PSU's Appeal Allowed as Tribunal Finds Time-Barred Service Tax Demand; Suppression Not Proven

The Tribunal set aside the demand in a case involving various issues related to service tax and CENVAT credit. The demand was found to be time-barred as the appellant, a Public Sector Undertaking, maintained proper accounts and disclosed all relevant information. The Tribunal held that suppression could not be alleged against the appellant, leading to the appeal being allowed.

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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.

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