2009 (8) TMI 381 - AT - Service Tax

Construction services- Notification No. 1/2006-ST, dated 01.03.2006- Assesee was engaged in construction services in respect of commercial and industrial building and civil structure. The assessee avail the abatement of 67 percent under Notification No. 1/2006-ST, dated 01.03.2006, which denied by the department on the ground that in respect of the some of their contracts entered into with the buyer, they have availed the Cenvat Credit on duty paid on the raw material. In the light of the decision of SMP Constructions (P.) Ltd. v. CCE&C 2009 -TMI - 35010 - CESTAT, AHMEDABAD held that benefit of notification is applicable, thus allow the appeal.

Summary

Issues:
- Confirmation of service tax
- Denial of abatement under Notification No. 1/2006-ST
- Availment of Cenvat credit
- Applicability of the benefit of the notification

Confirmation of Service Tax:
The Commissioner confirmed service tax of Rs. 87,00,000 along with interest and imposed a penalty under section 76 of the Finance Act, 1994. The appellant, a provider of construction services, was denied the abatement of 67% under Notification No. 1/2006-ST. The denial was based on the appellant availing Cenvat credit on duty paid on raw material, which rendered them ineligible for the abatement.

Denial of Abatement under Notification No. 1/2006-ST:
The appellant contended that they had availed the benefit of the notification only in contracts where no credit was taken. The Tribunal referred to a similar case, SMP Constructions (P.) Ltd. v. CCE&C, where it was observed that the services provided should be examined individually for extending the abatement facility. The Tribunal agreed that construction services provided to different buyers could qualify for the notification's benefit based on specific conditions, even if not satisfied for all buyers.

Availment of Cenvat Credit:
The denial of abatement was primarily due to the appellant availing Cenvat credit on duty paid on raw material in some contracts. The proviso to Notification No. 1/2006-ST specified that abatement was not available if Cenvat credit had been availed. This act of availing credit impacted the eligibility of the appellant for the abatement scheme.

Applicability of the Benefit of the Notification:
The Tribunal's decision in the referenced case highlighted the importance of examining each service provided for the notification's benefit. It emphasized that the focus should be on the services liable to taxes, not just the service provider. The Tribunal's decision supported the appellant's argument that the benefit of the notification could be extended to specific contracts based on compliance with the notification's conditions, even if not uniformly applied across all contracts. As a result, the present stay petition was allowed based on the Tribunal's interpretation and application of the notification's provisions.