2014 (5) TMI 801 - AT - Service Tax

CENVAT Credit - Denial of benefit of Notification No. 15/2004, dated 10-9-2004 - Benefit of abatement of 67% - Held that - Notification No. 15/2004, dated 10-9-2004 grants benefit of abatement of 67% on taxable value in respect of construction service. This benefit is available if no Cenvat credit has been taken on inputs and capital goods under Cenvat Credit Rules or no benefit under Notification 12/2003, dated 20-6-2003 has been availed. We find this Notification does not put any restriction that benefit under this Notification has to be availed during currency of entire contract. We also note that this Notification was rescinded on 28-2-2006 and Notification 1/2006 issued on 1-3-2006 granting the benefit of abatement subject to condition that no Cenvat credit has been taken in respect of input, capital goods and input services or no benefit has been claimed under Notification 12/2003. Contention of respondents that since they were availing credit of tax on input services prior to 1-3-2006, they will not be eligible for abatement under Notification No. 1/2006 and they opted for availing of Cenvat credit, has substantial force and we do not find any infirmity in findings of the Commissioner allowing abatement under Notification 15/2004 prior to 1-3-2006 and Cenvat credit facility with effect from 1-3-2006. - Decided against Revenue.

Summary

Issues:
- Challenge to the impugned order by Revenue on various grounds including bifurcation of taxable service, refund of Service Tax, and imposition of penalties.

Analysis:
1. The case involved a dispute regarding the liability of the appellant to pay Service Tax for construction services provided. The Commissioner, in the impugned order, confirmed the demand of Service Tax and interest on services rendered by the appellant as sub-contractors. The Commissioner held that the appellant's activity fell under the definition of "Commercial and Industrial Construction" service taxable from a specific date.

2. The Commissioner calculated the demand amounts for services rendered to different entities, such as BHEL and NBCC, considering the applicable rate of Service Tax and the value received as cum-tax value. The Commissioner also addressed issues related to abatement under specific notifications and the eligibility for Cenvat credit. The Commissioner confirmed the total demand in this regard and specified the excess amounts paid or payable by the appellant.

3. The Revenue challenged the impugned order on various grounds, including the bifurcation of the taxable service under a single contract for abatement and Cenvat credit benefits. The Revenue also contested the refund of Service Tax and the non-imposition of penalties under specific sections of the Finance Act.

4. The arguments presented by the Revenue focused on the eligibility of the appellant for either Cenvat facility or abatement benefits under the relevant notifications. The Revenue contended that the bifurcation of benefits was not proper and raised concerns about the refund granted to the appellant. Additionally, the Revenue emphasized the application of the doctrine of unjust enrichment to any refund payable.

5. The respondents, represented by their advocate, countered the Revenue's arguments by highlighting the specifics of the notifications related to abatement and Cenvat credit. They clarified the applicability of different notifications and the conditions for availing benefits under each. The advocate also addressed the issue of penalty imposition by the Commissioner.

6. Upon hearing both sides, the Tribunal examined the provisions of the relevant notifications, particularly focusing on the conditions for abatement and Cenvat credit benefits. The Tribunal found no infirmity in the Commissioner's findings regarding the eligibility of the appellant for abatement under the previous notification and Cenvat credit from a certain date.

7. Regarding the refund, the Tribunal concurred with the Commissioner's decision that the amount was refundable, subject to the principle of unjust enrichment. Any refund arising from the order was to be subject to this legal principle.

8. The issue of penalty imposition was analyzed by the Tribunal, noting the Commissioner's detailed discussion on the matter. The Commissioner's decision to waive penalties under specific sections of the Act was upheld by the Tribunal, finding no fault in the exercise of discretion.

9. Ultimately, the Tribunal rejected the Revenue's appeal and disposed of the cross-objections, affirming the findings and decisions of the Commissioner in the impugned order.