2016 (7) TMI 1076 - AT - Service Tax

Availing cenvat credit for some projects and availing the benefit of abatement under Notification No. 1/2006-ST for some other projects - projects undertaken on turnkey basis - Held that - it is clear that the appellants can avail Notification No. 1/2006-ST, so long as in respect of such projects, no CENVAT Credit is availed. The appellants are free to avail CENVAT Credit in respect of projects on which Notification No. 1/2006-ST has not been availed. However, the assertion of the appellant that the credit was availed only in respect of project on which Notification No. 1/2006-ST has not availed, needs verification. - Matter remanded back.

Summary

Issues:
Interpretation of Notification No. 1/2006-ST regarding availing of CENVAT Credit in relation to projects undertaken on turnkey and supervision basis.

Analysis:
The judgment revolves around the issue of whether a taxpayer can avail the benefit of Notification No. 1/2006-ST while also claiming CENVAT Credit for services provided in projects undertaken on turnkey and supervision basis. The appellant, M/s Afcons Infrastructure Ltd., faced a demand show-cause notice seeking to deny the benefit of the notification due to availing CENVAT Credit. The lower authorities confirmed the demand, leading to the appeal before the Tribunal.

The Counsel for the appellant argued that the restriction on availing CENVAT Credit under Notification No. 1/2006-ST applies only to services for which the notification's benefit has been claimed, not to other services. He relied on a previous Tribunal decision in a similar context to support this interpretation.

On the other hand, the learned AR supported the impugned order, highlighting that the demand was based on the appellant's failure to prove that the credit was utilized only for services not covered by Notification No. 1/2006-ST.

The Tribunal, in its analysis, referred to the decision in the case of Bharat Heavy Electricals Ltd., emphasizing that the condition of non-availment of CENVAT Credit applies specifically to cases where the credit is taken on inputs or input services related to the taxable service covered by the notification. The Tribunal clarified that if the taxpayer has not availed CENVAT Credit on inputs or input services, they are entitled to the benefit of the notification. However, verification is necessary to ensure that the credit was indeed utilized only for projects not covered by the notification.

Consequently, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for factual verification in line with the findings. The appeal was allowed by way of remand, providing clarity on the taxpayer's entitlement to Notification No. 1/2006-ST based on the availing of CENVAT Credit for specific projects.