2019 (1) TMI 567 - AT - Service Tax

Construction of residential complexes Services - benefit of N/N. 26/2012 - benefit of notification denied on the ground that appellant originally availed the Cenvat Credit of duty paid on the inputs - appellant reversed the Cenvat credit along with interest - Held that - The effect of reversal of the Cenvat credit leads to a situation as if no credit was ever availed - the reversal of credit by the appellant would lead to an inevitable conclusion that no credit stand availed by the assessee so as to fulfill the condition of the Notification in question. In such a scenario the benefit of the Notification has to be extended to the assessee - demand set aside. CENVAT Credit - capital goods - scaffoldings - Held that - Admittedly the definition of capital goods provided under Cenvat Credit Rules excludes chapter 73 from its ambit - credit cannot be allowed. Extended period of limitation - Held that - No mala fide suppression or mis-statement can be attributed to them so as to justifiably invoke the longer period of limitation - major part of the demand is barred by limitation. However, a part of the demand would fall within the limitation period which would be quantified by the original adjudicating authority and intimated to the assessee. Penalty - Held that - In the absence of any findings of mala fide, the same is required to be set aside in toto. Appeal allowed in part and part matter on remand.

Summary

Issues: Benefit of abatement under Notification No.26/2012, reversal of Cenvat credit, denial of Cenvat credit on scaffoldings, longer period of limitation, penalty imposition.

Abatement under Notification No.26/2012:
The appellant, engaged in construction services, availed abatement of 75% under Notification No.26/2012 but faced proceedings due to initially availing Cenvat credit on inputs. The appellant reversed the Cenvat credit before the show cause notice was issued. The Tribunal held that the reversal of credit led to the conclusion that no credit was availed, thus fulfilling the Notification's condition. Citing legal precedents, the Tribunal set aside the demand and penalty, acknowledging the appellant's compliance.

Denial of Cenvat credit on scaffoldings:
A demand of ?11.15 lakhs was confirmed by denying Cenvat credit on scaffoldings claimed as capital goods. The Revenue contended scaffoldings fell under chapter 73, excluding them from the definition of capital goods. Despite the appellant's reference to a Tribunal decision, the Tribunal disagreed, stating the scaffoldings' classification under chapter 73 precluded Cenvat credit eligibility. The Tribunal found no merit in the appellant's argument, emphasizing the need to consider Cenvat Credit Rules' definition of capital goods, ultimately ruling against the appellant.

Longer period of limitation:
The show cause notice was issued for the period July 2012 to March 2014, alleging mala fide suppression. The appellant had reflected credit in their Cenvat account and filed regular returns, indicating no deliberate concealment. Citing relevant Tribunal decisions, the Tribunal held that a major part of the demand was time-barred due to lack of mala fide intent. The remaining demand falling within the limitation period would be quantified by the adjudicating authority.

Penalty imposition:
In the absence of mala fide findings, the Tribunal set aside the penalty entirely. Without evidence of intentional wrongdoing, the penalty was deemed unjustified. The Tribunal disposed of the appeal, ruling in favor of the appellant on the limitation issue and penalty imposition, while denying Cenvat credit on scaffoldings based on legal interpretations and precedents.