Aviat Health Care Pvt. Ltd. Vs. Commissioner of CGST, Belapur - (Customs, Excise and Service Tax Appellate Tribunal) (13 Dec 2019)

No service tax liability accrues from pure sale un-associated with any service component

MANU/CM/0411/2019

Service Tax

The Appellant is a manufacturer of pharmaceutical products as well as trader. 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 present forum.

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 22nd April, 2009. Show-cause notice been issued on 22nd April, 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.

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. 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 and Ilavia Enterprises Vs. CCE, Jaipur MANU/CE/0813/1996. Therefore, the demand would not survive.

'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. On this count also, the demand would not survive. The appeal is allowed and the order passed by the Commissioner is hereby set aside.

Relevant : Ilavia Enterprises vs. Collector of Central Excise MANU/CE/0813/1996

Tags : DEMAND CONFIRMATION LEGALITY