2014 (1) TMI 453 - AT - Service Tax

Availment of CENVAT Credit - Abatement of 67% from the value of commercial or industrial construction service under Notification No. 15/2004-S.T., dated 10-9-2004 - Held that - Upon examination of the Circular No. 80/10/2004-S.T., dated 17-9-2004 read with the Notification No. 15/2004-S.T., dated 10-9-2004 Revenue intended taxation by value addition, but the assess refuted the same. Adjudicating authority appears to have rightly decided the issue against the assessee following taxation of incremental value principle. In sofar as taxing of the advance is concerned, there is no ambiguity in the law. Law prescribes that the consideration received before, during and after providing of taxable service should enter into the net of the service tax - Cenvat credit is allowable to avoid cascading effect. If taxability does not arise admissibility of Cenvat credit does not arise. Therefore, adjudication has rightly been done on this count also denying the benefit - Decided against assessee.

Summary

Issues involved:
1. Abatement entitlement under Notification No. 15/2004-S.T.
2. Taxability of advance received before providing taxable service
3. Entitlement to Cenvat credit
4. Calculation errors in the show cause notice
5. Time-barred demand

Abatement entitlement under Notification No. 15/2004-S.T.:
The principal issue of abatement was contested by the assessee but denied by the adjudicating authority based on Circular No. 80/10/2004-S.T. and Notification No. 15/2004-S.T. The authority applied the incremental value principle for taxation, ruling against the assessee. The law mandates that consideration received before, during, and after providing taxable service should be included in the net of service tax, leading to a decision against the assessee on this issue.

Taxability of advance received before providing taxable service:
The law unambiguously states that consideration received before, during, and after providing taxable service must be subject to service tax. The authority upheld this principle, ruling against the assessee on this issue as well.

Entitlement to Cenvat credit:
Cenvat credit is permissible to prevent cascading effect, but its admissibility is contingent upon taxability. Since taxability was not established, the benefit of Cenvat credit was rightfully denied by the adjudicating authority.

Calculation errors in the show cause notice:
The authority appropriately addressed any calculation errors in the show cause notice in para 16 of the order, with no intervention needed in this regard.

Time-barred demand:
The appellant's conduct indicated that the abatement claimed was not in accordance with the law, rendering the proceeding not time-barred. Section 73 of the Finance Act, 1994 was correctly invoked, and the adjudication was conducted in compliance with the law. Consequently, the appeal was dismissed based on the observations and conclusions made in the judgment.