2020 (1) TMI 185 - AT - Service Tax

Non-payment of service tax - mobilisation advance received from the client - irregular availment of CENVAT credit on common input services used for rendering taxable as well as exempted services - HELD THAT - Commissioner (Appeals) has recorded that appellants had enclosed certain ST-3 returns pertaining to 2012-13 and 2014-15 but had not produced relevant ST-3 returns to prove their claim that they had reversed the amount. This is a fit case to be remanded to the original authority for verification of the following (1) the amount of service tax paid by them on the mobilisation advances received by them; (2) the amount of CENVAT credit reversed by them and its calculation - The original authority shall give the appellant an opportunity of being heard and presenting the documents in support of their claims and accordingly redetermine the tax liability, if any. Appeal allowed by way of remand.

Summary

Issues involved:
1. Non-payment of service tax on mobilisation advance
2. Irregular availment of CENVAT credit on common input services

Analysis:
1. The appellant, engaged in works contract services, was issued a show-cause notice for non-payment of service tax on mobilisation advance and irregular availment of CENVAT credit. The lower authority confirmed the demand and imposed penalties, which were upheld with modifications by the first appellate authority. The appellant challenged the levy of service tax on mobilisation advances, stating they had discharged the total liability. The department contended otherwise, demanding tax on unadjusted amounts. Regarding CENVAT credit, the appellant claimed compliance with Rule 6(2) by proportionately reversing CENVAT Credit on common input services. The matter was remanded for verification of the tax liability on mobilisation advances and CENVAT credit reversal.

2. The appellant submitted a Chartered Accountant's certificate showing the total discharge of service tax liability on mobilisation advances. Concerning CENVAT credit, the appellant reversed an amount but failed to provide detailed calculations. The order-in-original noted the appellant's reversal of an amount certified by a Chartered Accountant, but the certificate was not submitted. The Commissioner (Appeals) rejected the claim as relevant ST-3 returns were not produced. The appeal was remanded for verification of service tax payment on mobilisation advances and the calculation of CENVAT credit reversal, allowing the appellant to present supporting documents for redetermination of tax liability. The judgment was pronounced and dictated in open court, disposing of the appeal by way of remand to the original authority.