2023 (9) TMI 720 - AT - Service Tax

Levy of service tax - Tour Operator service - organising tours for foreign tourists to India - reverse charge mechanism - period July 2012 to March 2014 - Extended period of limitation - HELD THAT - There is no dispute that the appellant is provided tour operator services and has been paying service tax on the services and has been filing ST-3 returns. To provide these services, the appellant hires taxis. Thus, the services of the taxi operators are the input services to the appellant - From the invoices produced, it is evident that the taxi operators were paying service tax on their services considering themselves liable to pay service tax and the appellant has been taking CENVAT credit of such service tax. To charge service tax again on reverse charge basis from the appellant (the service recipient) would result in double taxation on the same service. Even otherwise, the notification refers to persons not in the same line of business and NOT persons engaged in the same business and the two are distinct. Similar line of business has a much wider connotation and therefore, it includes their tour operator services as well. Since the appellant is in the similar line of business, it was not covered S. No. 7 (a) of the notification. Extended period of limitation - HELD THAT - There are no grounds to invoke the extended period of limitation under the proviso to section 78(1). There is no fraud or collusion or wilful mis-statement or suppression of facts or violation of the Act or Rules with an intent to evade payment of service tax. Revenue Neutrality - HELD THAT - If the appellant had paid service tax under reverse charge mechanism, it would have been entitled to CENVAT credit on it immediately because it is its input service. Thus, the entire exercise is revenue neutral and in such a situation, the appellant cannot be alleged to have had an intent to evade payment of service tax. The demand in the impugned order needs to be set aside. Consequently, the interest and penalties also need to be set aside - Appeal allowed.

Summary

Issues:
The judgment involves the issue of challenging the Order in Appeal dated 15.2.2018 passed by the Commissioner (Appeals) Jaipur, concerning the liability of the appellant to pay service tax on services of taxis hired on a reverse charge basis.

Comprehensive Details:
The appellant, a Tour Operator registered with the Service Tax Department, organizes tours for foreign tourists using taxi services. The operators of these taxis paid service tax and recovered it along with their charges from the appellant, who availed CENVAT credit for the tax paid. The dispute arose when it was felt that the appellant was liable to pay service tax on the hired taxis on a reverse charge basis as per Notification No. 30/2012-ST issued under the Finance Act, 1994.

The notification specified that in the case of renting motor vehicles to non-similar businesses, the service recipient should pay 100% of the service tax. The Deputy Commissioner issued a Show Cause Notice proposing to recover service tax from the appellant, which was confirmed in the Order in Original and upheld in the Order in Appeal.

The appellant contended that their services were not covered under the notification as they were in a similar line of business to renting motor vehicles. They argued that since the taxi operators had already paid service tax, charging it again on a reverse charge basis would result in double taxation. They also claimed that the demand was not sustainable and penalties should be set aside.

After considering the submissions, the Tribunal found that the appellant was in a similar line of business and had been correctly availing CENVAT credit. It was concluded that there was no intent to evade tax, and the demand, interest, and penalties in the impugned order were set aside. The appeal was allowed, and the impugned order was set aside.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting that the demand for service tax on the hired taxis was not sustainable due to the appellant's compliance with tax obligations and the absence of any intent to evade payment.