TaxTMI 
TaxTMI 
2024 (6) TMI 1
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.... 13,80,65,985/- 1 Service tax on logistic charges Rs. 53,07,859/- Rs. 8,04,148/- 2 Service tax on collection of toll plaza Rs. 58,45,817/- NIL 3 Service tax on other income NIL Rs. 4,26,27,473/- 4 Total Rs. 4,47,19,467/- Rs.18,14,97,606/- 3. Briefly stated, the facts of the case are that M/s Premier Car Sales Ltd are engaged in trading of Motor Vehicles of Hyundai, Honda two wheelers and Piaggio three wheelers. They have been registered under Service Tax for providing services of Servicing of Motor Vehicle', 'Business Auxiliary Services' and Renting of Immovable Property Services'. During the course of scrutiny of records of the Appellants, it was observed that they had availed Cenvat credit in respect of service tax paid on various input services like telephone service, courier service, business promotion, cleaning and house keeping, insurance, maintenance or repairs, advertisement etc. It was alleged that some of the services had been used commonly for providing taxable services as well as non-taxable activities like trading of motor vehicles. It was observed that while availing such Cenvat credit, Appellants had neithe....
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....362/2019, SCN was issued on 17-10-2017 by invoking extended period of limitation and in Appeal No. ST/70378/2019, statement of demand was issued on 23-04-2018 within the limitation period of 30 months. Issue No. 1: Disallowance of credit under Rule 6 (3) of Cenvat Credit Rules 2004. 5. The Learned Commissioner, in both the cases, held that the Appellants have availed Cenvat credit relating to taxable and exempted services. Therefore, amount has been demanded for the period 2012-13 to 2014-15 @ 6% of the value of exempted services. It has been held that the Appellants had chosen not to follow the statutory provision by not excersing any option in the form of Rule 6(2), Rule 6 (3) and Rule 6 (3A) of CCR, 2004 and that it was obligatory on a service provider to take all required steps including informing the jurisdictional Range Officer about the activity. Since the Appellants had not maintained separate records of input services, used in taxable services and exempted services, they have lost the first option. Further to avail the benefit of second option, the Appellants were required to intimate in writing to the jurisdictional Superintendent by submitting certain particulars r....
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....ted services has not been computed correctly. The main reason for the difference is that the sale price includes the value of spare parts, whereas, the cost of goods sold does not include the cost of spare parts sold for the year 2015-16. The cost of spare parts sold was Rs. 177.65 crores and the same was liable to be reduced while computing the value of exempted services. Therefore, the gross margin for the year 2015-16 will stand reduced from Rs. 191.5 crores to Rs. 13.8 crores and the computation of amount @ 7% for the year 2015-16 shall stand reduced from Rs. 13.4 crores to Rs. 1.76 crores. For the year 2016-17, Appellants availed credit of Rs. 75.75 lakhs. It included services of Rs. 29.14 lakhs availed at workshop and Rs. 46.61 lakhs availed at show room. It was submitted that as per ST-3 returns, Appellants had provided taxable services of Rs. 26.6 crores and the value of exempted services on the basis of 10% of the value of goods sold (819 crores) works out to Rs. 81 crores. It was submitted that on attributable basis, Appellants were liable for reversal of credit of Rs. 34.91 lakhs in the ratio of 27:81. They have already paid an amount of Rs. 1.36 crore by way of pre depo....
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.... the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. The Order-in-Original, to the extent that it proceeded on these lines, therefore cannot be countenanced." 12. In the case of Mercedes Benz India Pvt. Ltd. Vs. CCE reported in 2015 (40) S.T.R. 381 (Tri-Mum), the appellants were engaged in manufacturing of motor vehicle as well as trading activity of similar goods. Demands had been raised under Rule 6 (3A) of CCR, 2004 on the ground that appellants had not exercised the option under the said Rule. This Tribunal held that in case the assessee fails to exercise an option under Rule 6 (3A) of CCR, 2004, there is no provision that option of payment of 5% would be automatically applied. Relevant paras are reproduced as under:- "5.3. As regard the contention of the adjudicating authority that this option should be given in beginning and before exercising such option, we are of the view that though there is no such time limit provided for exercising such option in the rules but it is a common sense that intention of any option should....
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....3) (ii), how Revenue can insist that option (3) (i) under Rule 6 should be followed by the assessee." "5.5. As discussed above and in the facts of the case that actual Cenvat credit attributed to the exempted services used towards sale of the bought out cars in terms of Rule 6 (3A) comes to Rs. 4,06,785/- where as adjudicating authority demanded an amount of Rs. 24,71,93,529/-. In our view, any amount, over and above Rs. 4,06,785/- is not the part of the Cenvat Credit which required to be reversed. The legislator has not enacted any provision by which Cenvat credit, which is other than the credit attributed to input services used in exempted goods or services; can be recovered from the assessee." 13. The above view has consistently been taken by this Tribunal in various other cases. The issue is therefore no more res integra. We therefore, hold that the Appellants are eligible for benefit of Rule 6 (3A) of CCR, 2004, even if they have not exercised their option before the beginning of the year. 14. The Appellants have submitted that they have maintained separate records for availing Cenvat credit at workshops and showroom. They have also submitted that services avail....
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.... the said amount alongwith interest may be appropriated from the amount of Rs. 1.36 crores deposited by way of pre-deposit. As already mentioned, Department has not disputed the said computation and payment of Rs. 1.36 crores. We therefore order for appropriation of amount of Rs. 34.95 lakhs along with interest due thereon from the deposit of Rs. 1.36 crores. Issue No. 2 : Demand of service tax on logistic charges recovered from the buyers of car. 15. Appellants had been recovering logistic charges from the buyers of the car. It is the case of the Department that the Appellants had not deposited service tax on such logistic charges. The learned Commissioner has held that the Appellants have charged the logistics charges over and above the ex-showroom price of car. If logistic charges were part of the transaction value, then it could have been included in the sale value and mentioned in the sale invoice but Appellants had separately charged logistic charges and issued separate invoice in this regard. It has therefore been held that it is a pure service taxable under the provisions of Finance Act, 1994 and these logistics charges are not the part of transaction/sale value, rath....
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....tainable and the same is set aside". 19. On a specific query by the Bench, the learned Chartered Accountant informed that Department has not filed any appeal against the said order. It therefore appears that Department has accepted the said order. 20. In view of above, we hold that service tax could not have been demanded on logistic charges; particularly when Appellants have paid VAT on the same, Department has not been able to specify the nature of service provided and the order of Commissioner (Appeals) in another case has been accepted by the Department. Issue No. 3 Demand of service tax on collection of toll tax at toll plaza. (i) Appellants had entered into a contract with NHAI and obtained right to collect toll tax at toll plaza. It had to pay fixed amount per week to the NHAI and remaining amount of collection had to remain with the Appellants. (ii) The impugned order has held that the Appellants are carrying out the activity for another person (NHAI) for consideration and therefore falls in the definition of service. It holds that the negative list entry under section 66D (h) covers access to a road or bridge on payment of toll charges. Ser....
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....act was very clear : possession of the 'Kanwaliyas Toll Plaza' asset is transferred to the appellant for the stream of lump sum payment guaranteed by the appellant. Any deficit returns owing to decreased vehicular traffic or any other reason affects the revenue steam of the appellant. A 'Commission Agent' is akin to a channel partner in delivery of goods / service, wherein the Principal bears all the risks . In the instant case, the tax liability does not arise by way of being commission Agent as per Section 65 (19) of the Finance Act, 1994 for the period prior to introduction of negative list regime". 24. Similarly in the case of Commissioner of Service Tax Vs. Ideal Road Builders Pvt. reported in 2018 (12) G.S.T.L. 192, the Tribunal rejected the Departmental appeal after holding that the activity of toll collection by the respondent was not on behalf of NHAI/MSRDC but on their own account, they have secured the right to collect the toll. Relevant portion of the order reads as under:- "We have carefully considered the submissions of both the sides as well as relevant records and case laws cited by the rivals. We find that in the present case the respondents has secured....
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....be said to be commission income. They have purchased the right to collect the toll in auction which in no way can be termed as rendering of service to NHAI or MSRDC. Rather the respondents in terms of the agreement are liable to pay the amount fixed at auction to the NHAI/MSRDC irrespective of the fact that such collection of Toll is profitable to them or not. This leaves no doubt that for the above reason also the Toll collection by the respondents is not arising from any "Business Auxiliary Service". We further find that even M/s. NHAI and MSRDC do not consider the toll collection by the respondents on their behalf as commission agent. They consider the respondents as in business of toll collection and even tax is collected at source u/s. 206C of the Income-tax Act from the installments paid by the respondents. The said section is in respect of collection of tax of income tax at the time of receipt of amount. The respondents income is towards its own toll collection and they do not get any commission on account of collection of toll from NHAI/MSRDC. There is no deduction of tax at source under Section 194H which is towards collection of tax on commission income. Thus, the differe....
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....7. Plain reading of aforesaid section 73 (1) (A) makes it clear that Statement of Demand can be issued for a subsequent period, on the basis of SCN for earlier period only if the grounds relied upon for the subsequent period are same as are mentioned in the earlier notice. We find that the earlier SCN dt. 17-10-17 had been issued for the period 2012-13 to 2014-15 and is proposed to demand service tax Rs. 4.47 crores on following grounds:- (a) Disallowance of credit under Rule 6 (3) of CCR, 2004. (b) Demand of service tax on logistic charges recovered from the buyers of car. (c) Demand of service tax on collection of toll tax at toll plaza. 28. In the aforesaid SCN, there was no proposal to demand service tax on other income. Therefore, the demand is liable to be set aside on this preliminary observation that demands on new issues cannot be raised by way of Statement of Demand. However, we find that the demand is also not sustainable on merits, in view of our observation in subsequent paragraphs. The Statement of Demand proposed to demand Rs. 2.26 crores for the year 2015-16 and Rs. 2.07 crores for the year 2016-17 on the ground that the value of servic....
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....differences are as under:- Nature of receipt 2015-16 (Rs) 2016-17 (Rs) Total (Rs) Works contract service 1,07,66,256 1,26,39,482 2,34,05,738 Other operating revenues 14,15,85,236 11,54,22,313 25,70,07,549 Miscellaneous income 58,33,578 96,67,159 1,55,00,737 Total 15,81,85,070 13,77,28,954 29,59,14,024 With regard to difference in value of works contract services, Appellants submit that these services relate to painting services provided on the motor vehicle received in workshop. In terms of Rule 2 A of Service Tax (Determination of Value) Rules, 2006, Appellants have availed abatement of 30%. We have seen a sample copy of invoice and note that Appellants have paid VAT on 60% of taxable value & service tax on 70% of taxable value. In other words, they have availed abatement of 30%. On perusal of detailed chart, we note that difference in value between the value declared in ST-3 return the value as per Balance Sheet is also about 30%. We therefore hold that there is no short payment of service tax under the head Works Contract service. 29. With regard to difference in value of other operating revenue, Appellants had su....
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....ant that all these amounts received from MUL, are either compensatory payments or in the nature of performance based trade discounts on achieving certain performance targets or is an activity which is mutually beneficial to both the Appellant and MUL. It is not the case of the Revenue that MUL continues to remain the owner of the goods dealt by the Appellant. All the vehicles / spares are purchased by the appellant and then sold. The incentives given by the MUL has to be considered performance based trade discounts and will not be in the nature of BAS commissions. On perusal of the case records and the factual matrix we agree with the arguments of the appellant that payments received on these accounts cannot be held to be classifiable as provision of taxable services of BAS under section 65 (19) of the Finance Act , 1994." 32. In view of the above, we hold that the Appellants were not liable for payment of service tax on discount /incentive received from suppliers of motor vehicle, spare parts etc and accounted for under the head other operating revenue. 33. Appellants submitted that the miscellaneous income of Rs. 1.55 crores represents amounts written off (excess received f....
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....venue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. "12. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the words 'wilful', preceding the words "mis-statement or suppression of facts" which means with intend to evade duty . The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intend to evade payment of duty'. Therefore, there cannot be suppression or mis-statement of fact, which is not willful and yet constitute a permissible ground for the purpose of the proviso to section 11A. Mis-statement of fact must be willful. 37. In case of Collector of Central Excise vs. Chemphar Drugs liniments reported in 1989 (40) E.L.T. 276, the Hon'ble Supreme Court has held that extended peri....
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.... before the tribunal itself as being based on no evidence. "9. In that view of the matter and in view of the requirements of Section 11A of the Act, the claim had to be limited for a period of six months as the tribunal did. We are, therefore, of the opinion that the Tribunal was right in its conclusion. The appeal therefore fails and is accordingly dismissed". 38. In case of M/s Shervani Industries, Syndicate Ltd. reported in 2009 (14) S.T.R. 486. (Tri-Delhi), this tribunal has held that extended period of limitation is not invocable when there is scope of difference in interpretation. Para 14 of the order reads as under:- "However, we find force in the submissions of the learned Advocate that there was scope for difference in interpretation and hence for entertaining a view that there was no levy of tax and therefore, the demand of tax for the extended period of limitation would not be applicable. We also noted that the issue involved in this case is the interpretation of the provision of the Finance Act and the penalties are not warranted. Accordingly, the demand of tax for the normal period of limitation is upheld. Penalties are set aside. The appeal is dis....