2016 (3) TMI 1117 - AT - Service Tax

Cenvat credit - construction service, erection, commissioning and installation service, works Contract service, consultancy engineer s service, business auxiliary services and business support services - services used for erection of BTS Towers - Held that - services of construction and works contract are excluded from the definition of input service, therefore the Cenvat Credit on the said two services are disallowed. As regard other services there is a dispute between the Ld. Commissioner and the appellant that some of the services like design service, technical testing and analysis service are in fact business auxiliary service and business support service, which needs verification by the adjudicating authority. However, irrespective of difference of service whether it is design service, technical testing and analysis service or business auxiliary service and business support service, the same for not falling under the exclusion category, therefore the credit cannot be denied on these services. Similarly, the services like erection, commissioning and installation and consultancy engineer s service are also not excluded in the amended definition of input service. Therefore in my considered view, except the construction service and works contract service the credit on other services are admissible. Imposition of penalty - Held that - the issue relates to the interpretation of definition of input service and on most of the services credit is admissible and the credit is inadmissible in respect of construction and works contract service, only due to the reason that there is exclusion w.e.f.1.4.2011. In this facts and circumstances, I do not see any malafide intention on the part of the appellant. Therefore penalty of ₹ 25,000/- imposed by the lower authorities under Rule 25 is hereby set aside. - Decided partly in favour of appellant

Summary

Issues:
Credit disallowed on certain services, penalty imposed under Rule 15(1) of Cenvat Credit Rules, 2004.

Analysis:
The appeal challenged the Order-in-Original disallowing credit on services like Consulting Engineers Service, Designer Service, Technical Testing & Analysis Service for erecting BTS Towers. The Commissioner excluded these services from the definition of input services post 01.04.2011, leading to the disallowance of ?5,27,136. However, credit for Optical Fibre Cable Duct was allowed. The main issue was the credit of ?5,27,136 and the penalty of ?25,000 under Rule 15(1) of Cenvat Credit Rules, 2004.

The appellant argued that post 01.04.2011, only construction and works contract services were excluded from input services, not others like erection, commissioning, consultancy engineer’s service, etc. They cited judgments supporting their claim. The Revenue, however, supported the Commissioner's findings, emphasizing the exclusion of services under the amended definition post 01.04.2011.

The Tribunal noted the appellant's telecom services and the breakdown of credit availed on various services. It analyzed the amended definition of input service post 01.04.2011, excluding construction and works contract services. The Tribunal found a dispute regarding certain services categorized differently by the Commissioner and the appellant, suggesting a need for verification. However, as these services did not fall under the exclusion category, credit denial was unjustified.

Regarding the judgments cited, the Tribunal differentiated the issues, emphasizing the present case's focus on input services rather than materials. It concluded that apart from construction and works contract services, credit on other services was admissible. The penalty under Rule 25 was set aside due to no malafide intention. The appeal was partly allowed on these grounds.

In conclusion, the Tribunal upheld credit disallowance on construction and works contract services but allowed credit on other services, setting aside the penalty imposed. The judgment clarified the interpretation of the amended definition of input services post 01.04.2011 and emphasized the need for services to fall under exclusion categories for credit denial.