2014 (11) TMI 337 - AT - Service Tax

Appellate Tribunal rules in favor of appellant on service tax liability, CENVAT credit, and tax exemption for exported goods

The Appellate Tribunal CESTAT Bangalore ruled in favor of the appellant in a case involving service tax liability on foreign remittances, CENVAT credit ... Waiver of pre deposit - import of services - claim of the appellant that there is no proper classification of the service under which the appellant was liable to pay service tax as a receiver - Held that:- provider of service is based outside India, the recipient of service is based in India, the payment is made by the recipient to the provider, the service received is used in relation to business or commerce, the service is received from outside India and is leviable to service tax as per the provisions cited above - in the absence of clear classification of service, appellant has made out a prima facie case. CENVAT Credit - input services - assessee is engaged in export of iron ore which is excisable but exported without payment of duty - Held that:- As regards the demand for ₹ 1,11,71,268/- which is the CENVAT credit availed of the service tax paid to M/s. Bothra Shipping Services for leasing the crane, it has been held that the assessee has not used the crane for providing service. In this case, the claim of the assessee was that it was used in relation to manufacture of goods which is dutiable but exported. They relied on the decision in the case of Repro India Ltd. Vs. UOI [2007 (12) TMI 209 - BOMBAY HIGH COURT]. services were used in respect of iron ore which was ultimately exported - appellant has made out a prima facie case for complete waiver and accordingly the requirement of predeposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted. Issues:Classification of service for service tax liability on foreign remittances.CENVAT credit availed for leasing a crane not used for providing service.Service tax liability on services used in relation to exported goods.Analysis:1. Classification of service for service tax liability on foreign remittances:The appellant provided various output services and received input services, including foreign remittances for professional fees. The impugned order held the appellant liable for service tax on foreign remittances. However, upon review, it was found that the proper classification of the service under which the appellant was liable to pay service tax was not clearly established. The Commissioner's observations highlighted that certain expenses incurred in foreign currency were not sustainable for service tax, while others were deemed includible. The absence of a clear classification led to the conclusion that the appellant had made out a prima facie case, resulting in the demand for service tax on foreign remittances being dropped.2. CENVAT credit availed for leasing a crane not used for providing service:Regarding the demand for CENVAT credit amounting to a significant sum for service tax paid on leasing a crane from M/s. Bothra Shipping Services, it was contended that the crane was used in relation to the manufacture of dutiable goods that were ultimately exported. Citing the decision in the case of Repro India Ltd., it was argued that the crane usage was appropriate for the purpose claimed. Consequently, the Tribunal found merit in this argument and deemed the appellant's case for waiver of predeposit and stay against recovery during the appeal as valid.3. Service tax liability on services used in relation to exported goods:The Tribunal also addressed a separate demand for service tax on services used concerning iron ore that was exported. Drawing on the precedent set by the case of Repro India Ltd., it was established that the services in question were indeed utilized in connection with the exported goods. This finding supported the appellant's contention for a complete waiver of the demand, leading to the grant of a stay against recovery during the pendency of the appeal. The Tribunal's decision was based on the prima facie case made by the appellant, supported by relevant legal precedents and arguments presented.In conclusion, the judgment by the Appellate Tribunal CESTAT Bangalore delved into the intricate details of service tax liability, CENVAT credit availed, and the connection between services provided and goods exported. Through a meticulous analysis of the legal framework, precedents, and arguments put forth by the appellant, the Tribunal arrived at decisions that upheld the appellant's contentions in various aspects, ultimately leading to the waiver of demands and the grant of stays against recovery during the appeal process.