2014 (9) TMI 648 - AT - Service Tax

Tribunal Grants Condonation, Dismisses Tax Demand, and Overturns Credit Denial in Favorable Tax Appeal Decision

Indian Hotels Company Ltd. Versus Commissioner of Service Tax Bangalore-service Tax

The Tribunal granted condonation of a 13-day delay in filing the appeal, requiring a deposit for condonation. It dismissed the tax demand for business ... Business support services (BSS) - customers used their business center in the hotel - Held that:- It is not known for what purpose the business center was used. In the absence of any knowledge as to what are the purposes for which the service was used, how one can reach a conclusion that the service received by the customers of the appellant could be one of the various services listed under support service of business or commerce is difficult to imagine. Basically the responsibility to show that that a taxable event has occurred and service is leviable to tax is required to be proved by the Revenue. In this case obviously it is an assumption on the part of the Revenue that taking print out, photocopying and use of computer fall under the category of BSS. - demand set aside - decided in favor of assessee. Lapse of cenvat credit - Held that:- In the month of March 2004, a part of the liability was paid by PLA and another part by utilization of credit. In other words, the total tax paid from December 2003 to March 2004 by utilizing the credit comes to ₹ 4,94,494.00. This is actually equal to 35% of their liability from May 2003 to March 2004. There is no rule which says that the credit accumulated during the month should be used in the same month. In fact no time frame has been fixed in the rules. In these circumstances, the utilization of credit to the extent of ₹ 4,94,494/- during December 2003, January 2004, February 2004 and March 2004 is in order and in consonance with Rule 3(5) of the Cenvat Credit Rules, 2002. - demand set aside - decided in favor of assessee. Issues:1. Condonation of delay in filing appeal.2. Tax demand for business support services provided by the appellant.3. Utilization of CENVAT credit and excess utilized credit.4. Denial of CENVAT credit on certain charges.5. Invocation of extended period of limitation for recovery of excess utilized credit and imposition of penalty.Analysis:Issue 1: Condonation of delay in filing appealThe appellant sought condonation of a 13-day delay in filing the appeal due to the authorized signatory's hospitalization. The Tribunal found a delay of over two months without proper explanation and directed the appellant to deposit Rs. 2000 for condonation. The Tribunal decided not to grant a stay and disposed of the appeal after hearing both sides.Issue 2: Tax demand for business support servicesThe tax demand of over Rs. 59,452 was based on the provision of Business Support Services (BSS) by allowing customers to use facilities in the business center. The Tribunal noted the lack of evidence on the purpose of service usage and questioned the Revenue's assumption that services like printing and photocopying fall under BSS. The responsibility to prove taxable events lies with the Revenue.Issue 3: Utilization of CENVAT credit and excess utilized creditThe appellant faced a demand for excess utilization of credit due to not maintaining separate accounts for exempted and taxable services. Citing precedents, the Tribunal clarified that there is no fixed time frame for credit utilization and ruled in favor of the appellant, setting aside the demands beyond the normal limitation period.Issue 4: Denial of CENVAT credit on certain chargesCENVAT credit was denied on charges related to car hire, cake shop makers, shower cubicle installation, and travel agents' commission, alleging they were used for exempted services. The Tribunal found the appellant's submissions reasonable, linking the charges to taxable services where applicable.Issue 5: Invocation of extended period of limitation and penaltyThe extended limitation period and penalty were invoked for the recovery of excess utilized credit. However, the Tribunal held that there was no evidence of deliberate suppression of facts or fraud, leading to the conclusion that the demands were sustainable only within the normal limitation period. The impugned orders were set aside, and the appeal was allowed with consequential relief.In conclusion, the Tribunal addressed various issues related to tax demands, credit utilization, and limitation periods, providing detailed analysis and legal interpretations in favor of the appellant in several instances. The judgments cited and the Tribunal's reasoning formed the basis for the decisions made in each issue.