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2023 (7) TMI 436 - AT - Service TaxLevy of service tax - Consulting Engineer Services - place of provision of services - service recipient of the appellants, their registered premises, location of their business establishment, within taxable territory or not - Wrongful availment of Cenvat credit without support of input documents or not - extended period of limitation. Whether the appellant is liable to pay service tax on Consulting Engineer Services rendered by the appellant? - HELD THAT -The perusal of responsibilities of Consultant Engineer and the defined role in the impugned agreement makes it clear that the scope of service of appellant in the given facts and circumstances was that of a Consulting Engineer for construction of a road in the territory of State of Jammu Kashmir. It is also clear beyond doubts that the consultant appellant had to visit the said site in non-taxable territory for providing the said services irrespective some consultation could be possible while being in his office situated in taxable territory. Hence, the findings of the Adjudicating Authority holding that the services provided by the appellant are in intangible in nature and have no relation to the immovable property of non-taxable territory are apparently wrong and, as such, are liable to be set aside. Taxable territory - HELD THAT - The appellant as well as service recipient, though both have their Head Offices in taxable territory but the provision of service was outside the taxable territory i.e. in the State of J K. Hence the Department herein was not liable to charge the service tax qua the said provision of service. The adjudicating authority below is, therefore, held to have committed an error while rejecting the appeals. In the present case it is an admitted fact that the services provided by the appellants are towards the construction of a road meant for use by the general public - Thus the appellant is not liable to pay service tax for providing the Consulting Engineering Services as rendered to its clients for construction of road in State of J K - decided in favour of the appellant. Whether the appellants have wrongly availed the Cenvat credit without support of input documents and, as such, the same is recoverable from the appellants? - HELD THAT - There is no denial to the fact that the appellants have availed the Cenvat credit on the basis of invoices. However, the reason for denying the availment is that the address mentioned on these invoices was not the registered premises of the appellant. Hence, the invoice was the improper documents in terms of Cenvat Credit Rules, 2004. There is no denial of the Department about the requisite price available on the invoices based whereupon the Cenvat credit has been availed by the appellant. Though the address mentioned thereupon is different from the registered address, but as apparent from show cause notice itself the appellant were found existing on the address mentioned in the invoice with explanation of the circumstances about shifting to the different address. Hence the objection about address is nothing but simply a procedural lapse. Substantial benefit of availment of Cenvat credit cannot be denied on the grounds of procedural lapse. Resultantly, Cenvat credit has been properly availed by the appellant based on the invoices. Where the extended period of limitation has wrongly been invoked while issuing the show cause notice? - HELD THAT - The Adjudicating Authority has justified invocation of extended period of limitation on the ground that information regarding non-payment of service tax and regarding wrong full availment of Cenvat credit has genesis only after investigations of the Department without which such issues could not have been detected - once admittedly the returns were filed regularly by the appellant the Department cannot alleged suppression against the appellant/assessee. It is mandatory for them to bring on record a positive act of the to prove the alleged suppression that too with an intent to evade tax - Once it is not the case of suppression with an intent to evade tax and once the appellant is held not liable to pay the service tax in the given facts and circumstances, the department was not entitled to invoke the extended period of limitation. The question of imposition of penalty upon the appellants also does not at all arise. The Hon ble Supreme Court in another decision in the case of ANAND NISHIKAWA CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT 2005 (9) TMI 331 - SUPREME COURT has held that when the facts were known to both the parties omission by one to do what he might have done not that he must have done, would not render it suppression unless and until there is some positive act from the side of assessee, willful suppression cannot be alleged - Suppression cannot be alleged in such circumstance and thus extended period cannot be invoked for issuing show cause notice - Issue decided in favor of appellant. Appeal allowed.
Issues Involved:
1. Liability to pay service tax on Consulting Engineer Services. 2. Wrongful availment of Cenvat credit. 3. Invocation of the extended period of limitation. Summary: First Issue: Liability to Pay Service Tax on Consulting Engineer Services The Tribunal examined whether the appellant was liable to pay service tax on Consulting Engineer Services rendered for construction projects in Jammu & Kashmir (J&K). The appellant argued that services provided in J&K, a non-taxable territory, are exempt from service tax under Service Tax Trade Notice No. 13/2004 and Mega Exemption Notification No. 25/2012-ST. The Tribunal noted that the services were indeed related to construction in J&K, an immovable property, and thus fell under the non-taxable territory exemption. The Tribunal held that the adjudicating authority erred in rejecting the appellant's claim and set aside the findings, concluding that the appellant was not liable to pay service tax for these services. Second Issue: Wrongful Availment of Cenvat Credit The Tribunal addressed whether the appellant wrongly availed Cenvat credit without proper input documents. The Department contended that the invoices did not bear the registered address of the appellant, making them improper documents under Cenvat Credit Rules, 2004. The Tribunal found that the invoices did contain the necessary details and that the address discrepancy was a procedural lapse, not a substantive error. The Tribunal ruled that the appellant had properly availed Cenvat credit based on the invoices, deciding this issue in favor of the appellant. Third Issue: Invocation of Extended Period of Limitation The Tribunal examined whether the extended period of limitation was wrongly invoked in issuing the show cause notices. The Department justified the extension on the grounds that the issues were detected only through departmental investigations. The Tribunal observed that the appellant had filed regular ST-3 returns, and there was no evidence of willful suppression of facts with intent to evade tax. Citing precedents, the Tribunal concluded that the extended period could not be invoked and that the imposition of penalties was unwarranted. This issue was also decided in favor of the appellant. Conclusion The Tribunal set aside the order under challenge and allowed both appeals, ruling in favor of the appellant on all three issues.
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