2015 (40) STR 509 (Tri. –Bang.) Kakinada Seaports Ltd. vs. C.C.E., S.T, & Cus., Visakhapatanam- II

Facts
The appellant engaged in providing “other port services” in Kakinada Port were issued Show cause notice (SCN) for the period post negative list of services under Reverse charge mechanism (RCM) for business support services and also with respect to CENVAT credit availed on certain input services. It was contested that during the period under consideration, definition of Business Support Services had to be referred u/s. 65B as against section 65 of the Finance Act, 1994 as provided in SCN. Though there was nothing regarding introduction of negative list of services in SCNs and orders, there was no mention that section 65 ceased to have effect. Since RCM was introduced recently on such services, due to ignorance, service tax was already discharged by service provider in routine manner. Therefore, tax cannot be demanded twice on same transaction. Further CENVAT credit availed on the basis of acknowledgment of service provider was disallowed by department. However, the appellant contended that they had availed CENVAT credit on the basis of challan of service provider which must be considered to be valid document for availing CENVAT Credit. Further, CENVAT credit was denied on certain input services and capital goods were contested by the appellant. CENVAT credit was also denied on the ground that input services were eligible for exemption.

Held
The services were covered under business support services either before or after negative list. Even though specific provision were not quoted, the entire demand cannot be set aside especially in view of the fact that RCM and introduction of negative list were mentioned in SCNs and orders. In the scenario of self-assessment, the assessee would be aware of classification and the fact that the assessee contended that section 65 ceased to be in effect, reveals that the assessee was not prejudiced due to omission of section in SCN. Further since service provider had already discharged service tax, even though not liable, demand of service tax cannot be sustained on service receiver. In this case, as a remedy, penalty may be imposed for contravention of law but no penalties may be imposed for non-payment of service tax. It was held that CENVAT Credit was available on the basis of challan (containing all requisite details) under RCM and therefore, it was considered to be sufficient document for availment of CENVAT credit. CENVAT Credit was also allowed on health services, insurance services, Rent-a-cab services, works contract services in relation to erection and installation activity. It was also held that CENVAT credit cannot be denied on the ground that service provider was eligible for exemption.