2018 (12) TMI 1116 - AT - Service Tax

CENVAT Credit - Construction of the Hotel Building - Held that - Issue decided in appellant own case M/S LEMON TREE HOTEL (CYBER HILLS DEVELOPERS PVT. LTD.) , M/S FLEUR HOTELS PVT. LTD. VERSUS CC, & CE, HYDERABAD-IV 2017 (7) TMI 799 - CESTAT HYDERABAD , where it was held that Input services includes the services used in relation to settingup, modernization, renovation of premises of provider of output services - the credit qua construction of hotel building of appellant allowed. CENVAT Credit - commonly used input services - security services - Internet Services - Held that - The appellants were rendering taxable services of cab operators convention service, Banking and Financial Service, Business Auxiliary Service, Internet caf , restaurant service and accommodation services. The input service credit was availed by the appellant on the construction services which were used for setting up of the premises from where the output services were rendered by the appellant and on the internet caf and security services for the same premises from where the output services were to be rendered by the appellant - in view of SRule 6 (5) thereof no question of denial and reversal of credit, therefore, at all arises - credit allowed. Interest - Penalty - Held that - Demand of interest as well as penalty set aside. Appeal allowed - decided in favor of appellant.

Issues:
1. Service Tax liability on cab operators convention service, Banking and Financial Service, Business Auxiliary Service, Internet café, restaurant service, and accommodation services.
2. Denial of Cenvat Credit on construction services, internet café services, and security services.
3. Barred by time show cause notice.
4. Demand confirmation and penalties under Sections 75, 76, and 78 of the Central Excise Act, 1944.

Service Tax Liability:
The appeal involved a dispute regarding Service Tax liability amounting to ?6,98,525 not paid by the appellants for the period from 2008 to 2011-12. The Department observed that the appellants wrongly availed credit of ?43,98,511 during a specific period and reversed it without payment of interest. The Additional Commissioner confirmed the demand, leading to an appeal before the Commissioner (Appeals), who partially allowed it. The Tribunal considered arguments from both sides and ultimately set aside the order confirming the demand, thereby allowing the appeal.

Denial of Cenvat Credit:
The issue of denial of Cenvat Credit on construction services, internet café services, and security services was extensively discussed. The Tribunal referred to past decisions in similar cases involving Lemon Tree Hotels Pvt. Ltd. and Tidel Park Ltd. to establish that the appellants were entitled to the credit. The Tribunal held that the construction services were used for setting up premises for output services, and the credit on security and internet café services was admissible. The findings of the Commissioner (Appeals) were deemed to be in violation of judicial discipline and were set aside.

Barred by Time Show Cause Notice:
The appellants argued that the show cause notice was time-barred due to no intention to evade duty. However, the Department contended that the extended period of limitation could be invoked due to concealment or misrepresentation of facts. The Tribunal found in favor of the Department, stating that the notice was not barred by time.

Demand Confirmation and Penalties:
The order confirmed the demand for Service Tax but set aside penalties under Sections 76 and 78 of the Act. The Department did not appeal the decision regarding interest on reversed credit and reduced penalties. The Tribunal found no infirmity in those findings, allowing the order to stand. Ultimately, the Tribunal set aside the order confirming the demand, thereby allowing the appeal.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision of the Tribunal, ensuring a comprehensive understanding of the case.

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