2019 (3) TMI 817 - AT - Service Tax

Erection commissioning and installation services - benefit of abatement - simultaneous availing cenvat credit - under Sl. No.5 of N/N. 1/2006-ST dated 01.03.2006 - Held that - There is a detailed calculation table based whereupon the demand was proposed and subsequently confirmed. Such a calculation is not possible in the absence of the evidence. Further the documents as that of giving details bifurcating the amount received by the appellant with respect to both kind of services (with and without material) are on record. A perusal thereof shows that the value mentioned for the services with material tallies with the value mentioned in the show cause notice. The said perusal is sufficient enough to hold that the services which do not include the value of material and on which the cenvat credit has been availed were not included by the appellant while availing the abatement under the said Notification. The details about cenvat credit on input services have also been brought to the notice of this Bench. There is no denial on part of Department that the appellants were rendering services of erection commissioning and installation and there have been the work orders which include the value of material as well as the labour. CENVAT Credit - Held that - The adjudicating authority has simply relied upon the ST-3 Return for holding that since cenvat credit has been availed one condition for abatement stands not complied with while denying the benefit of the Notification. But it is the simultaneous acknowledgement that the format of ST-3 Return is very restrictive and there is no scope of bifurcation. Hence merely relying upon ST-3 Return for holding the non-compliance of the condition to my opinion was not justified on the part of the adjudicating authority. Specially when there was enormous evidence giving bifurcation for both kind of services (eligible and not eligible for the abatement benefit under the impugned Notification) - the lack of evidence as has been held a ground for rejecting the appeal is not based on the true facts of the case and is rather against the record. Time limitation - Held that - It is observed that apparently there had been two prior audits of the appellant s record. First being in the year 2009 admittedly the appellant had regularly been filing the returns. No suppression or mis-representation of facts can be attributed to the appellant in the given circumstances. The Department was not entitled to invoke the extended period of limitation. Major portion of demand is therefore stands hit by principle of limitation - Appeal allowed - decided in favor of appellant.

Issues:
1. Alleged wrongful availing of abatement under Notification No.1/2006
2. Time bar for show cause notice
3. Denial of benefit due to lack of evidence
4. Calculation of demand based on evidence
5. Compliance with conditions of Notification No.1/2006
6. Invocation of extended period of limitation

Issue 1: Alleged wrongful availing of abatement under Notification No.1/2006:
The appellant, engaged in erection, commissioning, and installation services, was alleged to have wrongly claimed abatement under Notification No.1/2006 while also availing cenvat credit. The order-in-original confirmed penalties for short payment of Service Tax. The appellant contended that the demand was time-barred and argued against the denial of abatement benefits due to lack of evidence. The Tribunal analyzed the conditions of the Notification and found that the denial of benefits was unjustified as there was evidence supporting the appellant's compliance. The Tribunal set aside the order, allowing the appeal.

Issue 2: Time bar for show cause notice:
The appellant argued that the show cause notice issued in 2013 was time-barred due to previous audits in 2009 and regular filing of returns. Citing relevant case law, the Tribunal held that no suppression or misrepresentation of facts could be attributed to the appellant, rendering the extended period of limitation inapplicable. The Tribunal concluded that the demand was largely hit by the principle of limitation, leading to the setting aside of the order and allowing the appeal.

Issue 3: Denial of benefit due to lack of evidence:
The adjudicating authority denied the benefit of abatement under Notification No.1/2006 due to lack of evidence regarding compliance with conditions. The Tribunal noted that the authority's reliance on the ST-3 Return for non-compliance was unjustified as there was substantial evidence providing bifurcation for services eligible and ineligible for abatement. The lack of evidence as a ground for rejecting the appeal was deemed against the record, leading to the order being set aside.

Issue 4: Calculation of demand based on evidence:
The detailed calculation table in the show cause notice formed the basis for the proposed and confirmed demand. The Tribunal observed that the evidence, including documents bifurcating services with and without material, supported the appellant's position. The value mentioned in the notice aligned with the evidence, indicating that services not eligible for abatement were excluded. The Tribunal found the calculation justifiable based on the evidence presented.

Issue 5: Compliance with conditions of Notification No.1/2006:
The Tribunal examined the conditions of Notification No.1/2006, emphasizing the requirement that cenvat credit of inputs or services should not have been availed to claim abatement. The adjudicating authority denied benefits due to lack of evidence of compliance. However, the Tribunal found evidence supporting the appellant's compliance with the conditions, leading to the order being set aside and the appeal being allowed.

Issue 6: Invocation of extended period of limitation:
The Tribunal addressed the invocation of the extended period of limitation by the Department. Citing relevant case law, it concluded that the Department was not entitled to invoke the extended period due to lack of suppression or misrepresentation of facts. The demand was deemed largely barred by limitation, resulting in the order being set aside and the appeal being allowed.

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