The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the availment of condition-based excise exemption notification is a choice of to assessee.
The appeal was filed with the question of whether the Adjudicating Authority is correct in holding that an amount of Rs. 60,30,561/- paid by Isgec Unit Dahej, the assessee to be deposited and appropriation of the same in terms of Section 73A(2) of Finance Act, 1994, on the ground that appellant was not required to pay service tax on the job work as per exemption Notification No. 8/2005- ST dated 01.03.2005, therefore the amount paid on such activity is not a service tax but deposited and appropriated under Section 73A of Finance Act, 1994.
Shri Jigar Shah, Counsel appeared on behalf of the appellant submitted that the appellant has charged service tax to the service recipient and the same was paid to the government exchequer therefore, in any circumstance the proposal to treat the amount under Section 73A is not applicable.
Alternatively, he submitted that the Adjudicating Authority has contended that since the amount was not payable in terms of Notification No. 8/2005-ST, the payment made by the appellant to be treated as a deposit and appropriated under Section 73A(2), is not correct as Notification No. 8/2005-ST is a conditional one and it is open to the assessee to avail the same or not. Therefore, there was no compulsion on the appellant to avail of the notification. Accordingly, the payment made by the appellant is correct and legal. Shri P. Ganesan, Superintendent (AR) appeared on behalf of the Revenue and reiterated the findings of the impugned order.
The Commissioner treated the amount of service tax paid by the appellant as a deposit and the same was appropriated under Section 73A(2) of the Finance Act, 1994. From the sub-Rule-2, it is clear that even if any amount of service tax is not required to be paid and the same is collected, it needs to be credited to the Central Government account.
Section 73A(2) of the Finance Act is required only when the assessee, if not required to pay any service tax but collected from the service recipient and not deposited to the Central Government, same needs to be recovered. In the present case, there is no dispute that the appellant has deposited service tax recovered from the service recipient to the central Government.
A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C.L.Mahar, Member (Technical) observed that “since the Notification No. 8/2005-ST exempts but the same is admittedly on certain conditions and is not exemption notification and in terms of Section 5A of Central Excise Act, 1944 which applies to the service tax matters. The entire proceedings against the appellant is not sustainable.”
While allowing the appeal, the CESTAT set aside the impugned order.
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