9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (7) TMI 293 - AT - Service TaxBenefit of abatement - N/N. 1/2006-ST dated 1st March 2006 - commercial and industrial construction service - erection, commissioning or installation service - Held that - It is common ground that the appellant had availed CENVAT credit which was reversed subsequently so that the eligibility for abatement of 67% is not denied. There can be no two opinions that an exemption notification, being a deviation, albeit authorised, from the legislative mandate to levy tax, must be subject to strict interpretation. Credit is merely an accounting acknowledgement of a fact and the sole test of compliance with scheme of CENVAT credit is sufficiency of balance of credit in the CENVAT credit account after all adjustments have been effected. To the extent that the assessee did not utilise credit, the availment of which is in dispute, there is no detriment to Revenue. Wrongful availment of CENVAT credit is visited with specific consequence under the Rules; that is a different cause of action leading to a different outcome which does not concern us in this dispute. There is no prejudice to Revenue by such erasure as it has not deprived the State of any tax that was due. On the contrary, denial of abatement would be an act of encroachment by taxing sale of goods which is beyond the scope of legislative authority. To avoid such encroachment, erasure of credit is the only option. There is no allegation that such erasure has lead to deficiency of available credit at any time. Erasure would thus be substantial compliance and hence denial of abatement in the impugned order is not tenable. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Denial of abatement benefit under notification no. 1/2006-ST dated 1st March 2006. 2. Reversal of CENVAT credit and its compliance with the abatement notification. 3. Interpretation of exemption notifications and substantial compliance. Issue-Wise Detailed Analysis: 1. Denial of Abatement Benefit: The primary issue revolves around the denial of the abatement benefit under notification no. 1/2006-ST, which allows for a 67% abatement of the gross value of consideration for 'commercial and industrial construction service' and 'erection, commissioning or installation service' on the condition that CENVAT credit of duty/tax paid on inputs/input services/capital goods has not been availed. The assessee had availed this abatement but had also availed CENVAT credit, which was subsequently reversed. The Revenue sought to deny the abatement on the grounds that the CENVAT credit was not reversed before the discharge of tax liability on output services, thus not meeting the strict compliance required by the exemption notification. 2. Reversal of CENVAT Credit: The assessee contended that the reversal of CENVAT credit, even if done subsequently, should be considered sufficient compliance with the condition of the abatement notification. The assessee relied on various judicial precedents, including the Hon’ble Supreme Court's decision in Chandrapur Magnet Wires (P) Ltd v. Commissioner of Central Excise and the Tribunal's decision in Khyati Tours & Travels v. Commissioner of Central Excise, which supported the view that subsequent reversal of credit is as good as non-availment. 3. Interpretation of Exemption Notifications and Substantial Compliance: The Revenue argued that exemption notifications should be construed strictly and any deviation from the conditions should result in the withdrawal of the exemption benefit. The Revenue placed reliance on the Hon’ble Supreme Court's decision in Commissioner of Central Excise, New Delhi v. M/s Hari Chand Shri Gopal, which emphasized the need for strict compliance with the conditions of exemption notifications. However, the Tribunal noted that the abatement notification does not exempt the rate of tax but merely allows a deduction in the assessable value of taxable services. Therefore, the Tribunal held that the abatement notification should be construed in the context of substantial compliance rather than strict compliance. Conclusion: The Tribunal concluded that the reversal of CENVAT credit, even if done subsequently, meets the test of substantial compliance with the abatement notification. The Tribunal emphasized that the scheme of CENVAT credit is to prevent the cascading effect of taxation and that the critical factor is the availability of sufficient eligible credit when utilized for discharge of tax on output services. The Tribunal found no prejudice to Revenue by such reversal as it did not deprive the State of any tax due. The Tribunal allowed the appeal of the assessee and dismissed the appeal of Revenue, holding that the denial of abatement in the impugned order was not tenable. Pronouncement: The judgment was pronounced in Court on 12/06/2017.
|
