2017 (8) TMI 1230 - AT - Service Tax

Site Formation Services - abatement under N/N. 1/2006-ST - denial of notification on the ground that appellant have availed the Cenvat credit in respect of capital goods - Held that - the appellant have prima facie discharged the entire service tax liability as applicable in accordance with. law. Ld. Commissioner has not carefully perused contract document and billing made by the appellant in respect of site formation service and construction service - matter needs to be re-considered in the light of actual fact available on record. As regard the abatment notification, appellant have admittedly not availed Cenvat credit either in respect of input or input service. The show cause notice alleges that they have availed credit in respect of capital goods, therefore Notification No.1/2006-ST is not available to them. The allegation prima facie incorrect as there is no restriction in availing Cenvat credit on capital goods in order to avail exemption N/N. 1/2006-ST or under works contract composition scheme, therefore appellant not violated any condition, hence the abatment availed by them is correct and legal. 100% CENVAT credit availed on capital goods - Held that - as per the provision, the appellant was supposed to take credit of Cenvat credit of only 50%, however in the subsequent financial year remaining 50% credit was available - In the present case Cenvat credit of 50% was wrongly availed from date of taking credit till first day of subsequent financial year, therefore during such period appellant is liable to pay interest. Appeal allowed by way of remand.

Summary

Issues:
1. Demand confirmation for entire services as Site Formation Services for the period 2006 to 2010.
2. Allegation of non-availability of abatement Notification No.1/2006-ST due to Cenvat credit availed on capital goods.
3. Discharge of service tax on regular basis for Site Formation Service and Commercial or Industrial Construction Service.
4. Treatment of entire services as Site Formation Service by the Commissioner without considering the nature of services.
5. Verification of payment of service tax, nature of services, and availability of Notification No.1/2006-ST.
6. Clarification on availing Cenvat credit on capital goods and abatement under Notification No.1/2006-ST.
7. Reconsideration of service tax demand on Site Formation Service.

Analysis:
1. The judgment addresses the confirmation of demand for services as Site Formation Services for the period 2006 to 2010. The appellant argued that they discharged service tax regularly for both Site Formation Service and Commercial or Industrial Construction Service, availing abatement under Notification No.1/2006-ST. The Tribunal found that the Commissioner treated all services as Site Formation Service without considering the contract documents, which clearly showed the different nature of services provided and tax discharged accordingly.

2. The issue of non-availability of abatement Notification No.1/2006-ST due to Cenvat credit availed on capital goods was raised. The appellant contended that they did not violate any conditions as there was no restriction on availing Cenvat credit on capital goods to claim the abatement. The Tribunal agreed with the appellant, stating that the abatement availed was legal and correct, as they did not utilize the credit for capital goods.

3. The judgment highlighted the importance of verifying the payment of service tax, nature of services provided, and the availability of Notification No.1/2006-ST. The Tribunal emphasized the need for a thorough examination of contract documents and billing to determine the correct discharge of service tax liability. It was noted that the appellant had not availed Cenvat credit on input or input services, contrary to the allegations made.

4. Regarding the treatment of services as Site Formation Service by the Commissioner, the Tribunal found that a re-examination of the matter was necessary. The Commissioner was directed to pass a fresh order after considering all facts and providing proper reasoning. The Tribunal allowed the appeal by remanding the case to the Original adjudicating authority for a reevaluation of the service tax demand on Site Formation Service.

In conclusion, the judgment addressed various issues related to the demand confirmation for services, abatement availed, verification of service tax payments, and the proper treatment of different types of services provided. The Tribunal emphasized the importance of a detailed examination of contract documents and billing to determine the correct discharge of service tax liabilities.