2022 (2) TMI 1125 - AT - Service Tax

Tribunal sets aside service tax demand of Rs. 2,44,41,749 for 2012-13 to 2015-16

M/s Bengal Beverages Private Limited Versus Commissioner of CGST & Excise, Howrah

M/s Bengal Beverages Private Limited Versus Commissioner of CGST & Excise, Howrah - TMI Issues:Appeal against demand of service tax for the period 2012-13 to 2015-16 under reverse charge mechanism on services received from Rent-a-Cab service providers and other related expenses.Analysis:The appeal was filed by the assessee against the Order-in-Original confirming the demand of service tax amounting to Rs. 2,44,41,749 for the period 2012-13 to 2015-16, along with interest and penalty. The appellant, engaged in the manufacture of aerated water and fruit-based beverages, was audited, leading to a discrepancy in service tax payment under reverse charge mechanism on services received from Rent-a-Cab service providers and other related expenses. The appellant provided detailed replies and reconciliations, contending that the expenses were not related to Rent-a-Cab services. Despite the explanations, the department issued a Show Cause Notice alleging non-payment of service tax, leading to the appeal before the Tribunal.The appellant's advocate argued that the demand was not sustainable due to various reasons, including the absence of evidence regarding the service provider, assumptions by the adjudicating authority, and the already paid tax on certain expenses. The advocate presented documents and reconciliations supporting the appellant's claims, asserting that the demand was also time-barred. On the other hand, the authorized representative for the respondent supported the lower authority's order.After hearing both sides and examining the records, the Tribunal found that the demand of recovery of service tax was confirmed without proper appreciation of the documents provided by the appellant. The expenses under motor car and vehicle hire charges were found to be unrelated to Rent-a-Cab services, with reconciliations supporting the appellant's position. The Tribunal rejected the department's claims due to lack of contrary evidence and accepted the appellant's contentions.Moreover, the demand under Rent-a-Cab service was deemed unsustainable as the nature of expenses did not align with the service, and the demand for the period 2012-13 to 2015-16 in 2018 lacked justification for the extended period of limitation. Consequently, the Tribunal set aside the demand for recovery of service tax, rendering the penalty and interest also unsustainable. The appeal was allowed in favor of the appellant with consequential relief.In conclusion, the Tribunal ruled in favor of the appellant, highlighting the lack of evidence supporting the demand of service tax and the unjustified invocation of the extended period of limitation, ultimately leading to the setting aside of the demand and associated penalties and interest.