2020 (2) TMI 225 - AT - Service Tax

CENVAT Credit - Right of User (ROU)-sharing/leasing of immovable property service - exempted services - Rule 6(3) CENVAT Credit Rules 2004 - extended period of limitation - HELD THAT - The demand of Rs. 3, 81, 152/- on the lease rent amount paid to M/s HPCL during the previous years and got reimbursed in the year 2013-14 is not sustainable because the appellant has paid the Service Tax on gross amount without any deduction of Service Tax and M/s HPCL has deposited the gross Service Tax to the Department without claiming any refund and only adjustment was made on the net amount payable to M/s HPCL. Therefore the Service Tax Department has been paid with full amount of Service Tax and the demand of Service Tax on refund is not sustainable. Demand of Service Tax of Rs. 1, 03, 947/- under Rule 6(3) of CCR 2004 - HELD THAT - The appellants have not rendered any exempted service by way of trading in fact the appellant had purchased the material during the year 2000 to 2002 and paid the full Excise duty and did not avail any CENVAT credit because at that time transportation service was not under the purview of Service Tax. Moreover the activity of the appellant is not trading and they are neither manufactures nor trader and full Excise duty has been paid on all the goods purchased by them and no CENVAT credit was availed as output service was not taxable. In view of this this demand is also not sustainable in law. Demand of CENVAT credit of Rs. 58, 775/- is concerned - HELD THAT - The Commissioner (A) has rightly disallowed this credit on the grounds that there is an amendment in the definition of input service w.e.f. April 2011. Input service credit of Rs. 52, 875/- availed during January 2014 on input service provided by M/s Barley Person C India Ltd. for pre-feasibility study connected for laying petroleum pipeline from Mangalore to Kannur in Kerala - HELD THAT - The appellant during the course of audit has agreed to reverse the same. Similarly the CENVAT credit on construction of civil structure is concerned the appellant availed the CENVAT credit to the extent of Rs. 52, 113/- and during the course of audit agreed to reverse the same. Time limitation - April 2013 to March 2015 - HELD THAT - The disputed period in this case is April 2013 to March 2015 whereas the SCN was issued on 04.03.2016 alleging suppression of material fact with intent to evade payment of duty. Further the appellant is a PSU and is maintaining proper books of accounts in which all the transactions are recorded and some discrepancies were found during the course of audit; some of which appellant agreed and reversed ineligible CENVAT credit but with regard to others the appellant contested the same and thereafter a SCN was issued and adjudication was done - Since all the discrepancies were noticed on the basis of audit it cannot be alleged that the appellant being a PSU have indulged in suppression of material fact with intent to evade payment of tax. Since suppression cannot be alleged against the appellant hence invoking the larger period of limitation to confirm the demand is not tenable in law - the entire demand is barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Non-payment of service tax on Right of User (ROU) - sharing/leasing of immovable property service.
2. Non-reversal of proportionate CENVAT credit on lease rent amount paid to M/s. HPCL.
3. Non-payment of amount under Rule 6(3) CENVAT Credit Rules, 2004, for exempted services provided.
4. Wrong availment of CENVAT credit on Group Life Insurance, Group Health Insurance, and Group Personal Accident Insurance services.
5. Wrong availment of CENVAT credit on Manpower Supply Services for Pantry Services, services received in the guest house, and for garden maintenance.
6. Wrong availment of CENVAT credit on services for feasibility study of laying petroleum pipelines.
7. Wrong availment of CENVAT credit on services for construction services and work contract services.

Detailed Analysis:

1. Non-payment of service tax on Right of User (ROU) - sharing/leasing of immovable property service:
The Joint Commissioner dropped the demand of service tax amounting to Rs. 1,05,89,346/-.

2. Non-reversal of proportionate CENVAT credit on lease rent amount paid to M/s. HPCL:
The demand of Rs. 3,81,152/- was confirmed by both authorities. The appellant argued that they paid the service tax on the gross amount to M/s. HPCL without any deduction, and M/s. HPCL deposited the full service tax to the department. The Tribunal found that since the service tax was paid on the gross amount and deposited without claiming any refund, the demand was not sustainable.

3. Non-payment of amount under Rule 6(3) CENVAT Credit Rules, 2004, for exempted services provided:
The demand of Rs. 1,03,947/- was confirmed. The appellant contended that they did not render any exempted service by trading. The Tribunal held that since the appellant paid full excise duty and did not avail any CENVAT credit, and the activity was not trading, the demand was not sustainable.

4. Wrong availment of CENVAT credit on Group Life Insurance, Group Health Insurance, and Group Personal Accident Insurance services:
The Commissioner (A) disallowed the credit of Rs. 58,775/- on the grounds that these services were specifically excluded from credit admissibility after the amendment on 01.04.2011. The Tribunal upheld this disallowance, agreeing that the services were for personal use and not related to the provision of output service.

5. Wrong availment of CENVAT credit on Manpower Supply Services for Pantry Services, services received in the guest house, and for garden maintenance:
The Commissioner (A) disallowed the credit of Rs. 1,31,422/- for services received in the guest house and other personal consumption services. The Tribunal upheld this disallowance, citing no direct nexus between the input service and the business activities of the appellant.

6. Wrong availment of CENVAT credit on services for feasibility study of laying petroleum pipelines:
The appellant availed CENVAT credit of Rs. 52,875/- for a pre-feasibility study. During the audit, the appellant agreed to reverse this credit. The Tribunal noted this agreement and upheld the disallowance.

7. Wrong availment of CENVAT credit on services for construction services and work contract services:
The appellant availed CENVAT credit of Rs. 52,113/- on construction services. During the audit, the appellant agreed to reverse this credit. The Tribunal noted this agreement and upheld the disallowance.

Time Barred Demand:
The Tribunal found that the entire demand was barred by limitation as the appellant, a Public Sector Undertaking (PSU), maintained proper accounts and disclosed all relevant information in statutory returns. The discrepancies were noticed during the audit, and some were conceded by the appellant. The Tribunal held that suppression could not be alleged against the appellant, and hence invoking the larger period of limitation was not tenable in law.

Conclusion:
The Tribunal set aside the impugned order, holding that the entire demand was barred by limitation, and allowed the appeal of the appellant.