2021 (12) TMI 1233 - AT - Service Tax

Extended period of limitation - input service credit - it is alleged that the service has been used for construction of properties which do not attract output service tax - HELD THAT - The instant issue can be decided on limitation itself. The appellant has informed the entire facts relating to availment of credit to the Department. The Appellant has duly informed to the Department with regard to the above disclosure at the time of adjudication as well as in the first appeal, which has not been dealt by both the authorities below. In the said letters, they have categorically stated that they are availing Cenvat credit of input and input services and that the same would be utilised for payment of output liability arising at the time of Renting of properties and in case the properties are sold out, they would reverse the portion of credit attributable to such sale. The authorities below have not disputed the fact of disclosures made by the Appellant vide the above letters. The Ld. Commissioner (Appeals) in the impugned appeal order has merely reiterated the findings of the original authority without specifically dealing with the submissions made by the Appellant on limitation - there are no positive evidence has been adduced in the SCN dated 16.04.2015 to show any wilful suppression of fact on the part of the Appellant with an intent to evade payment of tax. The entire period in dispute in the instant case is covered under the extended period of limitation, which is not available to the Department in the absence of any element of fraud or wilful suppression - the impugned demand cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against service tax demand upheld by Commissioner (Appeals) - Availment of Cenvat credit for construction services disputed - Limitation and merits of the case challenged.

Analysis:
1. Background and Dispute: The appeal was filed against the Order-in-Appeal dated 18.04.2018, upholding the service tax demand of &8377; 35,11,719/- along with interest and penalty for the period 2009-10 to 2012-13. The dispute revolved around the availment of Cenvat credit by M/s. Ambuja Realty Development Limited for construction services.

2. Availment of Cenvat Credit: The Appellant, engaged in real estate construction, availed Cenvat credit under the CENVAT Credit Rules, 2004. The Show Cause Notice (SCN) issued alleged that the input service credit was used for properties not attracting output service tax. The Appellant contended that they had reversed the credit on inputs and proportionately on input services upon selling the constructed properties. Detailed calculations were submitted to demonstrate credit availed, reversed, and utilized for output service tax on renting services.

3. Disclosure and Communication: The Appellant had informed the department through letters in 2008 and 2009 about the credit availed and its utilization for output tax liabilities. This information was also included in their Service Tax Returns. The authorities did not dispute these disclosures made by the Appellant.

4. Decision on Limitation: The Tribunal found that the issue could be resolved based on limitation. The Appellant's timely disclosure of facts regarding credit availed was crucial. The lack of evidence of wilful suppression or fraud by the Appellant, coupled with the absence of such elements during the disputed period, rendered the extended limitation period invalid. Consequently, the demand was set aside entirely.

5. Judicial Findings: The Tribunal noted that both lower authorities failed to address the submissions made by the Appellant on limitation. The lack of positive evidence in the SCN to prove wilful suppression further weakened the department's case. As the demand was not sustainable without elements of fraud or suppression, the Tribunal allowed the appeal solely on the limitation issue without delving into the case's merits.

6. Conclusion: Given the decision on limitation, no observations were made on the case's merits. The appeal was allowed with any consequential relief as per law. The judgment was pronounced on 29.12.2021 by MR. P.K.CHOUDHARY, MEMBER (JUDICIAL) at the Appellate Tribunal CESTAT KOLKATA.

This comprehensive analysis highlights the key legal aspects and findings of the judgment, focusing on the issues of limitation and the disclosure of facts by the Appellant regarding the availment of Cenvat credit for construction services.