interest of Rs.6,71,531 in September 2013, after the Show Cause Notice was issued. These details have been certified by the Chartered Accountant and they are not being disputed by the Revenue - the confirmed demand of Rs. Rs.1,00,76,186/-, is legally not sustainable. Demand of Rs.42,94,470/- under 'business support service' - Classification and taxability of services under 'Business Support Service' and 'Business Auxiliary Service' - HELD THAT:- It is not found that the appellant, apart from making available the above 'space' has provided any other infrastructure facilities to the client. In fact, it is clear from the Agreement that all such infrastructure facilities will have to be created by the client with their own cost. It is more akin to letting out the space on rent to the client for which the consideration is arrived @ 18% of the sale proceeds of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been paid. The Appellant submits that during the material period, service tax was payable on collection basis and not on the invoice basis - the confirmed demand of Rs.4,73,252/- on the unrealised sundry debtors set aside. Demand of Rs.3,28,957/- under 'health care service' in respect of amount received from corporates for treatment of their employees - HELD THAT:- If the payment is made towards health checkup and preventive care, then such service would become taxable under the category "health service'. In the present case, it is found that the amount being paid by the corporates is not account of such services, but is on account of in-patient hospitalization charges, which is being paid by the corporates to the appellant - demand set aside. Demand of Rs.1,03,133/- under Section 66A of the Act - HELD THAT:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant holds Service Tax Registration No.AAATP7985MSD001, providing various services like health care service, providing its space in the hospital premises to various persons for furtherance of business etc.. They are also also providing various testing facilities. The appellant incurred expenses in foreign currency towards payment of lecture fee on infertility management and insertion of its hospital information at the websites hosted by the overseas entity, travelling & training expenses for the doctors abroad etc. During the relevant period, the Appellant in addition to the taxable services, was also providing exempted services but did not maintain separate record for the input services used for provision 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration is determined on the basis of percentage of turnover, therefore, not taxable under Business Support Service[ Agreement in Page No. 269 of Paper Book, Vol-II 1. Royal Western India Turf Club Ltd. Vs. Commr. of S.T., Mumbai [2015 (38) S.T.R. 811 (Tri. - Mum)] [ Pg 14-18 of Index of Cases] 3 Demand under Business Auxiliary Service 8,87,242 Specific Clause of BAS was not mentioned in SCN and therefore, shall not sustain. 1. Balaji Enterprises Vs. Commissioner of Central Excise & Service Tax, Jaipur-I [2020 (3) TMI 17 (CESTAT New Delhi)] [ Pg 27 - 41 of Index of Cases] 2. Dr. Jagjit Singh Parwana Vs. Commissioner of Central Excise & Service Tax, Chandigarh -II [ 2023 (8) TMI 407 (CESTAT 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Rule 6(3A). The Appellant without any dispute reversed the CENVAT credit amounting to Rs.10,26,482/-‐and also paid the balance of the CENVAT credit amounting to Rs.14,75,879/-‐by cash along with applicable interest of Rs.6,71,531/- on 2nd September, 2013. The Appellant also obtained certificate from a Chartered Accountant certifying the reversal/payment of CENVAT Credit and payment of interest thereon. (4) The Appellant submits 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 inventory of inputs/input services 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty 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 Sarani (formerly Rawdon Street), Calcutta- 700 017, demarcated in 'RED' border on the plan annexed hereto and hereafter referred to as the "SAID SPACE", together with a built-up godown space measuring 100 sqft for storing medicines etc. hereafter referred to as "Gowdown Space" for the purpose of selling medicine and other surgical instruments and equipments to indoor and/or outdoor patients and 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 var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the client; or (iv) Procurement of goods or services, which are inputs for the client; or Explanation : ……………………………………………….. [not relevant] (v) Production or processing of goods for, or on behalf of, the client; or (vi) Provision of service on behalf of the client; or (vii) A service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, ………………………….. [Emphasis supplied] (3) The Appellant submits that in the impugned 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. [Details are shown in Annexure -A/13, running page No. 302 to 366 of the Appeal Paper Book] The Appellant therefore, submits that it was a mere clerical mistake on its part while reporting the figure in the ST-3 Return for the month of April, 2011. For this clerical mistake, the Appellant cannot be made liable to pay service tax. (2) The Appellant further submits that the amount of Rs.1,91,20,228/- shown in ST-3 return inadvertently under the line no. 3F(l)(iii) in place of line no. 3F(l)(ii) was on account of services provided for diagnostic and treatment provided to admitted inpatients which was in the nature of exempt service and the same can be verified from the details provided in Annexure -A/13 above. Therefore, the Appellant is not liable to pay service tax amounting to Rs.19,69,383/- calculated on the aforesaid reported figure in the return. E. Demand of Rs.1,95,934/- 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. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (including cess) 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. While confirming the said tax, the Ld. Commissioner failed to appreciate that such outstanding are liable to service tax only on receipt basis in accordance with the prevailing provision at the material period. Accordingly, the Appellant has calculated its liability on collection basis and paid the same to exchequer as and when the same was collected. (2) The Appellant submits that during the material period, service tax was payable on collection basis and not on the invoice raised basis. It is a fact that the sundry debtors as on 31.03.2011 is a sum total of value of services provided prior to 31.03.2011 for which invoice was raised within 31.03.2011 but the payment against those invoices were not collected till 31.03.2011 but realised 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would become taxable under the category "health service'. Whereas if a business entity makes payment to a hospital or a nursing home only for treatment of its employees, then such service is not included in the definition of taxable service as defined under section 65(105)(zzzzo) of the Finance Act, 1994 hence not liable to service tax on such receipts from the corporate entities. H. Demand of Rs.1,03,133/- under Section 66A of the Act. (1) The Appellant submits that during the period from 2007-08 to 2010-11 it incurred various expenses in foreign currency to the tune of Rs.47,00,048/- (details are available in Annexure-A to the SCN, running page no. 143 of the Appeal paper book) on which the impugned 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 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax. The Appellant further submits that reversal of CENVAT Credit attributable to exempted services could not have been done as the law was new to the Appellant. The Appellant also submits that service tax on renting of Immovable property was not paid by the Appellant considering the divergent judicial pronouncements about the levy. Thus service tax was not paid under bona fide belief that tax was not payable and Cenvat Credit attributable to exempted service was not reversed by sheer lack of knowledge of the legal provision as the law has become applicable to the Appellant on 01.07.2010 only. But immediately on getting the SCN the Appellant deposited the admitted tax along with the applicable interest also reversed the Cenvat Credit attributable to exempted service along with applicable interest. (2) The Appellant further submits that from the above submissions, it is abundantly 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spital premises to the client and the consideration was received by them, on which no Service Tax was paid. Similarly they were providing Business Auxiliary services, on which no Service Tax was paid. Overall the Ld AR submits that only on account of detailed verification of the accounts of the appellant, the Revenue could get to the bottom to issue the Show Cause Notice. Therefore, he justifies the extended period as well as the demands confirmed by the Adjudicating Authority. 8. Heard both the sides. Perused the Appeal Papers and additional Written submissions made along with the documentary evidence placed by the appellant. 9. We take the issues one by one in the same order as has been done by the appellant : A. Demand of Rs.1,00,76,186 on account of Cenvat Taken : 9.1 On going through the facts, we find that the appellant initially did not opt for reversal of the Cenvat Credit 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in our opinion the Tribunal was not justified in taking a view that reversal of the credit having been made by the petitioner after removal of the final products the petitioner was not entitled to the benefit of Notification No. 15/94-C.E., dated 1-3-1994. 23. This view of the Tribunal is in our opinion patently erroneous and contrary to the decision of the five Member Larger Bench of the Tribunal as well as three member bench of the Tribunal, and is also contrary to the ratio of the decision of the Supreme Court in the case of Chandrapur Magnet Wire (supra). 24. In fact the decision of the five Member Larger Bench of the Tribunal in Franco Italian Company (supra) was followed by three Member Bench of the Appellate Tribunal in the case of ICON Pharma and Surgical (P) Ltd., 2000 (40) RLT 918. 25. The Tribunal again in a three Member Bench decision in the case of Tube Investment 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. As rightly pointed out by Sri S. Ravi, Learned Senior Counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed Cenvat Credit of Rs. 17,15,489/-. 15. We may also note that in the event the petitioner was found to have availed Cenvat Credit wrongly, Rule 14 of the Cenvat Credit Rules, 2004 empowered the authorities to recover such credit which had been taken or utilised wrongly along with interest. However, the second respondent did not choose to exercise power under this Rule but relied upon Rule 6(3)(i) and made the choice of the option thereunder for the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. The Order-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Notice demanding an amount equal to 5% or 10% of the value of the exempted products under Rule 14 is not supported by law. It is not possible to sustain the impugned demand based on such Show Cause Notice and therefore, the appeal filed by the assessee deserves to be allowed. 9.3 We find that there is no dispute that the appellant has reversed the entire credit of Rs.25,02,361/-‐ taken on exempted output services along with interest of Rs.6,71,531 in September 2013, after the Show Cause Notice was issued. These details have been certified by the Chartered Accountant and they are not being disputed by the Revenue. In the cited High Court decision in the case of Hello Minerals, it has been held that reversal of cenvat credit would result in a situation of no cenvat credit being taken in the first place. In the Tiara decision, the Telangana High Court has gone one step further 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 Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the turf club by way of stall or canteen, for a consideration. This activity is nothing but hiring/leasing of immovable property defined under clause (zzzz) of Section 65(105) of Finance Act, 1994 which defines the service as "renting of immovable property or any other service in relation to such renting, for use in the: course of or for furtherance of business or commerce". Business support service is defined in clause (104c) of Section 65 as follows :- "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 fulfillment 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 of office space along with office utilities, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lip;….. 11.2 After going through the documentary evidence provided by the appellant, we find that collection of blood samples prima facie does not fall under any of the above seven categories. Further, in the show cause notice, the department has 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". 11.3 It the case law of BALAJI ENTERPRISES Versus COMMISSIONER OF C. EX. & S.T., JAIPUR -2020 (33) G.S.T.L. 97 (Tri. - Del.), wherein an identical issue was being considered, it is held as under : 21. The submission of Learned Counsel for the Appellant 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was proposed to be demanded for an activity under BAS and BSS. Under BSS also several activities are listed as exigible under that head. In the absence of proposal in the show-cause notice as to the liability of the assessee under the precise provision in the Act, we find the demand to be not sustainable." 24. The aforesaid two decisions of the Tribunal clearly hold that it is imperative for the Department to specify which specific service contained in the seven clauses of Section 65(19) of the Act is being provided and in the absence of any specific service pointed out in show cause notice, the demand cannot be confirmed as the noticee will not be aware as to which precise service contained in the sub-clause has been rendered by him. 25. In the present case, as noticed above, the show cause notice, even after reproducing the seven clauses of Section 65(19), does not specify which particular clause was attracted and it only 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 appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confusion about the applicability of Service Tax on renting of immovable property, during the relevant period they have 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 calculated the service tax liability amounting to Rs.1,67,181/- on 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. We have gone through the challans and calculation sheet provided by the appellant at page Nos.367 to 389 and find the appellant's claims to be correct. Since, the Revenue has not adduced any evidence to the effect that the appellants have charged and recovered the Service Tax from their tenants, we hold that they are entitled for cum-tax benefit in terms of Section 67(2) of the Finance Act 1994. 13.2 Therefore, 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 di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by such business entity directly to such hospital, nursing home or multi-‐specialty clinic, or To a person covered by health insurance scheme, for any health check-‐up or treatment, where the payment for such health check-‐up or treatment is made by the insurance company directly to such hospital, nursing home or multi-‐specialty clinic." 15.3 It gets clarified that if the payment is made towards health checkup and preventive care, then such service would become taxable under the category "health service'. In the present case, we find that the amount being paid by the corporates is not account of such services, but is on account of in-patient hospitalization charges, which is being paid by the corporates to the appellant. 15.4 Therefore, we set aside the demand of Rs.3,28,957 and allow the appeal to this extent. 16. Confirmed demand on account of import of Services : H. Demand of Rs.1,03,133/- 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 class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case, the same would be available as Cenvat Credit to the appellant. Hence, there would not be any motive to suppress. The entry of Rs.19 lacs is on account of their clerical mistake while filing the ST3 Returns. In respect of Renting of immovable property services, due to the confusion prevailing at that time, they have neither collected the Service Tax nor paid the same. Subsequently on getting clarification, they have paid the Service Tax along with interest. Thus if all the facts are considered together, we find that the Revenue has not made out any case of suppression, and the non-payment / short payment, if any has been purely on account of interpretational difficulties. The appellant has also shown their bonafides by making the payment of Service Tax, wherever payable, along with interest. Therefore, we hold that the confirmed demand for the extended period is legally not sustainable. We set aside the confirmed demand for the extended period and allow the appeal to this extent even on account of time-bar. 18. Thus the Appeal succeeds on merits as per the terms discussed above on merits and on account of time-bar. 19. The appellant would be eligible for consequential re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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