The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) set aside the service tax demand on export commission and advertisement expenses due to time bar.
Gujarat Agrochem Ltd, appellant-assessee, hallenged the order passed by Commissioner (Appeals) dated 27.05.2013 .The assessee aggrieved by the order appealed before the tribunal.
The assessee’s counsel, argued that the head office handled the export sales commission and advertisement expenses, and the manufacturing unit was unaware of these transactions. He contended that any demand should be raised against the head office, not the unit.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
He also claimed the demand was time-barred, as audits in 2009 and 2010 had already examined the relevant records, with no suppression of facts. Additionally, he stated that since service tax was payable under reverse charge and eligible for Cenvat credit, the demand was revenue-neutral and unsustainable.
Read More:CESTAT upholds rejection of Time-Barred Service Tax Refund Claims
The departmental counsel reiterated the findings of the impugned order, stating that the appellant failed to declare the taxable service value in ST-3 returns. He argued that even if they believed the transactions were exempt, they should have disclosed them. Their failure to do so amounted to suppression, justifying the extended period for the demand. He supported his argument with various judicial precedents.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
A single member bench of Ramesh Nair(Judicial Member examined the submissions and records, noting that the assessee’s audits in April 2009 and May 2010 had already covered the disputed transactions. Since objections could have been raised then, no malafide intent was established.
It also found the demand revenue-neutral, as the assessee was liable under reverse charge but eligible for Cenvat credit. Citing precedents, the tribunal ruled that the extended period was not applicable, declared the demand time-barred, set aside the impugned order, and allowed the appeal.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
