TaxTMI 
TaxTMI 
2026 (4) TMI 1081
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....ed service provider of outdoor catering service, mandap keeper service, health club fitness service, dry cleaning service, internet services and renting of immovable property services. During Audit by the officers of CERA, Chennai, it was found that the appellant was receiving architect services from foreign service providers. It was noticed that towards the architectural fees paid to the service providers during the period 2008-2009 to 2009-2010, the appellant while paying service tax under Reverse Charge Mechanism, had excluded the TDS payments from the taxable value. The Department was of the view that thus there was a short payment of service tax. Therefore, a Show Cause Notice (SCN) dated 27-05-2011, was issued demanding service tax along with applicable interest and proposing penalties under Section 76 & 78 of the Finance Act, 1994 (Act). The Notice was issued invoking the extended period of limitation under proviso to Section 73(1) alleging that but for the detailed verification of accounts undertaken by the CERA Officers, Chennai, the facts of short payment would not have come to the notice of the Department. After due process of law, the Adjudicating Authority, vide Order-....
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....s along with applicable interest and imposed equivalent penalties under Section 78 of the Act. Aggrieved, the appellant has preferred the appeal numbered as ST/ 42197/2015. 4. Thereafter, the appellant was issued a Statement of Demand (SOD) No. 104/2013, dated 18-04-2013, referring to the previous SCN No.309/2012, dated 15-10-2012 and relying on the allegations therein, the SOD proposed denial of cenvat credit of service tax paid on renting of immovable property and also demand of Service Tax on the allied services received from foreign service providers under various categories. This was followed by SOD No.25/2014 dated 16.07.2014 for the period April to June 2012, SOD No.247/2014 dated 18.09.2014 for the period July 2012 to Mach 2013 and SOD No.5/2015 dated 09.01.2015 for the period April 2013 to September 2014, all of which proposed denial of cenvat credit on service tax paid under the renting of immovable property. After due process of law, these 4 SODs were adjudicated by the Commissioner of Service Tax-II, Chennai, vide a common OIO No.CHN-SVTAX-002COM-8-11-2016-2017 dated 27.01.2017, whereby the Adjudicating Authority confirmed the demands and imposed penalties under Sect....
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....by the appellant. In other words, if the consideration payable is Rs.100/-, the appellant has discharged the Service Tax on the said consideration and if the TDS on the said consideration is Rs.10/-, that has been paid separately to the Government of India. Ld. Counsel argues that as per Section 67 of the Act, the service tax is payable only on the amount which is charged to the service provider. As per Rule 7 of the Service Tax (Determination of Value) Rules, 2006 value of taxable service received under Section 66A shall be the actual consideration charged for the services provided or to be provided. Reliance is placed on the decisions in Magarpatta Township (2016) 43 STR 132, Final Order No.42344/2021 dated 24.09.2021 in the case of Indian Additives Ltd. vs. Commissioner of GST & CE, and Final Order No.40783-84/2024 dated 02.07.2024 in the case of Indian Additives Ltd. vs. Commissioner of GST & CE, in this regard. 8. In as much as the Appellant had also since moved miscellaneous applications in the respective appeals, raising common legal grounds as applicable, namely, (1) that, though the demand of service tax is under reverse charge mechanism invoking Section 66A of the Act ....
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....61 (Tri. Bom) in this regard. 10. Ld. Counsel further urges that the issue is revenue neutral in as much as, even if there is a service tax liability, the appellant is eligible to avail the cenvat credit and as such, the appellant could not have achieved any benefit. Since, the entire issue is revenue neutral, the demand is not sustainable. Reliance is placed on the decision in Final Order No.40436/2023 dated 15.06.2023, in the case of Renault Nissan Automotive India Pvt. Ltd. 11. It is also her contention that the denial of cenvat credit on the premises for which the service tax on renting of immovable property was paid was incorrect. Submitting a copy of the lease deed for the said premises, Ld. Counsel argues that the appellant used the premises as a storage facility for business and the same is available in accordance with law. Reliance is placed the decision of CCE vs, Ultratech Cement limited, 2010-TIOL- 745. She also submits that no one-to-one correlation/nexus between the credit utilised and the Service Tax paid is required to be made. Reliance in this regard is placed on the Final Order No.11629/2023, dated 1-8-2023 in the case of CE & ST, Daman versus AGS Transact T....
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.... without bifurcating the consideration/amounts under each category is tenable? 3) Whether the denial of cenvat credit of Service Tax paid on renting of immovable property of the premises leased by the appellant on the ground that the said premises is not registered under the appellant's registration certificate and that the appellant was not providing any output service therefrom, is proper? 4) Whether the invoking of extended period of limitation is tenable? 16. At the outset, we find that the miscellaneous applications filed by the Appellant raise questions of law that have a bearing on the tax liability and the tenability of the proceedings. It is no more res-integra that this Tribunal has jurisdiction to examine such questions of law neither raised before the lower authorities nor in the appeal memorandum but are now sought to be raised. Rule 10 of the CESTAT (Procedure) Rules, 1982 allows the parties to urge ground not taken in the appeal provided the Tribunal grants leave to the parties to do so. In fact, the Tribunal has also been given a wide power to decide the appeal on grounds not taken in the memorandum of appeal, with this power being circumscribed....
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....in services, identified as per the sub-clauses of Section 65(105), specified in the three limbs of Rule 3; and performed in accordance with the prescriptions therein, that is viz., in relation to the object of the service (immovable property), place of performance and location of the recipient; exigible to service tax. For example, Rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India), Rules 2006 includes 'business auxiliary services', but is restricted to such as are received by a recipient located in India for use in relation to business or commerce. That is to say, if the business auxiliary services received by the recipient were other than for the purpose of use in business or commerce, they are not chargeable to service tax. Therefore, the ascertainment of taxability of the services alleged to be received by the recipient with determination that they satisfy the requirement under any one of the three limbs of Rule 3 of the said Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, was a sine qua non to foist a liability of tax on the Appellant. Therefore, the SCNs suffer from a fundamental and incurable lacunae ....
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....t handicapped to seek and obtain the information and evidence required to issue a legally sustainable SCN. When there is no difficulty that has been stated to hamper the inquiry, the disinclination to employ the ample investigative powers conferred by the Act cannot provide a justification for issuing a vague SCN. When the Department has chosen to demand service tax only on the figures taken from the financial statements (profit and loss account) and not from the invoices raised by the appellant, even though the appellant was admittedly audited, it is indicative of a failure of the Department, more so when there is no stated difficulty in collecting and collating the requisite evidence in respect of each such service received from the foreign service provider. In fact, it is rather appalling that the consideration paid in respect of the various services alleged to have been rendered by the foreign service providers have not been separately identified, and the corresponding service tax dues payable thereon under reverse charge mechanism, quantified and put to the notice of the appellant. 21. It is also well settled that the show cause notice is the foundation on which the departm....
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....ed in India) Rules, 2006, which by itself renders the demand untenable as held by us above, it is also seen that there is no allegation in the SCN that the appellant has discharged the service tax only on the amount net of TDS. The appellant's contention that it has discharged service tax on the gross amount paid to the service provider for the services and that the TDS amount paid separately does not constitute consideration has remained uncontroverted. The issue is no longer res-integra and we find that in the decision in Final Order No.4078384/2024 dated 02.07.2024 in the case of Indian Additives Ltd. vs. Commissioner of GST & CE, it has been held by the Tribunal, relying on an earlier case of Adani Bunkering Pvt Ltd v. CCE, Ahmedabad-II, 2024 (1) TMI 984-CESTAT AHMEDABAD-II, that TDS deposited to the Income Tax Department in relation to the payment made to the foreign service provider over and above the invoice value of the services, is not liable to service tax. The reliance placed by the appellant on similar decisions as noted above, are also appropriate. 23. We are also of the considered view that determination of taxability on the basis of accounting entries in the P & L....
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.... appellant's contention on the plea of invoking the extended period of limitation, we find that it has been contended that the demand on Cenvat credit taken on renting of immovable property, vide SOD No.04/2017 dated 13.10.2017 is partly barred by limitation for the period October 2014 to September 2015 and that there was also no invocation of extended period in the SOD. This contention of the appellant is misconceived as we find that Section 73 stands amended by the Finance Act 2016 with effect from 14-05-2016, enhancing the time limit for issuance of SCN for demands within the normal period from eighteen months to thirty months and as on date of issuance of the SOD, i.e., 13.10.2017, according to the amended provisions of Section 73 applicable, the SOD was within the period of limitation, as rightly held by the adjudicating authority. Be that as it may, the demand raised therein is unsustainable in view of our findings above. However, insofar as the demand issued under SCN dated 15-10-2012 was concerned, we concur with the contention of the appellant that it is wholly barred by limitation for the reasons given below. 26. It is undisputable that the genesis of the demand is in ....