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2019 (12) TMI 554 - AT - Service TaxClassification of services - Erection, Commissioning or Installation Service or not - construction of off shore well and modification of existing off shore well platform in Krishna-Godavari basin, besides some other construction services - HELD THAT - The final order portion of Ld. Commissioner is contrary to her own findings in para 25 of the order. Therefore, we find that the sentence The total amount of ₹ 25,78,46,297/- demanded above towards total service tax payable includes CENVAT Credit demanded amount of ₹ 1,20,09,077/- also in para v of the ORDER needs to be quashed as it is contrary to the findings of the adjudicating authority in para 25. Penalty - HELD THAT - In terms of Section 78 of the Finance Act, 1994, the penalty imposable is equivalent to the amount of service tax not paid. Accordingly, in cases of wrong availment of CENVAT Credit, the amount of penalty imposable is also equivalent to the amount of CENVAT Credit wrongly availed. The adjudicating authority has no discretion of imposing a lesser penalty than what is mandatory, under Rule 15 of CCR, 2004 - the penalty under Rule 15 needs to be enhanced. Appeal disposed off.
Issues:
1. Classification of services under "Erection, Commissioning or Installation Service" for service tax. 2. Demand of service tax and irregularly availed CENVAT Credit. 3. Imposition of penalty under Rule 15 of CCR 2004. Issue 1: Classification of services under "Erection, Commissioning or Installation Service" for service tax. The appeal was filed by Revenue against an Order-in-Original passed by the Commissioner of Central Excise & Customs, Visakhapatnam. The case involved an agreement between the respondent and ONGC for construction services. Revenue claimed that services rendered by the respondent fell under "Erection, Commissioning or Installation Service," attracting service tax. A show cause notice was issued demanding service tax and interest, along with penalties under various sections. The Commissioner confirmed the demands and penalties in the impugned order, leading to the appeal by Revenue. Issue 2: Demand of service tax and irregularly availed CENVAT Credit. The Commissioner confirmed the demands as proposed in the show cause notice and imposed penalties. However, she erroneously held that the irregularly availed CENVAT Credit was included in the confirmed service tax amount. The appeal contended that the demands for service tax and CENVAT Credit should be confirmed separately, and the penalty for the irregular CENVAT Credit should match the amount wrongly availed. The Tribunal found discrepancies in the Commissioner's order, noting that the CENVAT Credit amount should not have been included in the service tax demand. Consequently, the sentence including the CENVAT Credit in the service tax payable was quashed. Issue 3: Imposition of penalty under Rule 15 of CCR 2004. The penalty imposed by the Commissioner under Rule 15 of CCR 2004 was challenged in the appeal. Rule 15 mandates a penalty equivalent to the amount of CENVAT Credit wrongly availed. The Commissioner had imposed a penalty of ?10 lakhs, significantly lower than the irregularly availed CENVAT Credit amount of ?1,20,09,077/-. The Tribunal held that the penalty must match the amount of irregularly availed CENVAT Credit, as per the mandatory provisions of Rule 15 and Section 78 of the Finance Act, 1994. Therefore, the penalty under Rule 15 was enhanced to ?1,20,09,077/- to align with the amount wrongly availed. In conclusion, the Tribunal allowed the appeal, modifying the impugned order. The sentence including the irregularly availed CENVAT Credit in the service tax payable was struck down. Additionally, the penalty under Rule 15 of CCR 2004 was enhanced to ?1,20,09,077/- to align with the amount of CENVAT Credit irregularly availed.
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