Exemption benefits allowed for business auxiliary services under Notifications 39/2009-ST and 43/2009-ST after appellant's undertaking on Cenvat Credit

CESTAT New Delhi allowed the appeal regarding denial of exemption benefits under Notifications 39/2009-ST and 43/2009-ST for business auxiliary services related to alcoholic liquor manufacture during September 2009 to June 2012. The appellant filed an affidavit undertaking not to claim Cenvat Credit, addressing the adjudicating authority's concerns. CESTAT found this undertaking satisfied the notification conditions and directed the adjudicating authority to reconsider and allow the exemption benefit, noting other conditions were already fulfilled.

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Issues:
The judgment involves issues related to the applicability of service tax on job work basis for manufacturing alcoholic liquor, denial of exemption for inputs used, invocation of larger period of limitation for issuing show cause notice, and the nature of business activities conducted by the appellant.

Applicability of Service Tax:
The appellant, engaged in manufacturing alcoholic liquor under job-work basis for M/s. United Breweries Limited, was found liable for service tax under the amended definition of "Business Auxiliary Service" from 1.09.2009. The dispute arose regarding the denial of exemption for the value of inputs used, despite the appellant not availing Cenvat Credit. The Tribunal allowed the benefit of exemption upon the filing of an affidavit confirming the non-availment of Cenvat Credit, as per relevant notifications.

Invocation of Larger Period of Limitation:
The show cause notice issued on 05.08.2014 demanding service tax for the period 1.09.2009 to 30.06.2012 was challenged as time-barred, exceeding the 18-month limitation. Citing a recent decision, the Tribunal held that the extended period of limitation could not be invoked, rendering the notice unsustainable. The appellant's tax liability had already been paid under protest, and a refund was sought due to the limitation issue.

Nature of Business Activities:
The appellant, Winsome Breweries Limited, was involved in manufacturing, brewing, and bottling alcoholic beverages under a contract with M/s. United Breweries Limited. Despite providing taxable services to M/s. UBL, the appellant had not registered for service tax, leading to the issuance of a show cause notice in 2014. The Tribunal acknowledged the taxable nature of the services provided by the appellant and directed the adjudicating authority to consider granting the benefit of exemption based on the filed affidavit.

Conclusion:
The Tribunal allowed the appeal in favor of the appellant, emphasizing compliance with exemption conditions regarding Cenvat Credit and the limitation period for issuing the show cause notice. The affidavit submitted by the appellant played a crucial role in establishing eligibility for exemption benefits. The judgment highlighted the importance of fulfilling statutory requirements for claiming exemptions and the necessity of timely issuance of show cause notices within the prescribed limitation period.

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