Sundharams Private Limited Vs Commissioner of G.S.T. and Central Excise (CESTAT Chennai)
CESTAT Chennai held that claim of wrong availment of abatement via ST-3 returns doesn’t amount to mis-declaration. Hence, extended period of limitation cannot be invoked and demand for normal period sustained.
Facts-The Revenue entertaining a doubt that the appellant, for the period from July 2012 to June 2017, had paid Service Tax on “renting of motor vehicle” @ 40% of the taxable value after availing abatement of 60% under Sl. No. 9 of Notification No. 26/2012-ST dated 20.06.2012 formed an opinion that the said abatement availed by the appellant was not as per the requirement of the said Notification since the abatement was available to a person – availing full CENVAT Credit of such input services received from a person who is paying tax on 40% of the value – or up to 40% CENVAT Credit of such input service received from a person who is paying Service Tax on the full value, and no CENVAT Credit on input services other than those specified above is taken under the provisions of the CENVAT Credit Rules, 2004.
In the Show Cause Notice, it was alleged that the appellant was availing CENVAT Credit on the input services, though it had not fulfilled the conditions prescribed under the said Notification and therefore, the assessee was ineligible to avail the abatement provided under the said Notification for the period from July 2012 to June 2017, and that the assessee was consequently liable for payment of Service Tax on the entire taxable value without abatement in terms of Section 67 of the Finance Act, 1994.
Conclusion- A perusal of the Show Cause Notice reveals that “the assessee has not furnished the correct taxable value in the statutory ST-3 returns filed with the Department and the wrong availment of abatement under Notification No. 26/2012-ST dated 20.06.2012 came to light only upon audit of accounts ….. But for the audit team finding out the wrong availment of abatement and short payment of Service Tax the same would have gone unnoticed…
Held that the claim of abatement is, therefore, available in the S.T.-3 returns which were only sought to be denied and that per se would not amount to mis-declaration because the appellant claimed the abatement based on its understanding of the law and the authority chose to deny the same perhaps giving a different interpretation of the Notification. Hence, there cannot be any scope for mis-declaration, that too with an intention to evade payment of tax. Therefore, the demand, if any, for the normal period alone can sustain.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The Revenue entertaining a doubt that the appellant, for the period from July 2012 to June 2017, had paid Service Tax on “renting of motor vehicle” @ 40% of the taxable value after availing abatement of 60% under Sl. No. 9 of Notification No. 26/2012-ST dated 20.06.2012, formed an opinion that the said abatement availed by the appellant was not as per the requirement of the said Notification since the abatement was available to a person – availing full CENVAT Credit of such input services received from a person who is paying tax on 40% of the value – or up to 40% CENVAT Credit of such input service received from a person who is paying Service Tax on the full value, and no CENVAT Credit on input services other than those specified above is taken under the provisions of the CENVAT Credit Rules, 2004.
1.2 It appears that the Revenue chose to verify further the documents such as CENVAT Credit account with S.T. -3 returns filed by the appellant, wherein they appear to have come across the fact that the appellant had availed CENVAT Credit of the Service Tax paid on input services received by them as well. This prompted the Revenue to believe that the appellant was not eligible for claiming abatement as above, which resulted in the issuance of Show Cause Notice dated 09.02.2018.
1.3 In the Show Cause Notice, it was alleged that the appellant was availing CENVAT Credit on the input services, though it had not fulfilled the conditions prescribed under the said Notification and therefore, the assessee was ineligible to avail the abatement provided under the said Notification for the period from July 2012 to June 2017, and that the assessee was consequently liable for payment of Service Tax on the entire taxable value without abatement in terms of Section 67 of the Finance Act, 1994.
1.4 In the said Show Cause Notice, the demand was quantified at Rs.36,16,412/- for wrong availment of the exemption, by means of abatement under the above Notification and, for the said reason, the Show Cause Notice also revealed that the action of the assessee required invoking the extended period of limitation under Section 73(1) of the Finance Act, 1994. It was thus pointed out in the Notice that but for the audit team finding out the wrong availment of abatement and consequent short payment of Service Tax, the same would have gone unnoticed and therefore the assessee had deliberately mis-declared material facts with an intent to evade payment of correct Service Tax.
1.5 A further perusal of the Show Cause Notice also makes it clear that there is no indication as to whether the appellant had availed any CENVAT Credit on capital goods, inputs or input services and if so, the quantification thereof. The appellant in its submission has pleaded that it did not avail any CENVAT Credit either on inputs or input services or even capital goods in relation to renting of motor vehicle services rendered by it. Hence, there is a clear violation of the principles of natural justice in not putting the appellant to notice as to what amount of CENVAT Credit it had availed of while providing the services of renting of motor vehicles.
2. It appears from the record that the assessee filed a detailed reply justifying its stand as to availing the benefit of abatement of the Notification (supra). They also appear to have contended that the granting of abatement of 60% on the transaction value was subject to a condition that no CENVAT Credit should be availed by the person which is attributable to the services provided by them on which the abatement was claimed. Further, it is their case that the restriction on availing credit was confined only in respect of those taxable services for which the assessee had chosen to avail abatement. Further, they had not availed any CENVAT Credit on inputs, input services and capital goods attributable for this service, and therefore they had fulfilled all the conditions prescribed under the above Notification.
3. In the adjudication, the adjudicating authority having analysed the reply filed by the assessee, however, chose not to accept the same for the following reasons: –
