Custom, Excise & Service Tax Tribunal
Park Hospital vs Service Tax - Kolkata on 11 February, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Service Tax Appeal No.75776 of 2014
(Arising out of Order-in-Original No.65/Commr/ST/KOL/2013-14 dated 28.02.2014
passed by Commissioner of Service Tax, Kolkata.)
M/s. Park Hospitals
(2, Rowdon Street, Kolkata-700017.)
...Appellant
VERSUS
Commissioner of Service Tax, Kolkata
.....Respondent
(GST Bhawan, 180, Shantipally, Rajdanga Main Road, Kolkata-700107.) APPEARANCE Shri Pulak Kr. Saha & Shri Joydev Bhattacharjee, both C.A. for the Appellant Shri S.K.Dikshit, Authorized Representative for the Revenue CORAM: HON‟BLE SHRI R. MURALIDHAR, MEMBER(JUDICIAL) HON‟BLE SHRI RAJEEV TANDON, MEMBER(TECHNICAL) FINAL ORDER NO. 75282/2025 DATE OF HEARING : 08.01.2025 DATE OF DECISION : 11.02.2025 Per : R. MURALIDHAR :
The Appellant holds Service Tax Registration No.AAATP7985MSD001, providing various services like health care service, providing its space in the hospital premises to various persons for furtherance of business etc.. They are also also providing various testing facilities. The appellant incurred expenses in foreign currency towards payment of lecture fee on infertility management and insertion of its hospital information at the websites hosted by the overseas entity, travelling & training expenses for the doctors abroad etc. During the relevant period, the Appellant in addition to the taxable services, was also providing exempted services but did not maintain separate record for the input services used for provision of taxable as well as exempted services. The Appellant did not reverse 2 Service Tax Appeal No.75776 of 2014 the CENVAT Credit attributable to exempted services as the applicability of Service Tax was new to the Appellant. After getting the SCN, they computed the amount of credit attributable to exempt service and paid a sum of Rs.10,26,482/- by way of reversal and paid a sum of Rs.14,75,879/- by cash along with applicable interest amounting to Rs.6,71,531/- and also communicated the same to the department.
2. After scrutinizing the Service Tax Returns and after obtaining the information and clarification, the department issued Show Cause Cum Demand Notice C. No. V(15) 107/ST--‐Adjn./Commr./13/9125dated 19.04.2013 by invoking extended period of limitation in terms of the proviso to Section 73(1) of the Act. The Appellant filed detail reply vide its letter dated 21.10.2013, explaining mistakes in certain calculations, furnishing evidences and relevant legal position against each allegation of the SCN. The Appellant, in its reply denied and disputed the allegations made in the SCN except to the extent admitted and paid. The Adjudicating authority passed the impugned OIO on 28.02.2014 confirming the entire proposal in the impugned SCN. Being aggrieved the appellant is before the Tribunal.
3 The Ld Consultant, submits that the demands have been confirmed under 8 different headings. The individual demands, the submissions of the appellant and relied upon case laws are being summarised by way of the Table given below :
3Service Tax Appeal No.75776 of 2014 Sl. Service Tax Issues Defence submissions Relied upon Case Laws No. Demand
1. Department has no right to raise demand as per Rule
1. M/s. Tiara Advertising Vs. Demand of 6(3)(i) and choose the option Union of India [2019 (10) TMI 27 -
CENVAT Credit on behalf of the Appellant
Telangana and Andhra Pradesh
under Rule 14 of which is not permitted in law.
High Court [ Pg 1-4 of Index of
CCR,2004 due to For this the Appellant has
Cases]
non-reversal of relied upon some case laws.
2.Tuticorin Alkali Chemicals &
CENVAT under 2. The Appellant has already
Fertilisers Ltd. Vs. CCE,
Rule 6(3) in reversed proportionate Cenvat
Tirunelveli [2009 (248) E.L.T. 514
1 regard to Credit in the following manner
1,00,76,186 (Tri. - Chennai)][ Pg 7-8 of Index
Exempted Service as per the CA Certificate
of Cases]
and accordingly enclosed in Pg-464, Vol-II of
3. M/s. Texmaco Rail &
demand was the Appeal Paper Book-
Engineering Ltd. Vs,
calculated @6% - By reversing Cenvat
Commissioner of CGST & Excise,
of the Value of amounting Rs. 1026482[ Pg
Kolkata North [2021 (11) TMI 425
Exempted Service 476 of Paper Book]
- CESTAT Kolkata] [ Pg 9-13 of
under 6(3)(ii) - By making cash payment
Index of Cases]
through Challans[ Pg 477 to
480 of Vol-II of Paper Book
The Transaction is for Renting
of Space and only the 1. Royal Western India Turf Club consideration is determined on Ltd. Vs. Commr. of S.T., Mumbai Demand under the basis of percentage of [2015 (38) S.T.R. 811 (Tri. -
2 Business Support
42,94,470 turnover, therefore, not taxable Mum)] [ Pg 14-18 of Index of
Service
under Business Support Cases]
Service[ Agreement in Page
No. 269 of Paper Book, Vol-II
1. Balaji Enterprises Vs.
Commissioner of Central Excise &
Service Tax, Jaipur-I [2020 (3)
TMI 17 (CESTAT New Delhi)] [ Pg
Demand under Specific Clause of BAS was 27 - 41 of Index of Cases]
3 Business Auxiliary not mentioned in SCN and 2. Dr. Jagjit Singh Parwana Vs. 8,87,242 Service therefore, shall not sustain. Commissioner of Central Excise & Service Tax, Chandigarh -II [ 2023 (8) TMI 407 (CESTAT Chandigarh)] [ Pg 42 - 48 of Index of Cases] Clerical Error Demand under 1. Page-305(Vol-II), ST-3 Health Care Return where the amount was 4 Service as Pure 19,69,383 reported Agent 2. Page -311 to 366 (Vol-II)-
Details of Bills with Summary Cum Tax Benefit not given, The Appellant has already paid Rs. 167181/- under cum tax Commissioner of Central Excise, Demand under with Interest amounting to Delhi Vs. Maruti Udyog Ltd.
Renting of Rs.86,406/- before
5 [(2002) 141 ELT 3] -Pg 54 to 57 of
immovable 1,95,934 adjudication, however the
the Index of Cases [ Pg 54-57 of
property same was not taken into
Index of Cases]
consideration in OIO. No
amount is payable by the
Appellant
4
Service Tax Appeal No.75776 of 2014
Demand under Rajasthan State Road Transport
Tax Payment was done as and
Health Care Corporation Vs. Joint
when amount is collected as
Service on Commissioner of Central Excise
6 per Rule 9 of POTR - CA
Balance of 4,73,252 and Service Tax, Jaipur [ 2024 (3)
Certificate enclosed in Pg 408
Sundry Debtors TMI 1103 - CESTAT New Delhi] [
of Paper Book, Vol-II
on 31.03.2011 Pg 58-63 of Index of Cases]
Not Taxable as per definition
Demand under
provided in section
Health Care
65(105)(zzzzo) as it is
Service in respect
treatment provded to
of Amount
7 employees and not preventive
Received from 3,28,957
health care or health check up.
corporates for
[ All available records are
treatment of their
given in Pg 434 to 463 of
employees
Paper Book, Vol-II]
Demand was proposed in in
the SCN without any
classifcation of taxable service.
Demand under Without a specific classification
8
Import of Service 1,03,133 under which the tax is payable
by the assessee, the SCN
shall be treated as vague and
therefore not sustainable.
Total Demand 1,83,28,557
4. His arguments on individual demands are on the following lines :
A. Demand of Rs.1,00,76,186 on account of Cenvat Taken:
(1) The Ld. Commissioner confirmed the demand of Rs.1,00,76,186/- under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(2) of the Finance Act, 1994 based on the observation that the Appellant neither maintained separate accounts under Rule 6(2) of the Rules, nor opted for determining the payable amount under Rule 6(3) of the said Rules. Therefore the Appellant was required to pay an amount equal to 6% of the value of the exempted service provided by the Appellant under Rule 6(3)(i) of the Cenvat Credit Rules, 2004.
(2) The Appellant submits that since they were fastened with the Service Tax levy only from July, 2010, due to lack of knowledge, they could not exercise the option provided in the Rules during the material period.5
Service Tax Appeal No.75776 of 2014 (3) However, the Appellant immediately after receiving the impugned SCN reviewed and found that they have availed excess CENVAT credit to the tune of Rs.25,02,361/-
-‐[Rs.14,75,879+Rs.10,26,482]and the same was required to be reversed in accordance with Rule 6(3A). The Appellant without any dispute reversed the CENVAT credit amounting to Rs.10,26,482/--‐and also paid the balance of the CENVAT credit amounting to Rs.14,75,879/--‐by cash along with applicable interest of Rs.6,71,531/- on 2nd September, 2013. The Appellant also obtained certificate from a Chartered Accountant certifying the reversal/payment of CENVAT Credit and payment of interest thereon.
(4) The Appellant submits that Rule 6(3) of the Cenvat Credit Rules, 2004 merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax Authorities can choose one of the options on behalf of the service provider. At the most the authorities can reject the disputed Cenvat credit taken by the Appellant. In this regard the Appellant relies upon the decision of the Telangana and Andhra Pradesh High Court in the case of M/s. Tiara Advertising Vs. Union of India [2019 (10) TMI 27 - Telangana and Andhra Pradesh High Court].
(5) The Appellant further submits that the recovery of CENVAT credit amounting to Rs.1,00,76,186/- is highly disproportionate to the credit of Rs.25,02,361/- availed on common input services which could be attributed to the 6 Service Tax Appeal No.75776 of 2014 service on which no Service Tax was payable. The Appellant in this regard relies upon the decision of the Hon‟ble High Court, Gujarat in the case of CCE, Ahmedabad-II Vs. Maize Products [2009 (234) E.L.T. 431 (Guj.)].
(6) The Appellant further submits that they have already reversed/paid the CENVAT Credit attributable to the exempted services along with applicable interest as stated hereinabove. The Appellant submits that in the case of Tuticorin Alkali Chemicals & Fertilisers Ltd. Vs. CCE, Tirunelveli [2009 (248) E.L.T. 514 (Tri. - Chennai)], the Hon‟ble Tribunal held that the reversal of credit by the appellant with interest subsequent to the clearance of goods is as good as taking no credit and therefore, demand and penalty not justified.
(7) The appellant also relies on the decision of this Bench in the case of M/s. Texmaco Rail & Engineering Ltd. Vs, Commissioner of CGST & Excise, Kolkata North [2021 (11) TMI 425 - CESTAT Kolkata], wherein it was held that demanding 5% to 10% of the value of the exempted products under Rule 14 is not supported by law.
(8) The Appellant therefore, submits that confirmation of the recovery of CENVAT amounting to Rs.1,00,76,186/- is not supported by law and liable to be set aside on merits.
B. Demand of Rs.42,94,470/- under „business support service‟.
(1) The Appellant states that the Ld. Commissioner while confirming the demand of Rs.42,94,470/- under the classification „business support service‟ observed that "from the agreement between the Noticee and M/s. Neotia Healthcare Pvt. Ltd. It is understood that the notice was providing infrastructural support 7 Service Tax Appeal No.75776 of 2014 service to M/s. Neotia Healthcare Pvt.Ltd. by providing office space along with all necessary assistance required for the purpose of running their business at the premises of the notice." [Refer para 3.1 of running page no. 124 of the Appeal Paper Book] Whereas, from the agreement dated 19th December, 2009 by and between the Appellant and M/s. Neotia Healthcare Pvt. Ltd. In para 1 [Refer page no. 270 of the Appeal Paper Book] it says:
" In terms of this arrangement, the first party will allow the second party to use the specified space, being the demarcated and independent centrally air-conditioned built up space measuring 330 sqft more or less situated and lying in the lobby portion of Ground floor OF THE Premises No. 2. Sarojini Naidu Sarani (formerly Rawdon Street), Calcutta- 700 017, demarcated in „RED‟ border on the plan annexed hereto and hereafter referred to as the "SAID SPACE", together with a built-up godown space measuring 100 sqft for storing medicines etc. hereafter referred to as "Gowdown Space" for the purpose of selling medicine and other surgical instruments and equipments to indoor and/or outdoor patients and to public at large visiting the said premises."
(2) The Appellant submits that the scope and ambit of the service can be judged from the definition and the clarification given by the department. From the relevant definition and the clarification issued by the Department, it is clear that to classify any service under "Business Support Service", the very essential ingredient is that such service shall be an outsourced service which the entity instead of doing himself, preferred it to outsource to some other service provider for various reasons. Whereas, in the instant case M/s. Neotia Healthcare Pvt. Ltd. has 8 Service Tax Appeal No.75776 of 2014 not outsourced any of its activities to the Appellant and instead it had taken a portion of the hospital space from the Appellant on rent to be calculated on the basis of 18% of the sale proceeds of the medicines on principal to principal basis. Therefore, by no stretch of imagination, this service can be classified under "Business Support Service".
(3) The Appellant further submits that conjoint reading of the definition of "Support Services of business or commerce" along with the C.B.E.&C. Circular dated 28.02.2006 makes it clear that mere renting of air conditioned space within the hospital premises does not come within the definition of "Support Services of business or commerce". Such providing of space should be along with other facilities specified therein. It is not the case of the department that such facilities have been provided to M/s. Neotia Healthcare Pvt. Ltd.
(4) The Appellant in this regard relies upon the following decisions:
a. Royal Western India Turf Club Ltd. Vs. Commr. of S.T., Mumbai [2015 (38) S.T.R. 811 (Tri. - Mum)] b. Commissioner of Customs and Central Excise, Aurangabad Vs. Narsinha SSK Ltd. [2014 (11) TMI 39 - CESTAT MUMBAI] c. Hyderabad Race Club Vs. Commissioner of Cus. & C.EX., Hyderabad [2020 (35) G.S.T.L. 289 (tri. -
Hyd)] (5) Therefore, the demand of Rs.42,94,470/- under „business support service‟ is not sustainable and liable to set aside on this ground alone.
9Service Tax Appeal No.75776 of 2014 C.Demand of Rs.8,87,242/- under „business auxiliary service‟.
(1) The Appellant states that the impugned show cause notice alleged that the assessee collected Blood Collection Charges (Income from UCB Collection Charges) from M/s. CRYO BANKS, and the service provided by the assessee falls under the category of „Business Auxiliary Service‟.
(2) The Appellant submits that as per Section 65(19) of the Finance Act, 1994 „business auxiliary service‟ means any service in relation to, -
(i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii) Promotion or marketing of service provided by the client; or Explanation : ........................................................ [not relevant]
(iii) Any customer care service provided on behalf of the client; or
(iv) Procurement of goods or services, which are inputs for the client; or Explanation : ........................................................ [not relevant]
(v) Production or processing of goods for, or on behalf of, the client; or
(vi) Provision of service on behalf of the client; or
(vii) A service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, ................................
[Emphasis supplied] 10 Service Tax Appeal No.75776 of 2014 (3) The Appellant submits that in the impugned show cause notice, the department nowhere specified under which clause of the definition of "Business Auxiliary Service" the liability shall be fastened on the Appellant. It is well settled that to bring any activity under the definition of "Business Auxiliary Service" for levy of tax, it is to be clearly mentioned in the show cause notice under which clause of the definition shall apply to fasten that service under the classification of "Business Auxiliary Service". Since the demand has been proposed under omnibus definition of "Business Auxiliary Service" without specifying the clause under which the activity qualifies to be "Business Auxiliary Service", the impugned show cause notice is bad in law and therefore, the confirmation of demand by the Ld. Commissioner shall be set aside on this ground alone.
(4) The Appellant in this regard relies upon the following Tribunal decisions:
A. Balaji Enterprises Vs. Commissioner of Central Excise & Service Tax, Jaipur-I -2020 (3) TMI 17 (CESTAT New Delhi) B. Dr. Jagjit Singh Parwana Vs. Commissioner of Central Excise & Service Tax, Chandigarh -II-2023 (8) TMI 407 (CESTAT Chandigarh) (5) Without prejudice, the Appellant submits that from the scope of the agreement with various parties, services provided by the Appellant to various „Cord Blood‟ and / or „Umbilical Cord Stem Cell‟ banking service providers merit classification under "Technical Testing and Analysis Service" as defined under Section 65(106) of the Finance Act, 1994. The Appellant therefore, submits that the services provided by it to the various „Cord 11 Service Tax Appeal No.75776 of 2014 Blood‟ and/ or Umbilical Cord Stem Cell Banking service providers cannot be classified under„ business auxiliary service‟ and therefore, the Appellant is not liable to service tax on the consideration received for such service. The Appellant in this respect relies upon the decision of the Punjab & Haryana High Court in case of Commissioner of Central Excise Vs. Dr. Lal Path Lab (P) Ltd. [2007] (8) S.T.R. 337 ((P&H)].
D. Demand of Rs.19,69,383/- under as pure agent.
(1) The Appellant states that while filling up the ST 3 Return Form for the month of April, 2011 inadvertently they have reported the exempted income to the tune of Rs.1,91,20,228/ in the line no. 3F(I)(iii) which is meant for reporting of the amount received as pure agent. Such exempted income should have been reported under line no.3F(I)(ii).The Appellant states that during the relevant period it did not receive any money from any person whatsoever as reimbursement of expenses incurred by them as pure agent. The Appellant further states that it did not incur any expenditure as pure agent and claimed for reimbursement from the clients. [Details are shown in Annexure -A/13, running page No. 302 to 366 of the Appeal Paper Book] The Appellant therefore, submits that it was a mere clerical mistake on its part while reporting the figure in the ST-3 Return for the month of April, 2011. For this clerical mistake, the Appellant cannot be made liable to pay service tax.
(2) The Appellant further submits that the amount of Rs.1,91,20,228/- shown in ST-3 return inadvertently under the line no. 3F(l)(iii) in place of line no. 3F(l)(ii) was on account of services provided for diagnostic and treatment provided to admitted inpatients which was in the nature of exempt service and the same can be verified from the details provided in Annexure -A/13 above. Therefore, the Appellant is not liable 12 Service Tax Appeal No.75776 of 2014 to pay service tax amounting to Rs.19,69,383/- calculated on the aforesaid reported figure in the return.
E. Demand of Rs.1,95,934/- under „renting of immovable property service‟.
(1) The Appellant submits that due to ongoing controversy about the levy of service tax on renting of immovable property, during the relevant period the Appellant neither collected nor paid any service tax on the rent received from its various tenants. Considering the retrospective amendment in Section 65(105)(zzzz) of the Finance Act, 1994, the Appellant after admitting the service tax liability on the rent collected from the various tenants during the relevant period, calculated the service tax liability amounting to Rs.1,67,181/- under cum-tax basis in terms of Section 67(2) of the Act and deposited the same along with applicable interest amounting to Rs.86,406/- on 02.09.2013. [Copy of the receipted challans and the requisite calculations are available in Annexure -A/14, page no. 367 to 389 of the Appeal paper book.] (2) The Appellant submits that the Ld. Commissioner without any application of mind ignored the evidences submitted with the reply to show cause notice and arbitrarily did not give the benefit of cum-tax which otherwise is legally available to the Appellant since the Appellant had not charged and collected any service tax while raising the invoice for rent from its tenants, it was entitled to the benefit of cum-tax in terms of Section 67(2) of the Act. The Hon‟ble Supreme Court in the case of Commissioner of Central Excise, Delhi Vs. Maruti Udyog Ltd. [(2002) 141 ELT 3] held that "The sale price respondent has to be regarded as the entire price inclusive of excise duty because it is the respondent who has, by necessary implication, taken on the liability to pay all taxes on the goods sold and has not 13 Service Tax Appeal No.75776 of 2014 sought to release any sum in addition to the price obtained by it from the purchaser. The purchaser was under no obligation to pay any amount in excess of what had already been paid as the price of the scrap."
(3) In view of the above, the Appellant submits that they have correctly discharged the service tax liability along with applicable interest and therefore, the demand of Rs.1,95,934/- is not sustainable and liable to be set aside.
(4) Without prejudice, the Appellant further submits that the Ld. Commissioner while passing the impugned OIO, did not recognise the payment of Rs.1,67,181/- made by the Appellant on 02-09.2013 in spite of the fact that all necessary evidences were furnished along with the reply to the SCN. Thus even if the demand is sustained, the same shall be Rs.28,753/- (Rs.1,95,934 - Rs.1,67,181).
F. Demand of Rs.4,73,252/- under „health care service‟ in respect of sundry debtors (1)The Appellant states that the department in the impugned SCN proposed to levy service tax (including cess) on the entire outstanding balance of Rs. 45,94,677/-as on 31st March 2011 against bills raised for taxable service till 31.03.2011. While confirming the said tax, the Ld. Commissioner failed to appreciate that such outstanding are liable to service tax only on receipt basis in accordance with the prevailing provision at the material period. Accordingly, the Appellant has calculated its liability on collection basis and paid the same to exchequer as and when the same was collected.
(2) The Appellant submits that during the material period, service tax was payable on collection basis and not on the invoice raised basis. It is a fact that the sundry debtors as on 31.03.2011 is a sum total of value of services provided prior to 14 Service Tax Appeal No.75776 of 2014 31.03.2011 for which invoice was raised within 31.03.2011 but the payment against those invoices were not collected till 31.03.2011 but realised at a later date. The service tax liability becomes due only on collection but not on raising the invoice. Therefore, the confirmation of the demand of Rs.4,73,252/- on the unrealised invoice is not permissible under the law and hence the demand is liable to be set aside.
(3) The Appellant in this regard relies upon the decision of the CESTAT, New Delhi in the case of Rajasthan State Road Transport Corporation Vs. Joint Commissioner of Central Excise and Service Tax, Jaipur [ 2024 (3) TMI 1103 - CESTAT New Delhi] G. Demand of Rs.3,28,957/- under „health care service‟ in respect of amount received from corporates for treatment of their employees.
(1) The Appellant states that it is enlisted with various corporates who send their employees / family members for treatment. In terms of the agreement, the employees after the treatment, do not pay any consideration to the Appellant. After the patient is discharged, the appellant sends the bills of that particular employee patient to the concerned employer of such patient for payment. The Appellant states that during the years 2010--‐11 and 2011--‐12(upto30.4.2011) it collected Rs.28,41,936/--‐and Rs.3,52,792/--‐respectively from various corporate with whom it was enlisted for the treatment of its employees / family members of the employees. The department in the impugned SCN has proposed to levy service tax on such amounts under the category "Health Service" and accordingly the Commissioner confirmed the demand by passing the impugned OIO.
15Service Tax Appeal No.75776 of 2014 (2) The Appellant states that w.e.f.01--‐07--‐2010 „health service‟ was brought under service tax net under sub--‐clause(zzzzo)of clause(105)of Section65 which defines the taxable service asunder:
"Taxable service means any service provided or to be provided by any hospital, nursing home or multi--‐specialty clinic, ---
(i) To an employee of any business entity, in relation to health check up or preventive care, where the payment for such health check--‐up or preventive e care is made by such business entity directly to such hospital, nursing home or multi--‐specialty clinic, or
(ii) To a person covered by health insurance scheme, for any health check--‐up or treatment, where the payment for such health check--‐up or treatment is made by the insurance company directly to such hospital, nursing home or multi--‐specialty clinic."
(3) The Appellant submits that under section 65(105)(zzzzo)(i) of the Finance Act, 1994 if a business entity makes payment directly to a hospital, a nursing home or amulti--‐specialty clinic for health check up and preventive care for its employees, then only such service would become taxable under the category "health service‟. Whereas if a business entity makes payment to a hospital or a nursing home only for treatment of its employees, then such service is not included in the definition of taxable service as defined under section 65(105)(zzzzo) of the Finance Act, 1994 hence not liable to service tax on such receipts from the corporate entities.
H. Demand of Rs.1,03,133/- under Section 66A of the Act.
(1) The Appellant submits that during the period from 2007-08 to 2010-11 it incurred various expenses in foreign currency to 16 Service Tax Appeal No.75776 of 2014 the tune of Rs.47,00,048/- (details are available in Annexure-A to the SCN, running page no. 143 of the Appeal paper book) on which the impugned SCN proposed to levy service tax under Section 66A without mentioning any specific classification whatsoever. However, on production of the documentary evidences along with the reply to the SCN, the Ld. Commissioner finally retained Rs.7,27,129/- and Rs.1,38,583/- as expenditure in foreign currency for the years 2008-09 and 2010-11 respectively and confirmed demand of Rs.1,03,133/- under three taxable classifications namely „Business Support Service‟, Commercial Coaching Centre and Tutorial Service‟ and „Scientific or Technical Consultancy Service‟ knowing fully that the demand proposed in the impugned show cause notice without mentioning any taxable service under which the demand was proposed.
(2) The Appellant submits that the Ld. Commissioner travelled beyond the show cause notice while confirming the demand under Section 66A in as much as the impugned show cause notice has not proposed the demand under any taxable classification of service but only mentioned that the assessee has incurred expenses towards payment of consultancy fees, travelling, training expenses in foreign currency to their overseas advisors/consultants.
(3) Whereas, the Ld. Commissioner while confirming the demand, based on the details submitted by the Appellant, suo motu classified those foreign currency expenditures under various taxable classification going beyond the show cause notice. The Appellant in this regard submits that it is well settled that for confirmation of any demand, the show cause notice must clearly classify the taxable head of services under which the demand shall be confirmed.
17Service Tax Appeal No.75776 of 2014 (4) Since the show cause notice in the instant case is silent about the classification of the taxable services under which the service tax demand shall be confirmed, the act of the Ld. Commissioner is beyond jurisdiction and on this ground alone, this demand shall be set aside.
5. In view of the above detailed submissions, the Ld Consultant prays that the confirmed demands are required to be set aside on merits and the appeal may be allowed.
6. He also takes stand that the Show Cause Notice issued on 19.04.2013 for the period October 2007 to April 2011 is also is hit by time bar. Therefore, the entire demand proposed in the impugned show cause notice is barred by limitation in terms of Section 73(1) of the Act. His arguments are as under :
(1) The Appellant submits that it entertained a bona fide belief based on rational interpretation of statutory provisions that it was not liable to pay Service Tax save and except as admitted here in above. The Appellant‟s assertion would be evident from what has been stated and submitted here in above. It is well settled in law that longer period of limitation is not invokable in the presence of bona fide belief that services are not taxable.
Hence, the longer period of limitation is not invokable for recovery of Service Tax. The Appellant further submits that reversal of CENVAT Credit attributable to exempted services could not have been done as the law was new to the Appellant. The Appellant also submits that service tax on renting of Immovable property was not paid by the Appellant considering the divergent judicial pronouncements about the levy. Thus service tax was not paid under bona fide belief that tax was not payable and Cenvat Credit attributable to exempted service was not reversed by sheer lack of knowledge of the legal provision as the law has become applicable to the Appellant on 01.07.2010 only. But immediately on getting the SCN the Appellant 18 Service Tax Appeal No.75776 of 2014 deposited the admitted tax along with the applicable interest also reversed the Cenvat Credit attributable to exempted service along with applicable interest.
(2) The Appellant further submits that from the above submissions, it is abundantly clear that there was no deliberate, wilful and fraudulent suppression of material facts and information with an intent to evade payment of service tax on the part of the Appellant as alleged in the impugned OIO.
(3) All the data towards the quantification was gathered based on the details given in the ST 3 Returns, P & L Accounts and Balance Sheets. This shows that all the details were properly recorded in the books of account and there was no deliberate act of suppression in order evade payment of Service Tax.
(4) The Appellant in this regard further relies upon the decisions of the Hon‟ble Supreme Court if the case of Uniworth Textiles Ltd. Vs. CCE, Raipur [2013] 31 Taxmann.com 67 (S.C.), wherein the Apex Court observed and held that „Every non-payment /non-levy of duty does not attract extended period, there must be deliberate default. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is untenable. If that were to be true, then it was beyond understanding, which form of non-payment would amount to ordinary default."
(5) The Appellant further submits that the Department at the time of issue of the impugned Show Cause Notice, could not bring on table any cogent evidence to prove that there was existence of at least one of the required situations to enable the 19 Service Tax Appeal No.75776 of 2014 Department to invoke the longer period. The Appellant further submits that the burden of proof for establishing the ground for invocation of extended period of limitation is on the Department. The Show Cause Notice has to clearly bring out the reasons for invoking extended period of limitation. In this regard reliance is placed on the following decisions.
1. Cosmic Dye Chemicals Vs. Commissioner [1995 (75) ELT 721 (SC)]
2. Commissioner Vs. HMM Limited [1995 (76) ELT 497 (SC)]
3. Kaur & Singh Vs. Commissioner [19978 (94) ELT 289 (SC)]
4. Nizam Sugar Factory Vs. Commissioner [2006 (197) ELT 465 (SC)] (6) In view of the foregoing, the appellant prays that the confirmed demand for the extended period may be set aside on account of limitation also.
7. The Ld AR representing the Revenue, reiterates the detailed findings of the Adjudicating authority. He submits that the appellant failed to opt for reversal of proportionate credit even after knowing that they were rendering taxable and exempted services. Similarly, knowing fully well that when the services are availed abroad, the Service Tax is required to be paid on Reverse Charge basis, still the appellant has not made the payments. In respect of the Business support services, the appellant has provided infrastructure service by giving the particular place within the Hospital premises to the client and the consideration was received by them, on which no Service Tax was paid. Similarly they were providing Business Auxiliary services, on which no Service Tax was paid. Overall the Ld AR submits that only on account of detailed verification of the accounts of the appellant, the 20 Service Tax Appeal No.75776 of 2014 Revenue could get to the bottom to issue the Show Cause Notice. Therefore, he justifies the extended period as well as the demands confirmed by the Adjudicating Authority.
8. Heard both the sides. Perused the Appeal Papers and additional Written submissions made along with the documentary evidence placed by the appellant.
9. We take the issues one by one in the same order as has been done by the appellant :
A. Demand of Rs.1,00,76,186 on account of Cenvat Taken :
9.1 On going through the facts, we find that the appellant initially did not opt for reversal of the Cenvat Credit on proportionate basis.
For this they have given the explanation that since the appellant was not required to be registered as they were Hospital and were providing the related services, they were not aware of the statutory provisions. Had they known the same, they would have ensured that the cenvat credit is taken only in respect of the taxable output services. After the Show Cause Notice was issued, on their own they have reversed Rs.25,02,361/--‐[Rs.14,75,879 + Rs.10,26,482] along with applicable interest of Rs.6,71,531/- on 2nd September, 2013. This fact is also certified by their Chartered Accountant. We have gone through page 464 to 484 of the Appeal and find the claim of the appellant to be correct. We find that Tribunals and High Courts have been consistently holding that reversal of Cenvat Credit would amount non-availment of the same. It is also held that the demand of 6% to 8% percent of the value of the exempted services which is way above the proportionate credit to be reversed on account of exempted services, and hence is legally not sustainable.
21Service Tax Appeal No.75776 of 2014 9.2 We have gone through some of the decisions of the High Courts and Tribunals, which are discussed below :
2004 (174) E.L.T. 422 (All.) HELLO MINERALS WATER (P) LTD.
Versus UNION OF INDIA
4. Certain final products of Chapter 39 of the Schedule to the Central Excise Tariff Act are fully exempted from central excise duty under Notification No. 15/94-C.E., dated 1-3-1994. The condition for this exemption is that no modvat credit should be availed on the inputs used in manufacturing of these final products. In the present case, the credit had been availed on the inputs but had been reversed subsequently. The issue, therefore, is whether this reversal of credit after availment can satisfy the condition of non-availment of credit under the exemption notification.
13.On the facts of the case we are of the opinion that this petition deserves to be allowed. The facts of the case show that the Modvat credit taken on the inputs was reversed by the petitioner. Since the reversal of Modvat credit has been done by the petitioner hence in our opinion it has to be treated that no credit was taken by the petitioner on the inputs, namely PVC granules used in the manufacture of PVC/PP bottles as contemplated under the Notification No. 15/94-C.E., dated 1-3-1994.
14.The undisputed facts of the case are that the petitioners have reversed Modvat credit on the entire inputs amounting to Rs. 10,61,379/-.
15.In fact the show cause notice issued to the petitioner specifically records that the petitioner has reversed the credit on PVC granules, which are used in the manufacture of PP Bottles.
22.Hence in our opinion the Tribunal was not justified in taking a view that reversal of the credit having been made by the petitioner after removal of the final products the petitioner was not entitled to the benefit of Notification No. 15/94-C.E., dated 1-3-1994.22
Service Tax Appeal No.75776 of 2014
23.This view of the Tribunal is in our opinion patently erroneous and contrary to the decision of the five Member Larger Bench of the Tribunal as well as three member bench of the Tribunal, and is also contrary to the ratio of the decision of the Supreme Court in the case of Chandrapur Magnet Wire (supra).
24.In fact the decision of the five Member Larger Bench of the Tribunal in Franco Italian Company (supra) was followed by three Member Bench of the Appellate Tribunal in the case of ICON Pharma and Surgical (P) Ltd., 2000 (40) RLT 918.
25.The Tribunal again in a three Member Bench decision in the case of Tube Investment of India, Final Order No. 795/2002, wherein the specific issue was whether the reversal of credit subsequent to removal of goods, was fetal to the extension of benefits of the notification considered the matter at length. The majority decision upheld the argument of the assessee therein and held that reversal of credit subsequent to the clearance of exempted product is in line with the ratio of the Supreme Court judgment laid down in Chandrapur Magnet Wires Co. (supra).
31.In view of the above decision the writ petition is allowed and the demand of duty and penalty created by order dated 30-10-2001 and confirmed by the Tribunal is set aside. Any amount already deposited by the petitioner shall be refunded to the petitioner forthwith with interest at 10% per annum from the date of deposit to the date of refund, and this refund must be made within two months from today. The petitioner is also entitled for any consequential benefits.
2019 (30) G.S.T.L. 474 (Telangana) TIARA ADVERTISING Vs UNION OF INDIA
9. It may be noted that there is no controversy with regard to the entitlement of the petitioner to avail Cenvat Credit but for this disputed amount of Rs. 17,15,489/- out of the total extent of Rs. 1,41,51,903/-. While so, the second respondent issued show cause notice dated 19-4-2016 to the petitioner 23 Service Tax Appeal No.75776 of 2014 proposing to choose the option under the aforestated Rule 6(3)(i) on its behalf and calling upon it to explain as to why it should not be directed to pay an amount of 5%, upto 31-3-2012, and 6%, from 1-4-2012, of the value of the exempted services, aggregating to Rs. 3,52,65,241/-. In its reply dated 16-5- 2016, the petitioner contended that it was wholly unreasonable on the part of the authorities to expect it to pay over Rs. 3.50 Crore when the total Cenvat Credit availed by it was less than Rs. 1.50 Crore and the actual dispute boiled down to a mere Rs. 17,15,489/-. It relied on case law to support its contention that such an unreasonable result could not be allowed to follow by application of the law. The impugned Order-in-Original however reflects that the second respondent did not even advert to the case law cited before him.
14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. As rightly pointed out by Sri S. Ravi, Learned Senior Counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed Cenvat Credit of Rs. 17,15,489/-.
15. We may also note that in the event the petitioner was found to have availed Cenvat Credit wrongly, Rule 14 of the Cenvat Credit Rules, 2004 empowered the authorities to recover such credit which had been taken or utilised wrongly along with interest. However, the second respondent did not choose to exercise power under this Rule but relied upon Rule 6(3)(i) and made the choice of the option thereunder for 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.
24Service Tax Appeal No.75776 of 2014 Tuticorin Alkali Chemicals & Fertilisers Ltd. Vs. CCE, Tirunelveli 2009 (248) E.L.T. 514 (Tri. - Chennai)
2. We have heard both sides. We find that the assessees reversed the credit taken on the input services used in non-dutiable goods subsequent to the clearance of such goods. They have also paid interest for the delay in reversal of the credit. In this circumstance, applying the ratio of the decision of the larger Bench of the Tribunal in Franco Italian Co. Pvt. Ltd. v. CCE - 2000 (120) E.L.T. 792 and the recent decision of the Tribunal in Mount Mettur Pharmaceuticals Ltd. vide Final Order No. 879/2008, dated 8-8-2008 [2009 (235) E.L.T. 664 (Tri.) = 2009 (13) S.T.R. 414 (Tri.)] and the Hon'ble Gujarat High Court in CCE v. Maize Products - 2009 (234) E.L.T. 431 (Guj.), the reversal of credit by the appellants subsequent to the clearance of the goods is as good as not taking any credit. The Revenue is also compensated for the delay in reversal of credit by payment of interest. Therefore, the demand for 10% of the net sale price of the exempted goods cannot be sustained. Accordingly, we set aside the demand together with the penalty and allow the appeal.
M/s Texmaco Rail & Engineering Ltd.
Vs Commissioner of CGST & Excise, Kolkata North FINAL ORDER NO.75685-75686/2021 Dated 10 NOVEMBER 2021
11. We find that the issue has been settled by the Hon‟ble Telangana High Court in favour of the assessee in the case of Tiara Advertising wherein it has been held that in case the assessee has not chosen to maintain separate accounts, the Credit Rules do not authorize the departmental authorities to choose one of the options on behalf of the assessee so as to demand the amount of 5% or 10% as per Rule 6(3) of the Credit Rules. In that event, the authorities can utmost disallowthe credit, if at all, wrongly availed or utilised by invoking the provisions of Rule 14 of the Credit Rules.
There is no legal provision under which an amount equal to 5% or 10% of the value of the exempted goods can be recovered. The reason is that payment of 25 Service Tax Appeal No.75776 of 2014 an amount of 5% or 10% is one of the choices under Rule 6 and is not a mandatory payment. This choice cannot be foisted upon the appellant nor can such an amount be recovered under Rule 14. The Ld. A/R for the Revenue has not been able to distinguish the above decision at the time of the hearing. Neither in the written submissions filed by him, the said Ruling of the High Court has been dealt with or distinguished.
13. In view of the above factual matrix and the legal position laid down by the Hon‟ble High Court, the Show Cause Notice demanding an amount equal to 5% or 10% of the value of the exempted products under Rule 14 is not supported by law. It is not possible to sustain the impugned demand based on such Show Cause Notice and therefore, the appeal filed by the assessee deserves to be allowed.
9.3 We find that there is no dispute that the appellant has reversed the entire credit of Rs.25,02,361/--‐ taken on exempted output services along with interest of Rs.6,71,531 in September 2013, after the Show Cause Notice was issued. These details have been certified by the Chartered Accountant and they are not being disputed by the Revenue. In the cited High Court decision in the case of Hello Minerals, it has been held that reversal of cenvat credit would result in a situation of no cenvat credit being taken in the first place. In the Tiara decision, the Telangana High Court has gone one step further ahead holding that there is no statutory provision available to demand 6% / 8 %/ 10% in case the assessee does not fullfil the conditions of Rule 6 (3). It went on to hold that at the most the cenvat credit taken can be asked to be reversed. We also find that these decisions have been followed by the Chennai Tribunal and Kolkata Tribunal. Therefore, applying the ratio of these case laws, we hold that the confirmed demand of Rs. Rs.1,00,76,186/-, is legally not sustainable. Accordingly, we set aside the demand and allow the appeal to this extent.
10. The next confirmed demand being considered is as under :
26Service Tax Appeal No.75776 of 2014 B. Demand of Rs.42,94,470/- under „business support service‟.
10.1 We have gone through the Agreement dated 19 th December 2009, between the appellant and Neotia Healthcare [Page 270 of the Appeal book], wherein the relevant portion of the service is given as under :
" In terms of this arrangement, the first party will allow the second party to use the specified space, being the demarcated and independent centrally air-conditioned built up space measuring 330 sqft more or less situated and lying in the lobby portion of Ground floor OF THE Premises No. 2. Sarojini Naidu Sarani (formerly Rawdon Street), Calcutta- 700 017, demarcated in „RED‟ border on the plan annexed hereto and hereafter referred to as the "SAID SPACE", together with a built-up godown space measuring 100 sqft for storing medicines etc. hereafter referred to as "Gowdown Space" for the purpose of selling medicine and other surgical instruments and equipments to indoor and/or outdoor patients and to public at large visiting the said premises."
10.2 We do not find that the appellant, apart from making available the above „space‟ has provided any other infrastructure facilities to the client. In fact, it is clear from the Agreement that all such infrastructure facilities will have to be created by the client with their own cost.
10.3 It is more akin to letting out the space on rent to the client for which the consideration is arrived @ 18% of the sale proceeds of the medicines. Therefore, on factual matrix we do not see any justification to classify the service as "Business Support Service", the classification under which the present demand has been made and confirmed.
27Service Tax Appeal No.75776 of 2014 10.4 Similar issue was before the Mumbai Tribunal in the case of Royal Western India Turf Club Ltd. Vs. Commr. of S.T., Mumbai [2015 (38) S.T.R. 811 (Tri. - Mum)],where the Tribunal has held as under:
5.8 As regards the department‟s claim for Service Tax under the category of „Business Support Services‟ from the book makers and the caterer, the activity of the appellant was to make available space within the premises of the turf club by way of stall or canteen, for a consideration. This activity is nothing but hiring/leasing of immovable property defined under clause (zzzz) of Section 65(105) of Finance Act, 1994 which defines the service as "renting of immovable property or any other service in relation to such renting, for use in the: course of or for furtherance of business or commerce". Business support service is defined in clause (104c) of Section 65 as follows :-
"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 fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting 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.
Explanation. - for the purposes of this clause, the expression "infrastructural support services" includes providing of office space along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security."
5.9 A reading of the above definition makes it very clear that mere renting of office space does not come within the definition. Such 28 Service Tax Appeal No.75776 of 2014 providing of space should be along with other facilities specified therein. It is not the case of the department such facilities have been provided to the book makers or the caterer. Therefore, we do not find any merit in the argument that the renting of office space to the caterer/book maker is liable to be classified as "business support service".
10.5 We find that for the factual matrix of the present case, the ratio of the cited case law is squarely applicable. Therefore, we set aside the demand of Rs.42,94,470/- made under „business support service‟ and allow the Appeal to this extent.
11. The next confirmed demand considered is as under :
C.Demand of Rs.8,87,242/- under „business auxiliary service‟.
11.1 The Appellant have collected the Blood Samples and conducted Tests for which Blood Collection charges realized from the clients were held as liable for Service Tax payment under the category of „Business Auxiliary Service‟. The appellant submits that while the BAS had Seven distinct activities given thereunder, the Show Cause Notice did not specify as to under which category the blood collection would fall.
The relevant portion of Section 65 (19) is extracted below :
„business auxiliary service‟ means any service in relation to, -
(i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or
(ii) Promotion or marketing of service provided by the client; or
(iii) Any customer care service provided on behalf of the client; or
(iv) Procurement of goods or services, which are inputs for the client; or 29 Service Tax Appeal No.75776 of 2014
(v) Production or processing of goods for, or on behalf of, the client; or
(vi) Provision of service on behalf of the client; or
(vii) A service incidental or auxiliary to any activity specified in sub-
clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, ................................
11.2 After going through the documentary evidence provided by the appellant, we find that collection of blood samples prima facie does not fall under any of the above seven categories. Further, in the show cause notice, the department has nowhere specified under which clause of the definition of "Business Auxiliary Service" the liability shall be fastened on the Appellant. It is well settled that to bring any activity under the definition of "Business Auxiliary Service" for levy of tax, it is to be clearly mentioned in the show cause notice under which clause of the definition shall apply to fasten that service under the classification of "Business Auxiliary Service".
11.3 It the case law of BALAJI ENTERPRISES Versus COMMISSIONER OF C. EX. & S.T., JAIPUR -2020 (33) G.S.T.L. 97 (Tri. - Del.), wherein an identical issue was being considered, it is held as under :
21. The submission of Learned Counsel for the Appellant is that it was necessary for the Department to specify the activity and the nature of service that was to be taxed and for this it was necessary for the Department to point out the specific clause out of seven clauses mentioned in Section 65(19) of the Act but that was not mentioned in the show cause notice. In support of this contention, Learned Counsel has placed reliance upon the decisions of the Tribunal in Commissioner of Customs & Central Excise, Goa v.
Swapnil Asnodkar [2018 (10) G..S.T.L. 479 (Tri. - Mumbai)] and 30 Service Tax Appeal No.75776 of 2014 United Telecoms Ltd. v. Commissioner of Service Tax, Hyderabad [2011 (22) S.T.R. 571 (Tri. - Bang.)].
22. In Swapnil Asnodkar, a Division Bench of the Tribunal observed as follows :-
"4. We have carefully considered the submission made by both sides. We find that though in the SCN the Respondent was made liable to pay Service Tax but as rightly held by the adjudicating authority, no specific clause of Section 65(19) defining Business Auxiliary service has been shown to be applicable to levy Service Tax. It is not appearing from the show cause notice as to what goods or services the Respondent has promoted or helped to promote. The Appellate Commissioner also on the same ground has held that the demand being vague is not enforceable against the Respondent. We do not find any reason to infer any different view than expressed by the lower authorities as without specifying the activity and the nature of service of the Respondent he cannot be taxed. Further out of the seven clauses under Section 65(19) no clause has been pointed out under which the Respondent is liable for Service Tax."
23. In United Telecoms Ltd., another Division Bench of the Tribunal observed as follows :-
"6. We find that no demand can be confirmed against any person towards Service Tax liability unless he/it is put on notice as to its exact liability under the statute. In the show- cause notice basic to the proceedings, the impugned activities were proposed to be classified under BAS and BSS. This proposal was confirmed by the Original Authority. We find that this order is not in accordance with the law. The impugned order held that UTL provided services on behalf of the client i.e. Director, e-Seva and sustained the demand. We find that under BAS, there are seven sub-clauses. Demand under sub- clause (vii) could be on activities relatable to either one of the 31 Service Tax Appeal No.75776 of 2014 preceding six sub-clauses. Therefore, if a notice issued proposing demand under BAS, the noticee will not be aware as to the precise ground on which tax is proposed to be demanded from him unless the sub-clause is specified. In the instant case, Service Tax was proposed to be demanded for an activity under BAS and BSS. Under BSS also several activities are listed as exigible under that head. In the absence of proposal in the show-cause notice as to the liability of the assessee under the precise provision in the Act, we find the demand to be not sustainable."
24. The aforesaid two decisions of the Tribunal clearly hold that it is imperative for the Department to specify which specific service contained in the seven clauses of Section 65(19) of the Act is being provided and in the absence of any specific service pointed out in show cause notice, the demand cannot be confirmed as the noticee will not be aware as to which precise service contained in the sub- clause has been rendered by him.
25. In the present case, as noticed above, the show cause notice, even after reproducing the seven clauses of Section 65(19), does not specify which particular clause was attracted and it only mentions that "the assessee is an authorized distributor appointed by M/s. TTSL for selling CDMA handsets along with connection to the customers. The expenditure incurred by the distributor is reimbursed by M/s. TTSL in the guise of subsidy and the same appears to be covered under the definition of "Business Auxiliary Service" and chargeable to Service Tax since, the amount received by the assessee was in respect of providing Business Auxiliary Service to M/s. TTSL."
29. The impugned order, therefore, can be set aside only on this ground as the show cause notice does not mention which service out of the seven services specified in Section 65(19) of the Act was undertaken by the Appellant.
32Service Tax Appeal No.75776 of 2014 11.4 Applying the ratio of this case law to the factual matrix of the present case, we set aside the demand of Rs.887242 and allow the appeal to this extent.
12. The next confirmed demand considered by us is as under :
D. Demand of Rs.19,69,383/- under „health care service‟ as pure agent.
12.1 The Appellant submits that while filing the ST 3 Return Form for the month of April,2011, by mistake they have shown the exempted income to the tune of Rs.1,91,20,228/ in the line no.
3F(I)(iii) which is meant for reporting of the amount received as pure agent. Such exempted income should have been reported under line no.3F(I)(ii).The Appellant submits that during the relevant period they were not acting as an agent to any client, not did receive any amount as a „pure agent‟ towards any reimbursements given by the client. They have provided the details at n Annexure -A/13, running page No. 302 to 366 of the Appeal Paper Book] The Appellant therefore, submits that it was a mere clerical mistake on their part while reporting the figure in the ST-3 Return for the month of April, 2011. For this clerical mistake, the Appellant cannot be made liable to pay service tax, which has been calculated by treating the amount of Rs.1,91,20,228 as consideration 12.2 We have gone through the copy of the ST 3 enclosed and find that indeed it is an inadvertent error on their part because of which they have shown an amount of Rs.1,91,20,228/- under Sl.3F(l)(iii) instead of at S.No. 3F(l)(ii), wherein it should have been shown, since this amount was received on account of diagnostic and treatment provided to admitted inpatients which is an exempted service.
33Service Tax Appeal No.75776 of 2014 12.3 Based on the documentary evidence brought on record, we set aside the demand of Rs.19,69,383 and allow the Appeal to this extent.
13. The next confirmed demand as under :
E. Demand of Rs.1,95,934/- under „renting of immovable property service‟.
13.1 The Appellant has submitted due to the confusion about the applicability of Service Tax on renting of immovable property, during the relevant period they have neither collected nor paid any service tax on the rent received from its various tenants. Considering the retrospective amendment in Section 65(105)(zzzz) of the Finance Act, 1994, the appellant calculated the service tax liability amounting to Rs.1,67,181/- on cum-tax basis in terms of Section 67(2) of the Act and deposited the same along with applicable interest amounting to Rs.86,406/- on 02.09.2013. We have gone through the challans and calculation sheet provided by the appellant at page Nos.367 to 389 and find the appellant‟s claims to be correct. Since, the Revenue has not adduced any evidence to the effect that the appellants have charged and recovered the Service Tax from their tenants, we hold that they are entitled for cum-tax benefit in terms of Section 67(2) of the Finance Act 1994.
13.2 Therefore, we hold that the demand is required to be re-
quantified as Rs.1,67,181 and not at Rs.1,95,934/- as calculated by the Revenue. We find the appellant has also paid the interest of Rs.86,406 on account of delayed payment to the Service Tax amount. Hence, we direct the Adjudicating authority to appropriate the amount of Rs.1,67,181 of Service Tax and Rs.86,046 towards interest and we set aside the balance confirmed demand, interest and the entire penalty under this category of confirmed demand.
14. We take up the next issue of demand under „ Health Care service‟ :
34Service Tax Appeal No.75776 of 2014 F. Demand of Rs.4,73,252/- under „health care service‟ in respect of sundry debtors 14.1 We find that the Revenue has confirmed the demand of service tax on the entire outstanding balance of Rs. 45,94,677/- as on 31st March 2011 against bills raised for taxable service till 31.03.2011. The Adjudicating authority has failed to appreciate that such outstanding are liable to service tax only on receipt basis during the period under litigation.
14.2 The appellant shows by way of documentary evidence, along with the Chartered Accountant‟s Certification, that as and when the amounts were realized from the debtors, the same have been properly accounted for and Service Tax has been paid. The Appellant submits that during the material period, service tax was payable on collection basis and not on the invoice basis.
14.3 Considering the statutory provision during the period under litigation along with the factual details provided, we set aside the confirmed demand of Rs.4,73,252/- on the unrealised sundry debtors, and allow the appeal to this extent.
15. The next confirmed demand is on account of service provided to the corporate employees :
G. Demand of Rs.3,28,957/- under „health care service‟ in respect of amount received from corporates for treatment of their employees.
15.1 The Appellant are enlisted with various corporates who send their employees / family members for treatment. After the patient is discharged after treatment , the appellant raises the bills on the corporate for such employees / patients. Demand has been confirmed on such amounts paid by the corporates to the appellant.
35Service Tax Appeal No.75776 of 2014 15.2 The „health service‟ was brought under service tax net w ith effect from 1.7.2010. The relevant por tio n of Sectio n 65 (105) (zzzzo)defines the taxable service asunder:
"Taxable service means any service provided or to be provided by any hospital, nursing home or multi--‐specialty clinic, ---
To an employee of any business entity, in relation to health chec kup or preventive care, where the payment for such health check--‐up or preventive care is made by such business entity directly to such hospital, nursing home or multi--‐specialty clinic, or To a person covered by health insurance scheme, for any health check--‐up or treatment, where the payment for such health check--‐up or treatment is made by the insurance company directly to such hospital, nursing home or multi--‐specialty clinic."
15.3 It gets clarified that if the payment is made towards health checkup and preventive care, then such service would become taxable under the category "health service‟. In the present case, we find that the amount being paid by the corporates is not account of such services, but is on account of in-patient hospitalization charges, which is being paid by the corporates to the appellant.
15.4 Therefore, we set aside the demand of Rs.3,28,957 and allow the appeal to this extent.
16. Confirmed demand on account of import of Services :
H. Demand of Rs.1,03,133/- under Section 66A of the Act.36
Service Tax Appeal No.75776 of 2014 16.1 The appellant during the period 2007-08 to 2010-11 incurred various expenses in foreign currency to the tune of Rs.47,00,048/-.
The SCN proposed to levy service tax under Section 66A without mentioning any specific classification whatsoever. However, on production of the documentary evidences along with the reply to the SCN, the Adjudcating authority dropped a portion of the demand and confirmed the demand on Rs.7,27,129/- and Rs.1,38,583/- as expenditure incurred in foreign currency for the years 2008-09 and 2010-11. On such payments, he has confirmed the demand of Rs.1,03,133/- under three taxable classifications namely „Business Support Service‟, Commercial Coaching Centre and Tutorial Service‟ and „Scientific or Technical Consultancy Service‟ knowing fully that the demand proposed in the impugned show cause notice without mentioning any taxable service under which the demand was proposed.
16.2 We find that while such sub-classification was not part of the Show Cause Notice, the Adjudicating authority has traversed beyond the scope of the show cause notice, while confirming the demand under Section 66A.
16.3 Since the appellant was not put to notice about the sub- classification of the import of service in the Show Cause Notice, we set aside the confirmed demand of Rs.1,03,133/- and allow the appeal to this extent.
17. Now we take up the issue of time-bar or otherwise of the Show Cause Notice which has been issued by invoking the extended period provisions. The Show Cause Notice has been issued on 19.04.2013 for the demand pertaining to October 2007 to April 2011. If see the demands, we find that the main demand is on account of 6% / 8 % 37 Service Tax Appeal No.75776 of 2014 Service Tax on the exempted services on the ground that the appellant has availed cenvat credit in respect of the exempted services. As per our detailed findings in the foregoing paragraphs, the issue as to whether such demand can be legally sustained have been answered in the negative by various High Courts and Tribunals, wherein it is held that even if the cenvat taken is reversed, that would be sufficient. In this case, the appellant has reversed the cenvat taken along with interest and the decision are in their favour. Further all the cenvat credit taken whether for the exempted services or for the taxable services, have been recorded by them in their books of account. All these make it clear that the Dept has not brought in any evidence to the effect that the appellant was indulging in suppression with an intent to evade Service Tax payment. Similarly in case of import of service, even if the same payable, which is not in the present case, the same would be available as Cenvat Credit to the appellant. Hence, there would not be any motive to suppress. The entry of Rs.19 lacs is on account of their clerical mistake while filing the ST3 Returns. In respect of Renting of immovable property services, due to the confusion prevailing at that time, they have neither collected the Service Tax nor paid the same. Subsequently on getting clarification, they have paid the Service Tax along with interest. Thus if all the facts are considered together, we find that the Revenue has not made out any case of suppression, and the non-payment / short payment, if any has been purely on account of interpretational difficulties. The appellant has also shown their bonafides by making the payment of Service Tax, wherever payable, along with interest. Therefore, we hold that the confirmed demand for the extended period is legally not sustainable. We set aside the confirmed demand for the extended period and allow the appeal to this extent even on account of time-bar.
18. Thus the Appeal succeeds on merits as per the terms discussed above on merits and on account of time-bar.
38Service Tax Appeal No.75776 of 2014
19. The appellant would be eligible for consequential relief, if any, as per law.
(Order pronounced in the open Court on 11.02.2025.) Sd/ (R. MURALIDHAR) MEMBER (JUDICIAL) Sd/ (RAJEEV TANDON) MEMBER (TECHNICAL) sm