AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2024 (10) TMI 1346
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. Rs. 82,400/- (along with interest and equivalent penalty) 3. It has been alleged that suo moto recredit to the CENVAT Account in case where the service tax was paid twice/in excess of the service tax liability has been done without any documentary evidence in terms of Rule 9 of the CENVAT Credit Rules, 2004. Rs. 1,06,839/- (along with interest and equivalent penalty) 4. Penalty has been confirmed on "Intellectual Propery Service other than copyright". Rs. 1,49,822/- 2. The facts of the case are as under: - (i) Ms. Emami Limited (hereinafter referred to as the "Appellant") is the flagship company of the Emami group of Companies and is engaged, inter-alia, in the business of manufacture and sale of ayurvedic medicines and cosmetics falling under Chapter 30 and 33 of the Central Excise Tariff. The Appellant derives a significant share of its revenue from exports. Ms. Emami Paper Mills Limited (hereinafter referred to as "EPML") is one of the group companies of the Appellant and is engaged in the business of manufacture of newsprint paper. EPML primarily caters to the domestic market. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iness Support Service" and upheld the denial of CENVAT Credit. While the Ld. Adjudicating Authority allowed cum-duty benefit on the Royalty payments received by the Appellant and appropriated the service tax already discharged thereon, the demand for penalty was also upheld, vide Order-in-Original No. 55/ADC/ST-II/Kol/2017-18 dated 02.01.2018. (iv) On appeal, the Ld. Commissioner (Appeals) sustained the findings of the ld. adjudicating authority vide the impugned order. 3. Aggrieved against the said order, the appellant is before us. 4. The Ld. Consultant appearing on behalf of the appellant submits as under: - I. The Appellant did not provide any service, much less business support service to EPML by undertaking export of its own goods in its usual course of business and the arrangement between the group companies was only to optimize Customs duty savings for the group. a. The Appellant has submitted that vide the understanding dated 08.02.2007, EPML and the Appellant agreed to fulfil the export obligation towards the EPCG license held by EPML and share the customs duty saved thereon. The essence of the agreement was to share the duty of customs saved at....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastructural support services and other transaction processing." d. Business Support Service is not an omnibus category, where all the receipts pertaining to a business could be taxed. Reliance in this regard is placed on the judgement of the Hon'ble Supreme Court in the case of Jamna Auto Industries Limited Vs. Commissioner of Customs, C. Ex and ST, Indore [(2023) 5 Centax 194], whereby, non-compete fees, which was also in the nature of providing support to business, was excluded from the meaning of Business Support Service. "Business support service" was not a residuary category which could have accommodated any activity, which was otherwise not taxable under any other taxable head, otherwise there would have been no requirement on the part of the legislature to introduce the negative list. Therefore, the definition of Business Support Service was an exclusive definition. Reliance in this regard is placed on the judgement of the Hon'ble Tribunal, Hyderabad in the case of M/s. Shriram Chits Private Limited Vs. Commissioner o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Appellant was also not providing any administrative support as export of its own goods did not entail performance of any day-to-day operations for EPML. II. Without prejudice, the activity undertaken by the Appellant in the instant case could, at best, be classified as 'Declared Service' under the entry "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" which was brought under the service tax net for the first time w.e.f. 1st July 2012 under the negative list regime of taxing services a. Without prejudice, the said activity could, at best, constitute an agreement to do an act. In which case, the said activity could have been classified as "declared service" under the entry "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act". b. Since the impugned period is pertaining to the positive list regime, when service tax was leviable on selective approach basis, and the said "declared service" was introduced only with effect from 01 July 2012, under the negative list regime, no service tax could be levied on the said activity. III. The Appellant is eligibl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his regard is being placed on Rule 6(4A) of the Service Tax Rules, 1994 which reads as below: "(4A) Notwithstanding anything contained in sub-rule (4), where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be." c. In terms of the said provision, service tax liability paid in excess during any particular month/quarter may be adjusted towards the liability in the subsequent month/quarter. d. Further, such suo-moto recredit of service tax paid twice or paid in excess of the service tax liability is duly allowed in terms of the following judgements of the Tribunal: • J.K. Lakshmi Cement Limited Vs. CCE & ST, Jaipur - II [2015 (4) S.T.R. 618 (Tri. - Delhi)] Maintained in 2018 (8) G.S.T.L. 231 (Raj) and 2019 (27) G.S.T.L. J147 (SC). • Esdee Paints Limited Vs. Commissioner of Central Excise, Ahmedabad [2010 (249) E.L.T. 225 (Tri. -Ahmd.)] V. Extended period o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Appellant along with applicable interest vide challan no. 00501 dated 26 March 2013 i.e., even before the issuance of Show Cause Notice dated 15 December 2016. b. Reliance in this regard is placed on the judgement of the Tribunal, Bangalore in the case of YCH Logistics (India) Private Limited Vs. Commissioner of Central Excise, Customs and Service Tax [2020 (43) G.S.T.L. 518]. 5. On the other hand, the Ld. Authorized Representative of the Revenue supported the findings in the impugned order and submits that the appellant has provided business support service to its group company by undertaking the export on their own account which saved duty arising on account of the group company availing the EPCG scheme. Therefore, he contended that the said activity qualifies as "business support service" as the appellant were providing various support services viz. evaluation of prospective customers, processing of purchase orders and fulfilment of services to their group company. 5.1. It is therefore his contention that the impugned demands are sustainable. 6. Heard the parties and considered their submissions. Issue No. I: Demand of Service Tax of Rs.1,54,77,549/- under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aged hotel in preceding three years for both the original and the substitute product(s) /service (s) even in cases where the average is exempt for the substitute product (s)/ service (s) as given in para 5.7.6 of the Handbook (Vol 1). ...." (Emphasis supplied) 6.1.2. As the Customs has accepted that export obligation can be fulfilled through a group company who is having an EPCG Licence, which the appellant has done, therefore, there is no violation of Customs laws in this case. 6.1.3. The only issue that remains for consideration is whether Service Tax can be demanded under the category of "business support service" or not. For that, we have to examine the definition of "business support service", which is incorporated hereunder: - (104c) "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [Operational or administrativ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me cannot be termed as rendition of service as the essence of the arrangement was to save the duty of Customs at the group level in proportion to the export undertaken by the group company. Such an arrangement to jointly utilise resources and share the benefits accruing thereupon cannot be said to be in the nature of rendition of any service. 6.1.7. We further observe that the appellant and EPML were operating in two completely different products and were catering to two completely different sets of customers. As such, EPML could not have outsourced the activities of evaluation of prospective customers, processing of purchase orders and fulfilment of services to the Appellant, as alleged in the impugned Show Cause Notice. Moreover, the exports were not being made by the appellant to its own goods and accounting of the same was made in the books of the appellant only. It is an admitted position in the impugned order that none of the parties were undertaking the export of goods manufactured by the other. Therefore, by exporting its own goods, the appellant has not provided any kind of support service to EPML, but the same is to themselves only. 6.1.8. Furthermore, in terms of P....