2013 (5) TMI 84 - AT - Service Tax

Appellant's Taxable Service Tax Appeal Rejected Due to Invalid Cenvat Credit

AANEX SERVICES Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH

AANEX SERVICES Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH - 2012 (28) S.T.R. 139 (Tri. - Del.) Issues:1. Whether the appellant's activity of buying and selling cargo space constitutes a taxable service under the category of 'Business Auxiliary Service' for which service tax was paid.2. Whether the appellant's Cenvat credit of service tax paid to Indian Airlines Limited (IAL) without the specified documents under Rule 9(1) of Cenvat Credit Rules, 2004 is valid.3. Whether the extended period of time can be invoked for demanding improperly taken credits and imposing penalties.Issue 1: Taxability of Appellant's Activity:The appellant engaged in buying and selling cargo space, claiming it did not involve a taxable service as no service was rendered. The argument was supported by legal precedents. However, the Revenue contended that the appellant accepted the service was taxable by paying service tax. The issue raised was whether the activity fell under 'Business Auxiliary Service' and if the tax liability could be disputed retrospectively.Issue 2: Validity of Cenvat Credit:The appellant took Cenvat credit of service tax paid to IAL without the specified documents under Rule 9(1) of Cenvat Credit Rules, 2004. The appellant provided documents like photocopies of receipts, certificates from IAL and the bank, relying on the proviso to Rule 9(2) for allowing credit. The Revenue argued that the documents did not comply with the rules, questioning the validity of the credit.Issue 3: Extended Period and Penalties:The Tribunal considered whether the extended period could be invoked for demanding improperly taken credits and imposing penalties. It was concluded that the appellant's actions were not a bona fide mistake but an attempt to avoid tax liability. The Tribunal found the arguments for non-compliance with the rules to be unjustified and upheld the imposition of penalties and the rejection of the appeal.The Tribunal held that the appellant's activity did constitute a taxable service under 'Business Auxiliary Service' for which service tax was paid. However, the Cenvat credit taken without the specified documents under Rule 9(1) was deemed invalid. The Tribunal also ruled that the extended period could be invoked for demanding improperly taken credits and imposing penalties due to the appellant's actions. Ultimately, the appeal was rejected, and the penalty was upheld.