2015 (4) TMI 128 - AT - Service Tax

Denial of benefit of Abatement Notification of 67% on the ground that Cenvat Credit has been availed - Credit was reversed subsequently - Notification No.15/2004-ST dated 10.6.2004 as amended by Notification No.1/2006-ST dated 1.3.2006 - Held that - since the cenvat credit has been reversed, benefit of abatement cannot be denied - demand and penalty set aside - However interest is imposed from date of availment upto the date of reversal of credit - Decision in the case of Chandrapur Magnet Wires pvt. ltd. (1995 (12) TMI 72 - SUPREME COURT OF INDIA) followed - Decided partly in favour of assessee. Management, Maintenance and Repair service - Invocation of extended period of limitation Held that - The contracts were signed before 1.7.2003 and bills were raised prior to 1.7.2003. But actually services may have been rendered by them prior to and after 1.7.2003. No delineation of services rendered before 1.7.2003 and after 1.7.2003 has been made. During the arguments, it appeared that such categorization is not available in the records. - On merits there appears to be no doubt the service rendered after 1.7.2003 will be leviable to service tax. However, relying on the case of PT Education and Training Services (2008 (12) TMI 82 - CESTAT, NEW DELHI), we hold that as the issue relates to interpretation of provision of law, imposition of penalty and extended period of limitation are not warranted. - demand alongwith interest and penalties are set aside on limitation. - Decided in favor of assessee.

Summary

Issues:
1. Confirmation of demand on payments received after a certain date under extended period of limitation.
2. Denial of abatement benefit due to availing credit on inputs and capital goods.

Analysis:

Issue 1:
The appellant contested the demand confirmed on payments received after 1.7.2003 due to annual maintenance contracts signed before that date. The Tribunal noted the lack of clarity on when services were actually rendered under the contracts. While acknowledging the liability for services post 1.7.2003, the Tribunal, citing legal precedent, held that since the matter pertained to the interpretation of the law, penalties and extended limitation period were unwarranted. Consequently, the demand, interest, and penalties were set aside concerning the limitation issue.

Issue 2:
Regarding the denial of abatement benefit for commercial and industrial construction services due to availing credits, both parties cited legal judgments, including Supreme Court rulings. The Tribunal analyzed the precedents and highlighted the importance of strict compliance with conditions for availing exemptions. Referring to a specific case's similarity to the present scenario, the Tribunal followed the precedent to set aside the demand for service tax and penalties. However, the Tribunal directed the payment of interest on the availed credit amount until its reversal date.

In conclusion, the appeal was disposed of based on the above analysis and directions provided by the Tribunal.