2015 (10) TMI 2294 - AT - Service Tax

Liability of Service Tax Demand confirmed on account of denial of 67% abatement under notification No. 1/2006-ST and under Commercial or Industrial Construction Service category Appellant contended that credit was duly reversed before passing of order thus entitled to benefit under Notification No.1/2006-ST Further contended that demand under CICS is not sustainable as services provided to joint venture was in effect service to self and liability of service tax is not sustainable by notification No. 16/2005ST for construction of port as work was for completion of remaining jetty - No wilful mis-statement or suppression of facts. Revenue contended that exemption under Notification is subject to condition of non-availment of CENVAT credit and can be granted only if CENVAT credit is reversed before clearance of goods Joint Venture had a separate service tax registration thus service rendered cannot be said to be service to self Jetty was a personal property which could not be used by any other party and hence does not qualify to be called port and appellant is guilty of suppression of facts as it did not pay service tax and also did not file any ST-3 return. Held That - Benefit of Notification No.1/2006-ST granted on final product since reversal of credit on input was done at Tribunals stage Demand under CICS is untenable as Notification No.25/2007-ST nowhere implies that CICS for construction of public port only is eligible for exemption and private port is not - Appellant received payment for service rendered to joint venture thus contention that services rendered were effect to self is untenable - Allegation of wilful mis-statement or suppression of facts does not remain of much relevance but it is agreed that appellant did not pay service tax and did not file ST-3 returns Impugned order set aside Decided in favour of Assessee.

Summary

Issues:
1. Appeal against Order-in-Original No.24/ST/COMMR/DM/RTK/2013-14 for a confirmed demand.
2. Denial of 67% abatement under notification No. 1/2006-ST due to CENVAT credit on input services.
3. Confirmation of demand under Commercial or Industrial Construction Service (CICS).
4. Appellant's contentions on benefit under Notification No. 1/2006-ST and CICS demand.
5. Departmental Representative's arguments against the appellant's contentions.
6. Consideration of arguments and waiver of pre-deposit for appeal decision.
7. Eligibility for benefit under Notification No. 1/2006-ST after reversal of CENVAT credit.
8. Analysis of judicial precedents and applicability to the case.
9. Examination of service rendered in relation to construction of 'other port' under CICS.
10. Rejection of allegation of wilful mis-statement or suppression of facts.
11. Legal analysis of the grounds for upholding wilful suppression.
12. Conclusion on the sustainability of the impugned demand and setting aside of the impugned order.

Analysis:
The appeal was filed against Order-in-Original No.24/ST/COMMR/DM/RTK/2013-14 confirming a demand, including denial of abatement under notification No. 1/2006-ST due to CENVAT credit on input services and demand under CICS. The appellant contended that the reversal of CENVAT credit was done before the impugned order, citing relevant judicial precedents. The Departmental Representative argued against the contentions, emphasizing conditions for exemption and separate legal entity status of the joint venture. The Tribunal waived pre-deposit and proceeded with the appeal. The eligibility for benefit under Notification No. 1/2006-ST post CENVAT credit reversal was analyzed, citing the Allahabad High Court judgment and distinguishing other cases. The service under CICS was examined, concluding it was in relation to construction of 'other port' eligible for exemption under notification No. 25/2007-ST.

The allegation of wilful mis-statement or suppression of facts was rejected, as the grounds were deemed insufficient based on judicial precedents. The impugned demand was found unsustainable, leading to the setting aside of the impugned order and allowing the appeal. The judgment highlighted the importance of legal interpretations and precedents in determining tax liabilities and exemptions, emphasizing the need for strict adherence to statutory provisions and relevant case laws in tax disputes.