Custom, Excise & Service Tax Tribunal
Pinkcity Logistics Ltd vs Cgst & Ce Kanpur on 3 May, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.50229 of 2015
(Arising out of Order-in-Appeal No.KNP-EXCUS-000-COM-015-14-15 dated
30/09/2014 passed by Commissioner of Customs, Central Excise & Service
Tax, Kanpur)
M/s Pinkcity Logistics Ltd., .....Appellant
(V-5-04, Ansal's Garg Enclave,
122/235, Sarojini Nagar, Kanpur)
VERSUS
Commissioner of Central Excise &
Service Tax, Kanpur ....Respondent
(Commissionerate, Kanpur)
APPEARANCE:
Shri Dharmendra Srivastava, Chartered Accountant &
Shri Suhail, Advocate for the Appellant
Shri Manish Raj, Authorised Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70213/2024
DATE OF HEARING : 28 February, 2024
DATE OF PRONOUNCEMENT : 03 May, 2024
SANJIV SRIVASTAVA:
This appeal is directed against Order-In-Original No. KNP-
EXCUS-000-COM-015-14-15 dated 30.09.2014 of the
Commissioner GST, Customs and Central Excise Kanpur. By the
impugned order following has been held:
"67. In light of the foregoing discussions and the findings
recorded therein, I pass the following orders:-
I. I order that the entire amount of Rs.72,74,952/- (Rupees
Seventy Two Lakhs Seventy Four Thousand Nine Hundred
Fifty Two only) received by M/s Pinkcity Logistics Ltd. V 5-
Service Tax Appeal No.50229 of 2015
2
04, Ansal‟s Garg Enclave, 122/235, Sarojini Nagar, Kanpur
for Vehicle hire charges for the period from F.Y.2008-09 to
F.Y.2012-13, should be treated as taxable value for
providing service of Supply of Tangible Goods Services as
per section 65(105)(zzzzi) and for providing declared
Service as per section 66E(f) of the Finance Act, 1994, and
accordingly I confirm the demand of Service Tax (including
Education Cess and Secondary & Higher Education Cess)
amounting to Rs.7,83,274/- (Rupees Seven Lakhs Eighty
Three Thousand Two Hundred Seventy Four) and order for
its recovery under proviso to Section 73(1) of the Finance
Act, 1994 (as amended from time to time) for the reasons
detailed here-in-above.
II. I confirm the demand of wrongly availed Cenvat Credit
amounting to Rs.2,61,15,096/- (Rupees Two Crores Sixty
One Lakhs Fifteen Thousand Ninty Six Only) by the party
during the period from F.Y.2008-09 to F.Y.2012-13, and
order for its recovery under the provisions of Rule 14 of
the Cenvat Credit Rules, 2004 read with Section 73(1) of
the Finance Act, 1994.
III. I also confirm the demand of interest due on the aforesaid
amounts and order for recovery of the same from the
aforesaid party under the provisions of Section 75 of
chapter V of the Finance Act, 1994 read with Rule 14 of
the Cenvat Credit Rules, 2004.
IV. I impose a penalty of Rs.200 per day or 2% of the Tax
amount per month, whichever is higher, upto 09₩h May,
2008, upon the aforesaid party under Section 76 of the
Finance Act, 1994, for failure to pay Service Tax under
Section 68 of the said Act read with Rule 6 of Service Tax
Rules, 1994, as per the provisions existing at the relevant
time. For the period from 10" May 2008 onwards, no
penalty is being imposed under Section 76 of the Finance
Act, 1994 due to the amendment in Section 78 of the
Finance Act, 1994;
Service Tax Appeal No.50229 of 2015
3
V. I impose a penalty of Rs. 10,000/- (Rupees ten thousand
only) upon the party under the provisions of Section 77(2)
of the Finance Act, 1994 for the aforementioned reasons.
VI. I impose equal Penalty of Rs.7,83,274/- (Rupees Seven
Lakhs Eighty Three Thousand Two Hundred Seventy
Four)upon them under Section 78 of the Finance Act, 1994
for suppressing the value of taxable services provided by
them under the category of Supply of Tangible Goods
Service with intent to evade payment of service tax.
VII. I impose an equal Penalty of Rs. Rs.2,61,15,096/- (Rupees
Two Crores Sixty One Lakhs Fifteen Thousand Ninty Six
Only) upon them under Rule 15 of the Cenvat Credit Rules,
2004 read with section 78 of the Finance Act, 1994 for
wrong availment of Cenvat Credit under Cenvat Credit
Rules, 2004
2.1 Appellant is registered with the department w. e. f.
02.08.2007 under the category of "(1) Clearing &
Forwarding Agent Service falling under Section 65 (25) of the
Finance Act, 1994, (2) Business Auxiliary Services & (3)
Transport of goods by Road. The party was also availing the
facility of Cenvat credit.
2.2 During the course of audit and further scrutiny of Balance
Sheets of the party for the financial years from 2008-09 to
2012-13, it was noticed that during the period from 2008-09 to
2012-13, the party has rented out some of their trailers
(vehicles) to M/s Kataria Carriers, Kanpur and have received rent
from M/s Kataria Carriers, Kanpur for such renting of trailers
(vehicles) by them and the same has been shown in the Balance
Sheets as "vehicle hire charges received". The total amount
received by them from 2008-09 to 2012-13 comes to the tune of
Rs. 72,74,952/-, on which service tax under the taxable category
of "Supply of Tangible Goods Services" was payable as detailed
in table below:
Service Tax Appeal No.50229 of 2015
4
(Figures in Rs.)
S Period Amount of rent Rate of Service
No. received Service Tax Tax
1 2008- 5,02,305/- 12.36 62,085/-
09
2 2009- 17,14,594/- 10.30 1,76,603/-
10
3 2010- 15,19,494/- 10.30 1,56,508/-
11
4 2011- 23,92,612/- 10.30 2,46,439/-
12
5 2012- 11,45,947/- 12.36 141.639/-
13
Total 72,74,952/- 7,83,274/-
2.3 Further, during the course of audit and scrutiny of invoices
on the basis of which the Cenvat Credit was taken by the party,
it was also noticed that the party was availing Cenvat Credit on
the different heads mentioned on the invoices namely
documentation charges terminal handling charges and bill of
lading charges on invoices/debit notes. These heads are in
respect of charges related to Custom House Agent Services.
Hence, it appears that the Cenvat Credit on said charges would
be available for output service of Custom House Agent Service.
The detail of such inadmissible credit taken by the appellant is
indicated in table below:
(Figures in Rs.)
Sl. No Period Cenvat Taken Cenvat utilized
1 2008-09 53,86,547/- 53,86,547/-
2 2009-10 31,32,105/- 31,32,105/-
3 2010-11 37,07,660/- 34,36, 186/-
4 2011-12 36,13,192/- 38,08,897/-
5 2012-13 1,02,75,592/- 93,11,378/-
Total 2,61,15,096/- 2,50,75,1 13/-
2.4 Thus revenue was of opinion that by not paying the service
tax in respect of "Supply of Tangible Goods Services" and by
Service Tax Appeal No.50229 of 2015
5
availing the inadmissible cenvat credit, appellant have
contravened the provisions as follows:
Section 67 of the Finance Act, 1994, read with Service Tax
(Determination of Value) Rules, 2006, in as much as they
undervalued the services provided by them which were
taxable under the category of "Supply of Tangible Goods
Services" (prior to 1.07.2012) and under Section 66E(f) of
Finance Act, 1994 (w.e.f. 01.07.2012)
Section 68 of the Finance Act, 1994 read with Rule 6 of the
Service Tax Rules, 1994, in as much as the party did not
paid the applicable service tax in respect of taxable
services falling under category of "Supply of Tangible
Goods" Services (prior to 1.07.2012) and under Section
66E(f) of Finance Act, 1994 (w.e.f. 01.07.2012).
Section 69 of the Finance Act, 1994 read with Rule 4 of the
Service Tax Rules, 1994, in as much as the party failed to
obtain registration under the category of "Supply of
Tangible Goods" Services
Section 70 of the Finance Act, 1994, read with Rule 7 of
the Service Tax Rules, 1994 in as much as the party failed
to Self-assess correctly the liability of Service tax upon
them.
Rule 3 of the Cenvat Credit Rules, 2004 read with Rule 2()
of the Cenvat Credit Rules in as much as it availed the
Cenvat Credit which was not admissible
2.5 Accordingly, a show cause notice dated 14.10.2013 was
issued to the party, whereby they were required to show cause
as to why:-
(i) the amount of Rs.72,74,952/- ( Rupees Seventy Two
Lakhs Seventy Four Thousand Nine Hundred Fifty
Two only) received by them for Vehicle hire charges
for the period from F.Y.2008-09 to F.Y.2012-13,
should not be treated as taxable value for providing
service of Supply of Tangible Goods Services as per
section 65(105)(zzzzj) and for providing declared
Service as per section 66E(f) of the Finance Act,
Service Tax Appeal No.50229 of 2015
6
1994, and accordingly Service Tax (including
Education Cess and Higher Education Cess)
amounting to Rs.7,83,274/- (Rupees Seven Lakhs
Eighty Three Thousand Two Hundred Seventy Four)
should not be demanded and recovered from them
under proviso to Section 73(1) of the Finance Act,
1994 (as amended from time to time) for the
reasons detailed here-in-above
(ii) the Cenvat Credit amounting to Rs.2,61,15,096/-
(Rupees Two Crores Sixty One Lakhs Fifteen
Thousand Ninty Six Only) wrongly availed by them
during the period from F.Y.2008-09 to F.Y.2012-13,
should not be demanded and SCN 5l recovered
under Rule 14 of the Cenvat Credit Rules, 2004 read
with Section 73(1) of the Finance Act, 1994.
(iii) Interest should not be demanded / recovered from
them on the amounts demanded in Para 10(i) &
10(ii) above under the provisions of Section 75 of
chapter V of the Finance Act, 1994 read with Rule 14
of the Cenvat Credit Rules, 2004
(iv) Penalty should not be imposed upon them under
Section 76 of the Finance Act 1994, for the failure to
make the payment of Service Tax in prescribed time
limit
(v) Penalty should not be imposed upon them under
Section 77(2) of the Finance Act, 1994 for the failure
to self-assess the correct taxable value
(vi) Penalty should not be imposed upon them under
Section 78 of the Finance Act, 1994 for suppressing
the value of taxable services provided by them under
the category of Supply of Tangible Goods Service
with intent to evade payment of service tax
(vii) Penalty should not be imposed upon them under
Rule 15 of the Cenvat Credit Rules, 2004 read with
section 78 of the Finance Act, 1994 for wrong
Service Tax Appeal No.50229 of 2015
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availment of Cenvat Credit under Cenvat Credit
Rules, 2004.
2.6 The show cause notice has been adjudicated as per the
impugned order referred in para 1 above.
2.7 Aggrieved appellant has filed this appeal.
3.1 Have heard Shri Dharmendra Srivastava, Chartered
Accountant for the appellant and Shri Manish Raj Authorized
Representative for the revenue.
3.2 Arguing for the appellant learned counsel submits that:
Supply of transport vehicles to Goods Transport Agency is
exempted from Service Tax vide
o Notification No. 29/2008-ST dated 26/06/2008,
01/2009-ST dated 05/06/2009 (applicable till
30.06.2012)
o clause 22(b) of Mega-exemption Notification No.
25/2012-ST (applicable w.e.f 01.07.2012) which
exempts service of supply of goods carriage, without
transferring right of possession and effective control
of such goods carriage to GTA;
All invoices were already produced before department at
time of audit which contains all particulars as required as
per Notification No. 01/2009-ST dt 05/06/2009.
Govt. has exempted such services as cenvat credit of
renting of goods carriage or any service is not available to
a GTA denial of credit would be against intent of law
Appellant was under bonafide belief that no Service Tax
liability arises in respect of supply of vehicles to GTA u/s
65(105)(zzzzj) of Finance Act, 1994 (till 30.06.2012) & u/s
66 E(f) of Finance Act,1994 (w.e.f 01.07.2012), hence, it
did not take registration under Supply of Tangible goods
Service
Cenvat Credit of Service Tax paid on Document Charges,
terminal handling charges and bill of lading charges is
admissible output service
Service Tax Appeal No.50229 of 2015
8
Services on which credit is taken are for exports, hence
they get covered in inclusive part of definition of input
service as per Rule 2(l) of CCR, 04 as they are activities
relating to business.
The inclusive definition of input service is preceded by
word "such as". The expression "such as' is purely
illustrative & not restrictive;
The words "relating to" widens scope of definition of input
service;
Input services which have only remote or no nexus with
output services will get covered so long as these are
related to activities of business;
Even w.e.f. 01.04.201 1, disputed input services are used
for providing output service hence, are eligible input
services under Rule 2(l) of CCR,04;
Decisions relied on-
o Hema Engineering Industries Ltd.[2016 (46) S.T.R.
439 (Tri. - Del.)];
o Fine Care Biosystems [2010 (17) S.T.R. 168 (Tri.-
Ahmd.)]
cenvat When registered procedural tax credit has under
mistake) been should CHA paid
which not service; be has apparently denied never under
been merely wrong objected
because category by dept. appellant (which is hence, not a
CCR,04 nowhere states registration as a condition
precedent for availing cenvat credit as held in Samsung
India Electronics Ltd.[2017 (52) S.T.R. 497 (Tri. - All.)];
Appellant got subsequently registered for CHA Service on
12.7.2013
Respondent has without considering submissions of
appellant & without giving any specific submission on case
laws relied on passed a non-speaking order which is invalid
in law.
Without prejudice to above submissions, appellant entitled
to cum tax benefit on rental receipts of vehicle as service
Service Tax Appeal No.50229 of 2015
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tax not collected separately because appellant was under
bonafide belief of exemption
Extended period of limitation should not be invoked as-
o matter involves interpretation;
o all transactions are recorded in books of accounts
o Regularly filed returns
o Reliance is placed on Rudra Infra Developers [Final
Order No. 70034/2019 dated 08.01.2019]
No penalties should be imposed and Appellant entitled to
relief u/s 80;
Penalty should not be imposed under section 76 & 78
simultaneously even before 10.05.2008
all transactions are recorded in books of accounts
therefore Penalty u/s 78 to be reduced to 50%.
3.3 Arguing for the revenue, learned authorized representative
reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the
submissions made in appeal and during the course of arguments.
4.2 The issues for consideration in this appeal are as follows:
(i) Whether the appellant was liable to pay service tax under
the category of "Supply of Tangible Goods Service" on the rented
received for their trailers (vehicles) rented to M/s Kataria
Carriers, Kanpur;
(ii) Whether the CENVAT Credit was admissible to them on the
Document Charges, terminal handling charges and bill of lading
charges;
(iii) Whether extended period of limitation is available for
making this demand;
(iv) Whether penalty under Section 76 & 78 can be imposed on
the appellant.
4.3 On the issue listed at (i), impugned order records the
findings as follows:
"32. Now, I take up the aforementioned issues one by
one. The first issue to be decided is whether the demand
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of Service Tax of Rs. 7,83,274/- towards the services
under the category Supply of Tangible Goods Service
provided by the party is sustainable or not.
33. To have a better appreciation of the matter and
before arriving at a conclusion, it is important to go
through the definition of "Supply of Tangible Goods
Service" as defined in the Section 61(105)(zzzj) of the
Finance Act, 1994. The term "Supply of Tangible Goods
Service" has been defined as under;
[zzzzi) Taxable service means any service provided or to
be provided, to any person, by any other person in relation
to supply of tangible goods including_ machinery,
equipment and appliances for use, without transferring
right of possession and effective control of such
machinery, equipment and appliances;
34 Also, w.e.f. 01.07.2012, as per Section 66E (f) of the
Finance Act, 1994, the said activity shall constitute
declared services, namely: transfer of goods by way of
hiring, leasing, licensing or in any such manner without
transfer of right to use such goods. The said Section is
reproduced as below:-
SECTION 66E. Declared services-- The following shall
constitute declared services, namely:
(f) transfer of goods by way of hiring., leasing, licensing
or in any such manner without transfer of right to use such
goods:
35. I notice that the departmental allegation is based on
the fact that party has rented out some of their trailers
(vehicles) to Ms Kataria Carriers, Kanpur and have
received rent from M/s Kataria Carriers, Kanpur for such
renting of trailers (vehicles) by them and the same has
been shown in the Balance Sheets as vehicle hire charges
received. From the ST-3 returns filed by the party for the
period from F.Y.2008-09 to F.Y.2012-13, it was observed
that the said party was not registered under the said
Service Tax Appeal No.50229 of 2015
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category of taxable service and was not discharging the
applicable service tax on the income received from the said
activity
36. The department, therefore, concluded that hat the
activity of supply of trailers (vehicles) to M's Kataria
Carriers, Kanpur without giving legal right of possession
and effective control is taxable under Section 65 (105)
(zzzzj) of the Finance Act, 1994 (till 30.06.2012) and
under Section 66E(f) of the Finance Act, 1994 (w.e.f.
1.07.2012) and that the party has not obtained Service
Tax Registration under the category Supply of Tangible
Goods Service and they have also not paid Service Tax on
the aforesaid amount of rent received on supply of tangible
goods to M/s Kataria Carriers, Kanpur. Hence, the
applicable service tax of Rs.7,83,274/- is liable to be
recovered from the party.
37. The party, on the other hand contended that
payment of service tax on hiring of goods carriage
vehicles to goods transporting agency deeming it as
covered under supply of tangible goods service under
Section 65(105) (zzzz) is exempted by virtue of
Notification Number 29/2008-ST dated 26/06/2008,
01/2009-ST dated 05/06/2009 and clause 22(b) of Mega-
exemption Notification No. 25/2012-ST. The party‟s
assertion is that the aforesaid notifications clarifies the fact
that the supply of goods carriage to a goods transport
agency for carriage of goods by road liable under GTA
service, without transferring the right as to the possession
and effective control, as been exempted from the service
tax for all the relevant periods i.e. FY 2008-09 onwards
38. I feel that for better understanding of issue, it is
necessary to go through the exemption notifications
referred by the party in their defence
Notification No. 29/2008 - Service Tax dated 26th June,
2008
Service Tax Appeal No.50229 of 2015
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G.S.R. (E).- In exercise of the powers conferred by sub-
section (1) of section 93 of the Finance Act, 1994 (32 of
1994) (hereinafter referred to as the Finance Act), the
Central Government, on being satisfied that it is necessary
in the public interest so to do, hereby exempts the taxable
service of supply of a goods carriage, without transferring
right of possession and effective control of such goods
carriage, referred to in sub-clause (zzzzi) of clause (105)
of section 65 of the Finance Act, provided by any person to
a goods transport agency for use by the said goods
transport agency to provide any service, referred to in sub-
clause (zzp) of clause (105) of section 65 of the Finance
Act, to a customer in relationto transport of goodsby road
in the said goods carriage, from the whole of the service
tax leviable thereon under section 66 of the Finance Act.
2. This notification shall come into force on the date of its
publication in the Official Gazette. Notification
No. 1/2009 - Service Tax dated 5th January., 2009
G.S.R. ( ).- In exercise of the powers conferred by sub-
section (1) of section 93 of the Finance Act, 1994 (32 of
1994) (hereinafter referred to as the Finance Act), and in
supersession of the notification of the Government of India
in the Ministry of Finance (Department of Revenue),
No.29/2008- Service Tax, dated the 29thJune, 2008,
published in the Gazette of India Extraordinary, vide
G.S.R.482 (E), dated the 29th June, 2008, except as
things done or omitted o be done before such
supersession, the Central Government, on being satisfied
that it is necessary in the public interest so to do, hereby
exempts the taxable services specified in sub-clauses (j),
(k), (zr), (zza), (zzb), (zzzf). (zzzq) and (zzzzi) of clause
(105) of section 65 of the Finance Act, provided by any
person to, a goods transport agency for use by the said
goods transport agency to provide any service, referred to
in sub-clause (zzp) of clause (105) of section 65 of the
Finance Act, to a customer in relation to transport of goods
Service Tax Appeal No.50229 of 2015
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by road, from the whole of the service tax leviable thereon
under section 66 of the Finance Act subject to the
condition that the invoice issued by such service provider,
providing services should mention the name and address
of the goods transport agency and also the name and date
of the consignment note, by whatever name called, issued
in his behalf.
Notification No. 25/2012-Service Tax [as amended by
03/2013-ST] New Delhi, the 20th June,2012
G..S.R.....(.).- In exercise of the powers conferred by sub-
section (1) of section 93 of the Finance Act, 1994 (32 of
1994) (hereinafter referred to as the said Act) and in
supersession of notification number 12/2012- Service Tax,
dated the 17th March, 2012, published in the Gazette of
India, Extraordinary, Part I, Section 3, Sub-section (i) vide
number G.S.R. 210 (E), dated the 17th March, 2012, the
Central Government, being satisfied that it is necessary in
the public interest so to do, hereby exempts the following
taxable services from the whole of the service tax leviable
thereon under section 66B of the said Act, namely:-
1............
22. Services by way of giving on hire (a) to a state
transport undertaking, a motor vehicle meant to carry
more than twelve passengers; or (b) to a goods transport
agency , a means of transportation of goods;
23.... .....to. clause 31.
39. I observe that the period of demand is from 2008-09
and the Notification Number 39. 29/2008-ST was issued on
26/06/2008 which was later superseded by Notification
No.1/2009 issued on 05.01.2009,. Therefore, in my
opinion the effective Notification will be Notification
No.1/2009 - Service Tax dated 5th January, 2009 for
larger period of time. On perusal of Notification
No.01/2009-ST dated 05.01.2009, I notice that the
Notification exempts taxable service specified in sub-clause
Service Tax Appeal No.50229 of 2015
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(zzzz)) of clause (105) of Section 65 of the Finance Act,
provided by any person to a goods transport agency for
use by the said goods transport agency to provide any
service referred to in sub-clause (zzp) of clause (105) of
Section 65 of the Finance Act, to a customer in relation to
transport of goods by road from the whole of the service
tax leviable thereon under Section 66 of the Finance Act
subject to condition that the invoice isued by such service
provider providing service should mention the name and
address of the goods transport agency and also the name
and date of consignment note, by whatever name called,
issued in his behalf.
40 I find that the party has contended the issue only on
the ground of exemption Notification, but at the same
time, they have not submitted any documentary evidence
to satisfy the condition as laid down in the Notification No.
12009 - ST dated 5th January, 2009 which provides that
the invoice issued by such service provider providing
service should mention the name and address of the goods
transport agency and also the name and date of
consignment note, by whatever name called, issued in his
behalf.
I find that in case of U.G. SUGAR & INDUSTRIES LTD.
Versus COMMISSIONER OF C. EX., MEERUT-lI reported in
2011 (266) E.L T. 339 (Tri. - Del.), it was held that
mere raising of defence itself does not amount to
producing the proof in that regard.
once the defence was raised by the appellants, it was
essentially for the appellants to lead necessary
evidence in that regard.
mere raising of plea in answer to the show cause
notice does not by itself mean the proof of
correctness of such plea
When the plea relates to certain factual aspect, it is
absolutely necessary for the person raising such plea
Service Tax Appeal No.50229 of 2015
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to make the same good by producing sufficient
evidence in support of such plea
41 In the instant case, I observe that there is no
documentary evidence supporting the contention of the
party, and accordingly, I hold that the activity of supply of
trailers (vehicles) to M/s Kataria Cariers, Kanpur without
giving legal right of possession and effective control is
taxable and party is liable to pay service tax on the
amount received under the head vehicle hire charges
received.
42. Further, I observe that the party has argued that
Services provided by a GTA in relation 42 to transportation
of goods is leviable to service tax under GTA service.
However, service tax for the GTA service provided is
payable only on 25% of the amount charged for providing
the GTA service and the balance amount is exempt from
levy of service tax. In the view of this provision, GTAs are
not entitled to take input credit under Cenvat credit
scheme on goods and services used for GTA service. GTAs
often provide services for transportation of goods by road
using the goods carriage obtained on rent or hire basis.
Relief has been provided by the notification is on the
ground that the service tax paid on renting or hiring of
goods carriage could not be claimed as input credit for
payment of service tax towards GTA service
43 . I find that the party as interpreted the provision by
presuming the intention of the legislation. I observe that
the statute should be read in plain words that is,
expression, words etc. used in a fiscal statute are to be
imparted their plain meaning. It is not permissible to read
words into such enactment in the garb of intention of
legislature or spirit of law. This principal of statutory
interpretation has been often repeated by the Apex Court
in catena of judgments.
Service Tax Appeal No.50229 of 2015
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In the case of Tarulate Shyam Vs C.I.T., the Hon‟ble
Supreme Court has observed that: "In a taxing statute,
one has to look merely at what is normally said. There is
no room for any intendment. There is no equity about a
tax. There is no presumption as to a tax. Nothing is to be
read in, nothing to be implied. One can only look fairly at
the language used. There is no scope for importing into the
statute words, which are not there. Even if there is a casus
omissus, the defect can be remedied only by legislation,
and not by judicial interpretation".
Further, in the case of Reliance Cellulose Products Ltd. Vs
CCE [1997(6)SCC464), the Hon‟ble Supreme Court has
observed that:
"If the word used in a fiscal statute is understood in
common parlance or in the commercial world in a
particular sense, it must be taken that the Excise Act
has used that word in the commonly understood sense.
That sense cannot be taken away by attributing a
technical meaning to the word. But if the legislature
itself has adopted a technical term, then that technical
term has to be understood in the technical sense. In
other words, if in the fiscal statute, the article in
question falls within the ambit of a technical term used
under a particular entry, then that article cannot be
taken away from that entry and placed under the
residuary entry on the pretext that the article, even
though it comes within the ambit of technical term
used in a particular entry, has acquired some other
meaning in market parlance."
44. In view of the above analysis, I find that party has
failed to established their case with substantial evidential
support, thus, the allegation of the department that the
activity of supply of trailers (vehicles) to M/s Kataria
Carriers, Kanpur, without giving legal right of possession
and effective control, is taxable under Section 65 (105)
(zzzz) of the Finance Act, 1994 (till 30.06.2012) and under
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Section 66E (f) of the Finance Act, 1994 (w.e.f.
1.07.2012), is upheld."
4.4 From the above and submissions made by the appellant
before us it is quite evident that there is no dispute in respect of
taxability of these charges under the category of "Supply of
tangible Goods Service" as defined by Section 65 (105) (zzzz) of
Finance Act, 1994 till 30.06.2012 or as per Section 66 E (f) of
the Finance Act, 1994 w.e.f from 01.07.2012. Appellant is
pleading that these services in their case are exempted from
payment of service tax as per Notification Number 29/2008-ST
dated 26/06/2008, 01/2009-ST dated 05/06/2009 and clause
22(b) of Mega- exemption Notification No. 25/2012-ST. In para
38 of the impugned order said notifications have been
reproduced verbatim. Commissioner has denied the benefit of
the said exemption, only by stating that appellant has failed to
produce the documentary evidence to show its eligibility to the
said notification. They have failed to produce the documents as
specified in Notification No 01/2009-ST. We do not have any
hesitation in accepting the contention of Commissioner, to the
effect that the exemption notifications need to be strictly
construed and it is for the person claiming the benefit of
exemption to satisfy with regards to his eligibility to the
exemption. Reliance is placed on the decision of the Hon'ble
Supreme Court in the case of Dilip Kumar & Co [2018 (361)
E.L.T. 577 (S.C.)] wherein following has been held:
"52. To sum up, we answer the reference holding as under
-
(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
4.5 It is quite evident from the show cause notice and the impugned order, that these charges are reflected in the book of accounts of the appellant as "vehicle hiring charges received". It is also not in dispute that these charges have been received Service Tax Appeal No.50229 of 2015 18 from M/s Kataria Carriers, Kanpur as rent against renting of trailers (vehicles) to them by the appellant. In the paper book filed by the appellant, the invoices against which these charges have been received are available from page no 139 to 191. From perusal of these invoices it is quite evident that the name of the recipient of services is clearly mentioned as "Kataria Carriers, H O 133/198 T P Nagar, Kanpur -208023" and description is stated as "Goods Transport Vehicle (Trailers) Hire Charges". In our view Appellant has substantially complied with the conditions as laid down by the Notification No 1/2009-ST and the benefit of this notification cannot be denied to them. For other periods for which this demand has been confirmed even the notification do not lay down this condition and hence the benefit of same cannot be denied. Thus in our view the demand made in the impugned order on this ground needs to be set aside.
4.6 On the issue at (ii) impugned order records the findings as follow:
45. Now coming to the second issue, I find that the departmental case is that during the course of audit and scrutiny of invoices on the basis of which the Cenvat Credit was taken by the party, it was noticed by the officers that the party was availing Cenvat Credit on the different heads mentioned on the invoices namely documentation charges, terminal handling charges and bill of lading charges on invoices/debit notes. These heads actually are in respect of charges related to Custom House Agent Services. The party was providing services in capacity of Clearing and Forwarding Agent, defined under Section 65 (25) of the Finance Act, 1994 and not in capacity of Customs House Agent, defined under Section 65 (35) ibid. Hence it appears that the Cenvat Credit on said charges would not be available for output service of Clearing and Forwarding Agent. The departmental contention is that the Cenvat Credit availed during the period from 2008-09 to 2012-13 on the above referred heads is inadmissible to them.
Service Tax Appeal No.50229 of 2015 19
46. The party, at the outset denied the allegation and contested that the definition input as per law is broadly in two parts - first i.e. main part and second i.e. inclusive part. First part of the definition is restrictive in scope as it covers input services directly or indirectly used for providing output service or used in relation to manufacture or clearance of final product. However, second i.e. inclusive part of the definition expands the scope much beyond the coverage of first part. Further, the inclusive part itself is of two sub-parts The first sub-part gives some illustrations of input services while second part covers all services used in relation to „activities relating to business, such as Any service in relation to business would be „input service‟. Thus, the allegation that document charge, bill of lading and terminal handling charges are not covered under the ambit of input service is not sustainable in the eyes of law
47. For imparting more clarity in the matter, I find it necessary to go through the definition of input service as per Rule 2() of the Cenvat Credit Rules, 2004, which is reproduced as under:-
As per Rule 2(l) input service means any service-
(i) used by a provider of taxable service for providing an output service or;
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, (This clause has been amended vide Notification 10/2008 C.E.(N.T.)-dated 01.03.2008) and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, Service Tax Appeal No.50229 of 2015 20 procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training; computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
48. I find that the party‟s contention is mainly based on the inclusive part of the definition of input services. The argument put forth by the party is that the inclusive part expands the scope of main definition; that the inclusive part can cover items which are not getting covered in main part of definition; that it is also well settled hat „in relation to widens the scope of definition; that it is not restrictive; that input services which have only remote or no nexus with output services or manufacture of goods will get covered so long as these are related to activities of business.
49. On going through the definition as provided in Rule 2
(l) of the Central Excise Rules, 2004, I observe that in the
(i) part of definition itself the issue becomes amply clear. The provision stipulates that "i) used by a provider of taxable service for providing an output service or", From the plain reading of the first leg of the said definition, it is clear that the different heads mentioned on the invoices are evidently not being used by the party for providing the output service, hence, not covered under the first part of the said definition of the „input service‟. The first part of the definition is restrictive in scope as it covers input services used for providing taxable output service, or used by manufacturer, directly or indirectly, in relation to manufacture or clearance of final product upto the place of removal. Though, the definition of input service‟ is very wide, yet it only includes the services used in the manufacture and clearance of final products
50. I notice that the party has put-forth their argument mainly on the inclusive part of the definition. On analyzing Service Tax Appeal No.50229 of 2015 21 the second leg of the definition, which is commonly called includes‟ portion, it is clear that services, which are specifically enumerated, are the activities which qualify as „activities relating to manufacture and clearance of the finished goods‟ would fall within the purview of the definition of „input service‟ provided it is received by the manufacturer of final products. Distinction between the services used in manufacture, and service used in relation to manufacture is too thin. However, it is to be seen from the above, whether documentation charges, terminal handling charges and bill of lading charges, is in any way covered in the second part of the definition of the „input service‟; and for that we have to confirm if it relates either directly or indirectly in or in relation to manufacture and clearance of final products.
51. As per inclusive definition of „input service‟, all services used for activities relating to various stages of manufacturing and clearances of finished articles such as procurement of raw materials, transportation, advertisement and sales promotion, etc, are „input services‟. The definition specifically stipulates that „activities pertaining to manufacture and clearance of goods or provision of output service are eligible to be classifiable as „input service‟. Thus, it cannot be said that all input services used in activities relating to manufacture and clearance of the final product are „input service‟ whatever may be the purpose.
52. In this reference, I place reliance on the judgment passed in the case of Commissioner of C.Ex., Nagpur Versus Ultratech Cement Ltd. reported in 2010 (260) E.L.T. 369 (Bom.), it was observed by the Hon‟ble High Court that-
The expression "activities in relation to business" in the definition of input service postulates activities which are integrally connected with the business of the assessee. If the activity is not integrally connected with Service Tax Appeal No.50229 of 2015 22 the business of the manufacture of final product, the service would not qualifty to be an input service under Rule 2() of the 2004 Rules.
53 I also find that the department in the impugned show cause notice has alleged that these heads are in respect of charges related to Custom House Agent Services. The party has contended that that the documentation charges, bill of lading fees clearly falls within the ambit of input services, as it has been consumed in the output service, but at the same time, applied for the service tax registration under the category of Customs House Agent and were granted registration on 12.07.13. I observe that this action of party itself confirms departmental contention that the credit taken and utilised by the party on documentation charges, terminal handling charges and bill of lading charges are not in the eligible category of inputs for the output services as provided by the party such as Clearing & Forwarding Agent Service (2) Business Auxiliary Services&(3) Transport Of Goods by Road.
54 Accordingly, I hold that the credit on documentation charges, terminal handing charges and bill of lading charges availed by the party does not merit to be classifiable as input service as per requirements of the Rule 2(l) of Cenvat Credit Rules, 2004. As such, the party is not eligible to take the credit of Rs. 2,61,15,096/- on the basis of said services during the period and the wrong credit taken by the party in contravention of the provisions of the Finance Act, 1994 is liable to be disallowed.
55. Regarding reliance upon the various case laws cited by the party in their support, I would not like to discuss each and every case-law, because the fact in one case is not completely same or identical with the facts in the other case. The Hon‟ble Supreme Court of India, in the case of CCE, Bangalore Vs Srikumar Agencies [2008 (232 )ELT 0577 (S.C.)], has stated in para 5 that, one additional or Service Tax Appeal No.50229 of 2015 23 different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. They have also quoted the words of Lord Denning in this, which is as follows: "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.
56 Therefore, keeping the above observation in mind while deciding the case, I reiterate that the cases relied on by the party cannot be applied in their entirety to this case, as the facts are different from case to case."
4.7 Undisputedly the appellants are provider of output service. For providing the output services they receive certain input services against which they take the CENVAT Credit of the service tax paid by them. Impugned order seeks to deny the credit taken by the appellant on the ground that the services of documentation charges, terminal handling charges and bill of lading charges are the services which should have been used for providing the services under Taxable category of CHA services. As appellant is not registered for providing the services under this taxable category the credit is not admissible. We do not find any merit o logic in the said reasoning. Rule 2 (l) of the CENVAT Credit Rules, 2004 do not provide the input services, by specifying the input services which would be used for providing a particular taxable. The phrase used in the definition is "used by a provider of taxable service for providing an output service". From perusal of the above phrase, it is quite evident that CENVAT Credit is admissible in respect of any input service subject to following conditions:
input service is used by a provider of taxable service;
Service Tax Appeal No.50229 of 2015 24 for providing an output service.
Undisputedly appellant is a provider of taxable service and is registered with the department for providing output services. The term output service has been defined by Rule 2 (p) of the CENVAT Credit Rules, 2004 as follows:
""output service" means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly;"
Having satisfied the above conditions as laid down by the main clause of the definition in our view the appellant would be eligible for CENVAT Credit in respect of these services, even without reference to the inclusive part of the definition. Appellant has contested the denial of CENVAT Credit before the adjudicating authority by referring to the inclusive part of definition and the said challenge was not accepted. Similar view has been expressed by Hon'ble Gujarat High Court in the case of Excel Crop Care Ltd [2008 (12) S.T.R. 436 (Guj.)] in following words:
"7. On a plain reading of Rule 2(l)(i), „input service‟ means any service used by a provider of taxable service for providing an output service, or, means, any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services used in relation to setting up, modernization etc., advertisement or sales promotion, procurement of inputs, accounting, auditing etc., including computer networking etc. The definition of the term „output service under Rule 2(p) of the Rules means any taxable service provided by the provider of taxable service, to a customer, client, subscriber etc. The Explanation to the said clause makes it clear that if a person liable for paying Service tax does not provide any taxable service or does not manufacture final Service Tax Appeal No.50229 of 2015 25 products, the service for which he is liable to pay service tax shall be deemed to be the output service. Similarly, the definition of the phrase provider of taxable service‟ appearing in Rule 2(r) includes a person liable for paying Service tax."
4.8 Thus we do not find any merits in this part of the order seeking to deny the credit in respect of these input services used by the appellant for providing the output services.
4.9 As we are setting aside the demands on merit, issues listed at (iii) & (iv) are not relevant and we are not recording any findings in respect of these issues.
4.9 In view of discussion as above, we do not find any merits in the impugned order and set aside the same.
5.1 Appeal is allowed.
(Pronounced in open court on-03 May, 2024) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp