2016 (4) TMI 597 - AT - Service Tax

Short payment on service for the period from July to September 2006 and disallowance of abatement under notification no. 1/2006-ST dated 1 st March 2006 - Commercial or industrial construction service rendered to 100% EOU - Appellant contended that tax of ₹ 20,60,881 had been paid for the period from July to September 2006 which is more than the tax due of ₹ 20,44,791 as determined in the impugned order - Held that - as contended by the appellant, the TR6 challans shows the same. The allegation that CENVAT credit of ₹ 3,20,481/- had been utilized is incorrect as the amount was a mere of ₹ 8,233/- which was also reversed. Therefore, there has been an erroneous computation in the impugned order leading to the incorrect conclusion that there is a shortfall in tax paid by the appellant. We do not find any short-payment of tax. Denial of the substantial benefit of abatement owing to availment of CENVAT credit of a mere of ₹ 8,233/- does not appear to be equitable particularly as the amount has been made good. Hence, the reversal is sufficient to render the availment to be non-existent. Consequently, appellant is entitled to abatement as computed at the time of discharge of service tax in march 2006 followed by decision of this Tribunal in the case of BG Shirke Technology P Ltd v Commissioner of Central Excise, Pune II 2012 (6) TMI 522 - CESTAT, MUMBAI . - Decided in favour of appellant

Summary

Issues:
1. Confirmation of demand of service tax, interest, and penalty under section 78 of Finance Act, 1994.
2. Alleged short-payment of tax for services rendered to Export Oriented Units and others.
3. Disallowance of abatement under notification no. 1/2006-ST dated 1st March 2006.

Analysis:
1. The appeal was filed against an order confirming a demand of service tax, interest, and penalty under the Finance Act, 1994. The appellant, a provider of 'commercial or industrial construction service,' was proceeded against for alleged tax liability. The proceedings were initiated based on a show cause notice alleging short payments on services rendered to Export Oriented Units and others, resulting in a total tax liability of Rs. 34,23,401.

2. The original authority found discrepancies in the notice's segregation of services rendered to different entities. After adjustments, it was determined that the appellant had discharged the tax liability in full until June 2006. However, a shortfall of Rs. 89,291 was identified for the following three months. The claim for abatement was rejected, but the denial of ineligible credit was not upheld by the original authority.

3. The dispute in the appeal focused on the alleged short-payment for the period from July to September 2006 and the disallowance of abatement under a specific notification. The appellant argued that the tax paid for the said period exceeded the determined tax due. The appellant cited legal precedents to support the claim for abatement, emphasizing the reversal of utilized credit as a valid argument.

4. The Tribunal found errors in the computation of the impugned order, leading to an incorrect conclusion regarding the tax shortfall. It was established that there was no actual short-payment of tax. The denial of abatement due to a minimal credit utilization was deemed inequitable, especially considering the reversal of the amount. Relying on previous decisions, the Tribunal held that the reversal of credit rendered the availment non-existent, entitling the appellant to the abatement as calculated during the service tax discharge in March 2006.

5. Consequently, the appeal was allowed, and the impugned order was set aside, emphasizing the correction of the erroneous computation and the entitlement of the appellant to the abatement as per the Tribunal's decision.