2014 (9) TMI 489 - AT - Service Tax

Availing cenvat credit while availing benefit of abatement notification no. 1/2006-ST - appellant is of the view that though the credit on common input services was taken but the same was not utilised while discharging duty liability under Notification No. 1/2006-ST. - Held that - appellant agree to reverse the entire cenvat credit taken with respect to common services used for providing services under Notification No. 1/2006-ST. - prima-facie, appellant does not seem to have any case on reversal of CENVAT credit on common services. Appellant is, therefore, required to be put to certain conditions before remanding the case to the first appellate authority. It is directed that appellant shall deposit the entire credit taken on common input services utilised for providing taxable services for which benefit of Notification No. 1/2006-ST has been availed. - matter remanded back subject to pre-deposit of amount.

Summary

Issues:
1. Eligibility for abatement of duty under Notification No. 1/2006-ST when service tax credit is taken.
2. Eligibility for Works Contract Composition Scheme during October 2010 to March 2011.

Analysis:

Issue 1:
The appellant filed a stay application and appeal against OIA No. AHM-SVTAX-000-APP-012-14-15 dated 21.04.2014, questioning the eligibility for abatement of duty under Notification No. 1/2006-ST when service tax credit with respect to common services was availed. The appellant's representative, a Chartered Accountant, argued that although the cenvat credit on common services was taken, it was not utilized for paying service tax under the said Notification. The appellant was willing to reverse the entire cenvat credit taken on common services to comply with the requirements. The Revenue's representative contended that taking credit of common services while providing construction services would disqualify the appellant from availing the benefit of the Notification. The Tribunal observed that the appellant was not required to take cenvat credit to claim the exemption under Notification No. 1/2006-ST. However, the appellant agreed to reverse the entire cenvat credit taken on common services used for providing services under the said Notification.

Issue 2:
Regarding the eligibility for Works Contract Composition Scheme during October 2010 to March 2011, the appellant argued that the contract dated 12.10.2010 with M/s. Astral Polytechnic Limited was distinct from an ongoing contract and thus eligible for the Scheme. The Tribunal noted that the contracts dated 12.10.2010 and 26.02.2010 were different and required verification by the Commissioner (Appeals) to determine if the former was an ongoing contract. As the issue was narrow, the matter was remanded to the first appellate authority for further examination. The Tribunal directed the appellant to deposit the entire cenvat credit taken on common input services utilized for providing taxable services under Notification No. 1/2006-ST. The appellant was instructed to report compliance within four weeks for the first appellate authority to decide the issues afresh after considering all documentary evidence.

In conclusion, the Tribunal allowed the appeal by remanding it to the first appellate authority for a detailed review based on the directions provided regarding the reversal of cenvat credit and verification of the nature of the contract dated 12.10.2010.