The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the longer period of limitation not available when the entire information on service tax liability is in the knowledge of the Revenue.
On scrutiny of records, it transpired that the appellant, Arya Logistics, was availing benefit of Notification No. 1/ 2006 –ST and paid the Service tax after availing abatement of 70% under the category of Transport of goods in container by rail. However, at the same time appellant has also availed the Cenvat credit on input services, which was in contravention to the provisions of the Notification.
The appellant was issued show cause notice proposing service tax demand of Rs. 1,79,30,482/- under proviso to Section 73(1) of the Finance Act, 1994 read with Section 68 & 75 of the Finance Act, 1994. It was also proposed for imposition of penalties.
The Commissioner, on adjudication, confirmed the demand of Service tax of Rs. 1,68,83,309/- for the period 2008-09 to 2010-2011 under the category of “Transport of Goods by Rail” and Service tax amounting to Rs. 6,785/- on commission amount along with interest and penalties. Aggrieved by the said order, the appellant is in appeal before the Tribunal.
Abhishek Doshi, Chartered Accountant, who appeared on behalf of the appellant submitted that they were under impression that they are eligible for abatement also for commission income on rail freight. The whole case has been adjudicated only on account of wrong reporting in ST-3 return. However, such wrong reporting was due to bonafide interpretation and there was no evasion of tax
It was further submitted that the appellant was required to make payment at full rate of service tax on commission income. However, appellant has wrongly paid the service tax on commission income on abated value of 30%. In this regard, it is stated that demand has been proposed and confirmed under the Transportation of goods by Rail Services and not under the Business Auxiliary Services. It is well settled legal principle that demand for a particular service can be raised under that category of service only and no other categories of services.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “The appellant has maintained proper books of accounts in the normal course of business. It is pertinent to note that the entire case of the department on merit is that since appellant have availed Cenvat Credit, they violated the condition of abatement notification No. 01/2006-ST. As discussed above the facts that availment of Cenvat Credit and payment of Service Tax on the abated value were declared in the ST-3 return.”
“Inasmuch as the entire information was in the knowledge of the Revenue, the longer period of limitation is not available. In view of these facts the show cause notice should have been issued within the normal period of one year as prescribed under Section 73(1), whereas the show cause notice for the period April 2008 to March 2009 was issued on 26.02.2013 i.e. after prescribed limit of one year” the Bench noted.
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