2018 (8) TMI 492 - AT - Service Tax

CENVAT Credit - common input service used for both taxable and exempted services - Rule 6(3) of CENVAT Credit Rules - Held that - The lower authority has failed to make any justifiable grounds before confirmation of demand in respect of submission of the appellant that they never availed and utilised Input service credit towards exempted service in respect of road construction. The department also failed to submit any calculation sheet/reconciliation statement specifying the details of such alleged Cenvat Credit with supportive evidence and in absence of any such evidence this appellate forum is not in a position to make the correct decision. Before raising such demand, proper investigation is required and in absence of any material facts with corroborative evidence, the same is not maintainable. Appeal dismissed - decided against Revenue.

Summary

Issues:
Recovery of service tax, imposition of penalty, maintaining separate accounts for common input services, availing and utilizing input service credit, demand under Rule 6, appeal against adjudication order.

Recovery of Service Tax and Imposition of Penalty:
The case involved a show cause-cum-demand notice issued to recover a specific amount along with interest and penalty. The adjudicating authority confirmed the demand of service tax and imposed a penalty under Section 78 of the Finance Act, 1994. However, on appeal, the Commissioner (Appeals) set aside the adjudication order, leading the revenue to appeal before the Tribunal. The Tribunal analyzed the case, where the Revenue contended that the appellant did not maintain separate accounts for common input services used for both taxable and exempted services, resulting in non-payment of service tax. The Tribunal examined the arguments presented by both sides and reviewed the records to reach a decision.

Maintaining Separate Accounts for Common Input Services:
The crux of the issue revolved around the appellant's alleged failure to maintain separate accounts for common input services utilized for both taxable and exempted services. The lower authority confirmed the demand based on this premise, allowing the department to demand an amount equal to five percent of the value of exempted services under Rule 6(3)(i) of the Rules. However, the appellant contended that they did not avail any credit on input services related to road construction and thus did not maintain separate accounts. The Commissioner (Appeals) scrutinized the case records and found that the department failed to specify the exact services on which credit was taken and utilized, lacking evidence to prove that these services were common inputs used for both taxable and exempted services. The Tribunal emphasized the importance of proper investigation and evidence before confirming such demands.

Demand Under Rule 6 and Appeal Against Adjudication Order:
The Tribunal critically analyzed the arguments and evidence presented by both parties. The appellant, M/s. Walzen Strips Pvt. Ltd., submitted a letter along with a certificate from Chartered Accountants certifying various aspects related to the case. The Tribunal also addressed the aspect of limitation raised by the appellant, finding that the impugned demand notice was issued within the extended period due to alleged suppression of income in the statutory return. However, upon examination of the records and submissions, the Tribunal concluded that the appellant did not suppress material facts and that the allegation of suppression to evade tax was not sustainable. The Tribunal ultimately upheld the decision of the Commissioner (Appeals) and dismissed the appeal filed by the Revenue, emphasizing the lack of evidence supporting the demand for service tax on road construction under job work basis.

This comprehensive analysis of the judgment highlights the key issues, arguments, and findings, providing a detailed overview of the case and the Tribunal's decision.