Suvendu Kumar Pati ORDER
Dr. Suvendu Kumar Pati, Member (J)
1. Proportionate denial of CENVAT credits taken on trading which was considered as exempted service and thereby demand under Rule 6(3) of the CENVAT Credit Rules, 2004 as well as its confirmation in the Order-in-Original that was approved in Order-in-Appeal has been assailed by the appellant in this forum.
2. Factual aspect of this case in brief is that appellant is a manufacturer of pharmaceutical products as well as trader. During the EA-2000 audit conducted by the officers of the Central Excise, Belapur Commissionerate in the appellant's concern, it was noticed that during the year 2008-09 appellant had rendered exempted services of trading for an amount of Rs. 1,34,59,909/- and had not maintained separate account as provided in the Rule 6(3) of the CENVAT Credit Rules, 2004 for which 8% of the value of exempted service was considered as due on the appellant. Show-cause notice was issued accordingly for recovery of Rs. 1,68,712/- from the appellant alongwith interest and proportionate penalty, matter was adjudicated upon, duty demand of Rs. 1,25,199/- alongwith interest and equivalent penalty were confirmed by the Assistant Commissioner, Division-IV, Service Tax, Mumbai-VII by the adjudicating authority and the same order was confirmed by the Commissioner (Appeals) by way of dismissal of appeal preferred by the present appellant. Hence the appeal to CESTAT.
3. In the memo of appeal and during course of hearing of the appeal, among other points, learned Counsel for the appellant Shri Yogesh Mistry submitted that show-cause notice was issued even after the extended period of 5 years of limitation was over since duty demand for trading activity relate to financial year 2008-09 and the show-cause notice was issued on 22.04.2014. He further argued that there was no allegation concerning suppression of facts with intent to evade duty was made against the appellant even to invoke extended period and trading being held as not a service, invocation Rule 6(3) to raise a demand by the respondent-department is uncalled for, for which the order passed by the Commissioner (Appeals) is required to be set aside.
4. In response to such submissions, learned Authorised Representative for the respondent-department Shri S.K. Hattangadi, Assistant Commissioner argued in favour of the reasoning and rationality of the order passed by the Commissioner (Appeals) and submitted that the issue of limitation was well addressed by the Commissioner (Appeals) in his order and date of filing of Service Tax return is supposed to be taken into consideration for computation as per provision contained in Section 73(6) for the Finance Act, 1994 and since ST-3 return copy submitted by the appellant indicates that ST-3 return for the disputed period was filed on 22.04.2009, the show-cause notice was well issued within the period of limitation, for which interference by the Tribunal in the order of the Commissioner (Appeals) is uncalled for.
5. Perused the case record. As found from the show-cause notice and even in the Order-in-Original there was no Service Tax liability shown in the table that pertains to financial year 2009-10, 2010-11, 2011-12, 2012-13 and the only Service Tax liability due against the appellant for the financial year 2008-09 against which last ST-3 return was filed on 22.04.2009. Show-cause notice been issued on 22.04.2009 is, therefore, barred by the period of limitation since issued one day after the stipulated period of 5 years is over which extended period can only be invocable under certain contingency primarily when appellant-assessee intended to evade payment of tax there was no intention shown in the documents available on record for the period 2012-13 & 2011-12 since Service Tax liability against appellant was shown as zero in the audit report for that period. It is not understood as to under what authority the Excise Officials had travelled beyond the period of 18 months to find out, if any Service Tax was due when they found no evidence of fraud, collusion, willful misstatement, suppression of fact or contravention of the provision of the Finance Act or Rule within the statutorily prescribed 18 months. In my considered view the respondent-department can travel only backward from the current assessment to the past period and not like the audit people who usually move forward from the year last audit was closed up to the current assessment/financial year. Be that as it may, show-cause notice issued after expiry of 5 years would be barred by limitation as held in the order of Hon'ble Supreme Court in CCE, Ahmedabad-I Vs. M. Square Chemical reported in 2008 (231) ELT 194 (SC) and Ilavia Enterprises Vs. CCE, Jaipur reported in MANU/CE/0813/1996 : 1997 (91) ELT 26 (SC). Therefore, the demand would not survive.
6. It is worthwhile to mention here that 'trading' is a pure sale which is subjected to the taxable jurisdiction of the provisional Government and no Service Tax liability accrues from pure sale un-associated with any service component as has been elaborately dealt by the Tribunal in the case of Medisary Laboratories P. Ltd. Vs. CCGST, Kolhapur vide final Order No. A/87803/2018 dated 01.11.2018. On this count also the demand would not survive. Hence the order.
ORDER
7. The appeal is allowed and the order passed by the Commissioner of Central GST & CX (Audit-II), Mumbai vide Order-in-Appeal No. SK/GST (Audit-II)/MUM/44/Appeals Raigad/2018 dated 12.03.2018 is hereby set aside.
(Order pronounced in the open court on 13.12.2019)
© Manupatra Information Solutions Pvt. Ltd.