2024 (5) TMI 329 - AT - Service Tax

Service tax exemption allowed for trailer hire charges to goods transport agency despite missing documents

M/s Pinkcity Logistics Ltd. Versus Commissioner of Central Excise & Service Tax, Kanpur

CESTAT Allahabad allowed the appeal regarding service tax exemption for vehicle hire charges and CENVAT credit eligibility. The appellant, who rented ... Benefit of exemption from service tax - Vehicle Hire Charges - Rent received for their trailers (vehicles) rented to M/s Kataria Carriers, Kanpur - Supply of transport vehicles to Goods Transport Agency - availability of CENVAT Credit on Document Charges, terminal handling charges and bill of lading charges - invocation of extended period of limitation - levy of penalty u/s 76 & 78 of FA. Whether the appellant was liable to pay service tax under the category of “Supply of Tangible Goods Service” on the rented received for their trailers (vehicles) rented to M/s Kataria Carriers, Kanpur? - HELD THAT:- Commissioner has denied the benefit of the said exemption as per N/N. 29/2008-ST dated 26/06/2008, 01/2009-ST dated 05/06/2009 and clause 22(b) of Mega- exemption Notification No. 25/2012-ST, only by stating that appellant has failed to produce the documentary evidence to show its eligibility to the said notification. They have failed to produce the documents as specified in Notification No 01/2009-ST. There are no hesitation in accepting the contention of Commissioner, to the effect that the exemption notifications need to be strictly construed and it is for the person claiming the benefit of exemption to satisfy with regards to his eligibility to the exemption. From perusal of the invoices it is quite evident that the name of the recipient of services is clearly mentioned as “Kataria Carriers, H O 133/198 T P Nagar, Kanpur -208023” and description is stated as “Goods Transport Vehicle (Trailers) Hire Charges”. Appellant has substantially complied with the conditions as laid down by the Notification No 1/2009-ST and the benefit of this notification cannot be denied to them. For other periods for which this demand has been confirmed even the notification do not lay down this condition and hence the benefit of same cannot be denied. Thus, the demand made in the impugned order on this ground needs to be set aside. Whether the CENVAT Credit was admissible to them on the Document Charges, terminal handling charges and bill of lading charges? - HELD THAT:- Undisputedly appellant is a provider of taxable service and is registered with the department for providing output services - Having satisfied the conditions as laid down by the main clause of the definition of output services, the appellant would be eligible for CENVAT Credit in respect of these services, even without reference to the inclusive part of the definition. Appellant has contested the denial of CENVAT Credit before the adjudicating authority by referring to the inclusive part of definition and the said challenge was not accepted. Similar view has been expressed by Hon’ble Gujarat High Court in the case of Excel Crop Care Ltd [2008 (7) TMI 160 - HIGH COURT GUJARAT] where it was held that 'The definition of the term ‘output service under Rule 2(p) of the Rules means any taxable service provided by the provider of taxable service, to a customer, client, subscriber etc. The Explanation to the said clause makes it clear that if a person liable for paying Service tax does not provide any taxable service or does not manufacture final products, the service for which he is liable to pay service tax shall be deemed to be the output service. Similarly, the definition of the phrase provider of taxable service’ appearing in Rule 2(r) includes a person liable for paying Service tax.' - thus, there are no merits in this part of the order seeking to deny the credit in respect of these input services used by the appellant for providing the output services. Whether extended period of limitation is available for making this demand? - Whether penalty under Section 76 & 78 can be imposed on the appellant? - HELD THAT:- As the demands set aside on merit, these issues are not relevant and no findings recorded in respect of these issues. There are no merits in the impugned order and the same is set aside - appeal allowed. Issues Involved:1. Liability to pay service tax under 'Supply of Tangible Goods Service'.2. Admissibility of CENVAT Credit on Document Charges, Terminal Handling Charges, and Bill of Lading Charges.3. Applicability of extended period of limitation.4. Imposition of penalty under Section 76 & 78.Summary:1. Liability to pay service tax under 'Supply of Tangible Goods Service':The Tribunal examined whether the appellant was liable to pay service tax on the rent received for trailers rented to M/s Kataria Carriers, Kanpur. The impugned order confirmed the demand of Rs. 7,83,274/- u/s 65(105)(zzzzi) and Section 66E(f) of the Finance Act, 1994, stating the activity was taxable. The appellant contended exemption under Notification No. 29/2008-ST, 01/2009-ST, and clause 22(b) of Mega-exemption Notification No. 25/2012-ST. The Tribunal found that the appellant substantially complied with the conditions of Notification No. 1/2009-ST, and thus, the demand was set aside.2. Admissibility of CENVAT Credit on Document Charges, Terminal Handling Charges, and Bill of Lading Charges:The impugned order denied CENVAT Credit of Rs. 2,61,15,096/- on grounds that the services were related to Custom House Agent Services and not to the appellant's registered services. The Tribunal disagreed, stating Rule 2(l) of the CENVAT Credit Rules, 2004, allows credit for any input service used by a provider of taxable service for providing an output service. The appellant was found eligible for CENVAT Credit as they met the conditions laid down by the main clause of the definition. The denial of credit was thus set aside.3. Applicability of extended period of limitation:As the demands were set aside on merit, the Tribunal did not record any findings on the applicability of the extended period of limitation.4. Imposition of penalty under Section 76 & 78:Similarly, since the demands were set aside on merit, the Tribunal did not record any findings on the imposition of penalties under Section 76 & 78.Conclusion:The Tribunal found no merits in the impugned order and set aside the same. The appeal was allowed. (Pronounced in open court on 03 May, 2024)