2023 (2) TMI 608 - AT - Service Tax

Classification of services - works contract service or construction of a new residential complex service - Recovery of Irregularly availed CENVAT Credit - period November 2006 to September 2010 - appellant claims that the entire tax liability on the taxable value was discharged by it in cash and by utilization of CENVAT credit. - Invocation of extended period of limitation HELD THAT - It is seen from the records that the nature of service provided by the appellant would fall under the works contract service which became taxable w.e.f. 01.06.2007. The Commissioner has recorded a finding that since the appellant had got itself registered under the category of construction of complex service and had filed the service tax returns also under construction of complex service, it would not be open to the appellant to contend that the services should appropriately be classified under works contract service. This is what has also been contended by the learned authorised representative for the department. This submission cannot be accepted - If the service actually falls under works contract service, then mere registration under a different category and payment of service tax under that category would not be sufficient to hold that the service was actually rendered under that category. The reasoning adopted by the Commissioner, therefore, cannot be sustained. The demand of service tax, therefore, would not sustain. Whether the appellant had correctly availed CENVAT credit of Rs. 1.73 crores? - HELD THAT - The availment of CENVAT credit by the appellant requires a proper examination by the adjudicating authority afresh and the claim of the appellant cannot be brushed aside merely on the statement made in the affidavit filed by the department that Annexure-5 containing the statement of CENVAT credit availed is not available in the adjudication file. From the facts available on record, it does appear that the appellant had furnished the documents as also the Certificate of the Chartered Accountant. It would, therefore, be necessary to remit the matter to the adjudicating authority to determine this issue regarding availment of CENVAT credit afresh, for which purpose the department shall provide an opportunity to the appellant to furnish the documents. The confirmation of demand of service tax in the impugned order dated 30.04.2012 passed by the Commissioner is set aside - In regard to the availment of CENVAT credit by the appellant, the matter is remitted to the adjudicating authority to take a decision on this issue afresh after providing an opportunity to the appellant to furnish documents - Appeal allowed in part and part matter on remand.

Summary

Issues Involved:
1. Classification of services under the Finance Act.
2. Irregular availment and utilization of CENVAT credit.
3. Invocation of the extended period of limitation and imposition of penalties.

Detailed Analysis:

Classification of Services:
The appellant, SPL Developers Pvt. Ltd., contested the classification of their services under the 'construction of a new residential complex' as defined under section 65(30a)(a) of the Finance Act, 1994, and taxable under section 65(105)(zzzh). They argued that their services should be classified under 'works contract service', which became taxable from 01.06.2007, and they had discharged their service tax liability under this category. The Commissioner, however, confirmed the demand under 'construction of a new residential complex'. The Tribunal found that mere registration under a particular category and filing returns under that category does not determine the actual service rendered. It held that the appellant's services fall under 'works contract service', thus setting aside the demand of service tax under 'construction of a new residential complex'.

Irregular Availment and Utilization of CENVAT Credit:
The Commissioner disallowed CENVAT credit of Rs. 1.73 crores and confirmed the demand of Rs. 1.22 crores wrongly utilized by the appellant, alleging non-production of invoices and bills. The appellant contended that they had furnished the necessary documents to the investigating team and provided a statement with details of CENVAT credit along with copies of invoices. The Tribunal noted that the appellant had indeed provided a statement and a Chartered Accountant's certificate verifying the CENVAT credit availed. However, due to the lack of clear evidence in the adjudication file, the Tribunal remanded the matter to the adjudicating authority for a fresh examination, allowing the appellant to furnish the required documents.

Invocation of Extended Period of Limitation and Penalties:
The appellant argued against the invocation of the extended period of limitation and the imposition of penalties, claiming no suppression of facts with intent to evade tax. They pointed out that the show cause notice dated 05.05.2011 covered the period from 01.11.2006 to 30.09.2010, making part of the demand time-barred. The Tribunal did not explicitly address this issue in its final order but set aside the confirmation of the service tax demand, implying that the penalties and extended limitation may also be reconsidered upon remand.

Conclusion:
The Tribunal set aside the confirmation of the service tax demand under 'construction of a new residential complex' and remanded the issue of CENVAT credit availment and utilization to the adjudicating authority for fresh examination. The appellant was granted an opportunity to furnish the necessary documents to substantiate their claim. The appeal was allowed to the extent indicated, and the adjudicating authority was directed to decide the issue afresh after providing an opportunity of hearing to the appellant.