2018 (9) TMI 1718 - AT - Service Tax

Works Contract Service - Construction of Residential Complex Service - appellant were paying service tax under Construction of Residential Complex Service from 16.06.2005, however stopped doing so from 01.08.2006 considering the activities to be Works Contract based on CBEC circular dt. 1.8.2006. Assessee resumed payment of service tax under works contract w.e.f. 1.6.2007 availing the benefit of reduced liability under Works Contract (compensation scheme for payment of service tax) Rules, 2007 - demand of service tax for different periods under different heads - Composition Scheme - CENVAT Credit. Period up to 1.6.2007 - Held that - As the law laid down by the judgment of the Hon ble Apex Court in the case of L&T Ltd. 2015 (8) TMI 749 - SUPREME COURT , there will not be any service tax liability on the assessee. Appeals of the assessee on this score succeed - demand set aside. Period from 1.6.2007 to 1.7.2010 - Held that - The CBEC in Circular dt.10.02.2012 reiterating its earlier circular of 29.01.2009 has clarified that for the period 1.7.2010 such services provided by the builders / developers will not be taxable - services prior to 1.7.2010 also not taxable. Period w.e.f. 1.7.2010 - composition scheme under the said Rule 3 (3) - Held that - The adjudicating authority has denied the benefit of the composition scheme only on the preliminary ground that the assessee has not exercised option before due date of payment of tax - denial of compensation scheme to the assessee on the said ground is not justified and improper and therefore requires to be set aside - demand set aside. CENVAT Credit - period 1.6.2005 to 1.7.2010 - Held that - Appellant had paid service tax - Hon ble Apex Court in the case of Punjab Tractors Vs CCE Chandigarh 2005 (2) TMI 141 - SUPREME COURT OF INDIA have held that when duty is paid by the assessee even on exempted goods, modvat credit availed and reversed at the time of clearance of the final product cannot be demanded - credit remains allowed. Input service credit - duty paying invoices - denial also on the ground that related invoices did not bear invoice number and / or date - Going by the provisions of Rule 9 (2) of CCR 2004, as also plethora of decisions of higher appellate forums on this issue, these discrepancies in the credit availing documents are very much condonable and should be considered as curable defect only - credit allowed. Appeal allowed in toto.

Summary

Issues:
Limited issue regarding service tax liability under different categories, denial of cenvat credit, imposition of penalties, and benefit of compensation scheme.

Analysis:
1. The case involved a dispute regarding service tax liability under different categories for specific periods. The assessee had stopped paying service tax under Construction of Residential Complex Service from 01.08.2006, considering the activities to be "Works Contract." The department issued show cause notices for various periods, proposing recovery of differential service tax liability, denial of cenvat credit, and imposition of penalties. The resultant adjudication orders confirmed these proposals, leading to multiple appeals by the assessee.

2. The detailed analysis of each appeal, including the periods involved, categories of service, amounts adjudicated, cenvat credit issues, and penalties imposed, was presented. The assessee argued various points, including the non-taxability of services based on legal precedents and circulars, the eligibility for compensation scheme, and the denial of cenvat credit based on invoice discrepancies.

3. The Tribunal addressed each issue separately. It ruled in favor of the assessee for periods up to 1.6.2007 and from 1.6.2007 to 1.7.2010, citing legal judgments and circulars supporting the non-taxability of services during those periods. The Tribunal also found in favor of the assessee for the period from 1.7.2010, allowing the benefit of the compensation scheme and rejecting the denial of cenvat credit based on legal precedents.

4. The Tribunal highlighted that the denial of cenvat credit and the imposition of penalties were not justified based on legal principles and precedents. It emphasized the condonable nature of discrepancies in credit availing documents and the non-sustainability of demands on cenvat credit when service tax was paid, even on exempted goods.

5. Ultimately, all the appeals filed by the assessee were allowed, setting aside the impugned orders related to service tax liability, cenvat credit denial, and penalties. The departmental appeal on reduced penalty imposition was dismissed, concluding the case with a comprehensive ruling in favor of the assessee.

6. The judgment provided a detailed analysis of each issue raised, considering legal interpretations, precedents, and relevant circulars to arrive at a fair and just decision in each aspect of the case.