Custom, Excise & Service Tax Tribunal
Indian Hotels Company Ltd vs Commissioner Of Service Tax ... on 1 September, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No..21621 / 2014 Application(s) Involved: ST/COD/22420/2014 in ST/22189/2014-DB ST/Stay/22419/2014 in ST/22189/2014-DB Appeal(s) Involved: ST/22189/2014-DB [Arising out of OIA No.202-2014 dated 14/03/2014 passed by CCE(Appeals-II), BANGALORE ] Indian Hotels Company Ltd Unit- The Gateway Hotel, No-66, Residency Road BANGALORE - 560025 KAR Appellant(s) Versus Commissioner of Service Tax Bangalore-service Tax 1ST TO 5TH FLOOR, TTMC BUILDING,above BMTC BUS STAND,DOMLUR BANGALORE, - 560071 KARNATAKA Respondent(s)
Appearance:
Ms. Aparna Rao, Advocate CEN-EX Services, POST OFFICE BUILDING, 2ND FLOOR, J.B.NAGAR, ANDHERI (EAST) MUMBAI, - 400059 MAHARASHTRA For the Appellant Dr. A.K. Nigam, Addl. Commissioner(AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 01/09/2014 Date of Decision: 01/09/2014 Order Per : B.S.V.MURTHY Learned counsel submits that there is a delay of 13 days in filing the appeal. She submits that this happened because the authorized signatory was hospitalized from 09/06/2014. On going through the records, we find that impugned order was received by the appellant on 19/03/2014 and appeal was to be filed on 18/06/2014 whereas the authorized signatory fell ill on 09/06/2014. There is no proper explanation for the delay of more than two months. Therefore we do not consider that this is a case for condoning the delay without any cost. Accordingly the appellant is directed to deposit an amount of Rs.2000/- (Rupees two thousand only) for condonation of delay. Learned counsel agrees to deposit this amount within eight weeks. This would be considered as confirmed adjudication levy against the appellant and is required to be deposited within eight weeks as agreed and accepted. This observation we are making because after hearing both sides for sometime and even though learned AR opposed it, we came to the conclusion that the appellant has made out a case in their favour and it would not be appropriate to grant stay and keep the matter alive. Accordingly, we propose to dispose the appeal itself at this stage since we heard both sides in sufficient detail.
2. The first demand of more than Rs.59,452/- has been made on the ground that the appellants have provided business support services (BSS) to the customers who used their business center in the hotel. Since appellants allowed the customers to use the photocopier, printer etc. available in the business center, the learned Commissioner has taken the view that this amounts to provision of BSS. The learned counsel also submitted that the appellants have paid service tax required to be paid on internet service and the demand is only for using the business center for other purposes.
3. The Business Support Service is defined under Section 65(104C) of Finance Act, 1994 as under:-
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 assistance for marketing, 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 office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security;
4. In this case, it is not known to whom the service is provided since the customers of the hotel used the facility. It is not known for what purpose the business center was used. In the absence of any knowledge as to what are the purposes for which the service was used, how one can reach a conclusion that the service received by the customers of the appellant could be one of the various services listed under support service of business or commerce is difficult to imagine. Basically the responsibility to show that that a taxable event has occurred and service is leviable to tax is required to be proved by the Revenue. In this case obviously it is an assumption on the part of the Revenue that taking print out, photocopying and use of computer fall under the category of BSS.
5. During November 2006, the appellant had paid the service tax liability by debiting their account in excess of 20% which according to Revenue resulted in violation of Rs. 6(3) of CENVAT Credit Rules 2004 since the appellants did not maintain separate accounts of inputs/input service in respect of exempted and taxable services. The learned counsel submitted that the appellants had in fact utilised less credit during the proceeding months and there is no finding to the contrary that this submission was not correct. She relies upon the decisions in the case of Vijayanand Roadlines Ltd. Vs. CCE, Belgaum [2007(7) STR 219 (Tri. Bang.)] wherein the Tribunal made the following observations in paragraph 6. Relevant portion is reproduced below:-
A careful reading of the above provisions show that when the service provider does not maintain a separate accounts of input service for taxable and non-taxable output service, there is a restriction on utilization of the credit. As per the above rule, the utilization is restricted to 35% of the amount of service tax payable on such output service. At any point of time, the service provider can arrive at his liability which is service tax payable on his output service. He should calculate 35% of his liability. From out of the accumulated credit, he has allowed to utilize up to 35%. There is no indication that the service tax credit accumulated during the earlier period would lapse. In other words, there is no question of lapse of the credit legally taken. In the present case, from May 2003 to March 2004, even though the appellant had input credit available, he chose to pay tax only through PLA. As on November 2003, he had accumulated credit to the tune of Rs. 3,01,932/-. However, for the period from November 2003 to March 2004, the payment was done mostly by utilization of credit. In the month of March 2004, a part of the liability was paid by PLA and another part by utilization of credit. In other words, the total tax paid from December 2003 to March 2004 by utilizing the credit comes to Rs. 4,94,494.00. This is actually equal to 35% of their liability from May 2003 to March 2004. There is no rule which says that the credit accumulated during the month should be used in the same month. In fact no time frame has been fixed in the rules. In these circumstances, the utilization of credit to the extent of Rs. 4,94,494/- during December 2003, January 2004, February 2004 and March 2004 is in order and in consonance with Rule 3(5) of the Cenvat Credit Rules, 2002.
6. In somewhat similar circumstances, the Tribunal in the case of Idea Cellular Ltd. Vs. CCE, Rohtak [2009(16) STR 712 (Tri. Del.)] took the same view. The relevant paragraphs are reproduced below:-
4.2?The Appellant have pleaded that if the 20% ceiling on utilization is applied only to credit of services other than the services covered by Rule 6(5) and credit of inputs goods other than capital goods, utilization of credit for payment of service tax, in excess of the ceiling has taken place only in January 2005, March 2005 and May 2005 and this excess utilized credit cannot be demanded as Rule 6(3)(c) is silent with regard to the period during which the 20% credit shall be utilized and in this regard reliance has been placed on Tribunals judgment in case of Vijayanand Roadlines Ltd. v. CCE, Belgaum reported in 2007 (7) 219 (Tri.-Bang.), wherein the Tribunal with reference to Rule 3(5) of the Service Tax Credit Rules, 2002, which is pari materia with Rule 6(3)(c) of the Cenvat Credit Rules, 2004, has held that the utilization is not restricted to monthly or quarterly basis and that it can be utilized at any time. We agree with this plea. In the case of Vijayanand Roadlines Ltd. (supra) the Appellant during June 2003 to December 2003 period, as against service tax credit utilization quota of 35% of the total service tax payable, had paid entire service tax through PLA and they utilized the unutilized quota of payment through duty credit for January 2003 - December 2003 period, during January 2004 - March 2004 period and the Tribunal held that there is no time frame fixed in Rule 3(5) of the service tax credit Rules, 2002 for utilization of the credit to the extent of 35% of the tax liability. Applying the ratio of the Tribunals judgment in M/s. Vijayanand Roadlines Ltd. case, to this case, if during certain months, the credit utilization for payment of service tax was less than the 20% ceiling specified in Rule 6(3)(c) of Cenvat Credit Rules, 2002, the unutilized credit of those months has to be adjusted against utilization in excess of the 20% ceiling, in other months.
4.3?The demand for excess utilized credit is, therefore, required to be quantified as per our findings in para 4.1 and 4.2 above.
5.?Another plea of the Appellant is that longer limitation period of five years under proviso to Section 73(1) for recovery of excess utilized credit and penal provision of Rule 15(4) of Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 have been wrongly invoked as there is absolutely no wilful misstatement, fraud or suppression of facts etc. with intention to evade the service tax. We agree with this plea of the Appellant, in view of the following -
(a) In each ST-3 return filed during period of dispute, the details of the service tax payable and the service tax paid through credit and through cash under TR-6 challans have been given and therefore the Appellant cannot be accused of concealing the fact that during certain months, their utilization of credit for payment of service tax had exceeded the limit of 20% of the service tax payable.
(b) The dispute in this case is linked with the question as to whether or not the inter-connect usage charges being charged by one telephone service provider from another for network access attract service tax and the Board vide letter No. 199/2/2004-CX-4 dated 15-6-04 intimated BSNL that Interconnect usage charges would not attract service tax. In view of this background, it would be totally unfair for the Department to claim that it was not aware that the Appellant were providing non-taxable service like inter-connectivity, roaming service etc. 5.1?Honble Supreme Court in cases of CCE v. Chemphar Drugs & Liniments reported in 1989 (40) 276 (S.C.) and Pushpam Pharmaceuticals Company v. CCE, Mumbai reported in 1995 (78) 401 (S.C.) has held that something positive, rather than mere inaction or failure on the part of an assessee has to be proved before invoking extended limitation period under proviso to Section 11A(1) of the Central Excise Act, 1944 and that since the expression - Suppression of facts has been used in the company of strong words such as fraud, collusion in wilful default, it cannot be interpreted or mere omission - the act constituting suppression must be deliberate. In this case neither the circumstances indicate suppression of facts, misstatement, fraud etc. nor any evidence in this regard has been produced. Therefore neither the demand beyond the normal limitation period of one year is sustainable nor penalty under Rule 15(4) of Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 is attracted.
6.?In view of the above discussion, we hold that while the provisions of Rule 6(3)(c) of the Cenvat Credit Rules, 2004 are attracted and wrongly utilized credit, if any, is recoverable with interest, the demands are sustainable only for the normal limitation period of one year and have to be quantified as per our findings in para 4.1 and 4.2 above and no penalty is imposable under Rule 15(4) of Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. Therefore, both the impugned orders are set aside and the matters are remanded to the Commissioner for de novo adjudication as per our above directions. The appeals stand disposed off as above.
We find that the issue is covered by the above decisions.
7. CENVAT Credit has been denied on the ground that availment of CENVAT credit by the appellants during 2006-07 to 2007-08 on car hire charges, cake shop maker charges, shower cubicle installation charges and travel agents commission were availed for providing exempted non-taxable services viz. hotel rooms, restaurants and the room guests. Learned counsel submitted that cars were hired for guests to use mandap keeper service on which appellants paid service tax and the service was commonly used, in the cake shop makers also, cakes were used in the mandap keeper service and the shower cubicle installation would be attributable to the installation charges of shower installed in health and fitness center and travel agents charges to be attributable to the various services on which tax was paid. We find the submissions reasonable.
8. Having regard to the fact that show-cause notice was issued on 19/09/2011 whereas the demand relates to the period 2006-07 to 2007-08 and the entire demand is beyond the normal period of limitation and having regard to the submissions made hereinabove which would show that the issues involved clearly involved interpretation of law, classification of service etc., we find that extended period also could not have been invoked in this case. In view of the above observations, the impugned order is set aside and the appeal is allowed with consequential relief, if any, to the appellant. As already observed, the appellant should deposit an amount of Rs.2000/- (Rupees two thousand only) within eight weeks for COD.
(Operative portion of the order pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja.
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