2023 (10) TMI 598 - AT - Service Tax

Denial of abatement benefit - Commercial or Industrial Construction Service (CICS) - availed cenvat credit on various input services - period December 2008 to March 2010 - disallowance of credit on various input services in the nature of insurance services - Penalties. Denial of abatement benefit - Commercial or Industrial Construction Service (CICS) - availed cenvat credit on various input services - period December 2008 to March 2010 - HELD THAT - The dispute with regard to denial of benefit of abatement itself establishes that the contracts are composite in nature which involves both element of supply of goods as well as rendering of services. The decision in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI would then apply and the demand therefore cannot sustain, where it was held that For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter - thus, the demand of differential service tax under commercial or industrial construction service denying abatement cannot sustain and requires to be set aside Disallowance of credit on various input services in the nature of insurance services - HELD THAT - The period involved is prior to 1.4.2011 when the definition of input service had wide ambit as it included the words activities relating to business . The decisions of various forums have held that the said services would be eligible for credit. We hold that the appellant has established that the services were availed for providing output services and therefore is eligible for credit. The denial of credit is without basis and cannot be justified. Penalty - HELD THAT - The appellant has paid up the non-contested/admitted tax liability. For this reason, we hold that penalties imposed therefore cannot sustain and require to be set aside. The impugned order is modified to the extent of (i) setting aside the differential tax demand of Rs.26,08,254/- and interest and penalties thereon (out of Rs.73,33,337/-) without disturbing the confirmation or appropriation of the remaining demand - disallowance of credit to the tune of Rs.12,24,474/- is also set aside - Penalties are entirely set aside. The appeal is allowed.

Summary

Issues Involved:
The issues involved in the judgment are non-payment of service tax, availing of abatement, denial of credit on input services, and imposition of penalties.

Non-payment of Service Tax:
The appellant, engaged in providing infrastructure services, did not pay service tax collected from customers for services provided from October 2007 to April 2008. The appellant also failed to file statutory returns for specific periods. Subsequently, the appellant paid the service tax along with interest towards their liabilities.

Availing of Abatement:
The appellant availed abatement of 67% on commercial or industrial construction services from December 2008 to March 2010. However, as the appellant also availed cenvat credit on input services, they were not eligible for the abatement. The appellant was held liable to pay the differential service tax amount.

Denial of Credit on Input Services:
The department noticed that the appellant availed input service credit tax on insurance premium for employees, which was considered a personal benefit and not used for providing output services. The appellant wrongly availed credit on such services, leading to the imposition of penalties and demand for short-paid service tax.

Judicial Interpretation and Decision:
The Tribunal considered precedents and legal provisions regarding composite contracts and eligibility for abatement. Citing relevant cases, the Tribunal concluded that the demand of service tax under commercial or industrial construction services denying abatement could not sustain and was set aside. Additionally, the denial of credit on insurance services was deemed unjustified, and the disallowance of credit was set aside.

Penalties Imposed:
Since the appellant had paid the non-contested tax liability, the Tribunal held that the penalties imposed could not sustain and were set aside. The impugned order was modified to set aside the differential tax demand, disallowance of credit, and penalties, providing consequential relief to the appellant.