2019 (12) TMI 233 - AT - Service Tax

CENVAT Credit - Benefit of abatement - construction activities - Inasmuch as, the respondents availed the Cenvat credit in respect of inputs as also input services and simultaneously availed the benefit of Notification No.1/2006-ST, as amended, revenue initiated proceedings against them for denial of the credit - HELD THAT - The service tax assessee providing construction services is entitled to either the Cenvat credit or the benefit of abatement in terms of N/N.1/2006-ST. If both the facilities are availed by an assessee simultaneously, one of them has to be denied - In the present case, the revenue, at the time of issuance of show cause notice accepted the assessee s option of availment of Notification No.1/2006. In such a scenario, the credit availed by the assessee was required to be reversed, for which purpose show cause notice was issued. The respondent cannot be allowed to avail both the benefits i.e. availment of the Cenvat credit as well as the abatement. The show cause notice has extended the larger benefit of abatement to the assessee in terms of the notification and in that context directed them to pay back the Cenvat credit so availed by them. The assessee cannot be allowed to retain both the benefits on the technical grounds that the notice disallowed the Cenvat credit which was availed prior to availment of abatement of notification - there are no merits in the above reasoning of the lower authorities and accordingly reverse the said decision. The benefit of abatement Notification No. 1/2006-ST, as amended, is more beneficial to them and they should be allowed to retain the benefit of the same - Cenvat credit so availed by them is required to be reversed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of Cenvat credit and benefit of abatement under Notification No.1/2006-ST.
2. Denial of credit and abatement benefits.
3. Interpretation of legal provisions regarding simultaneous availment of benefits.

Analysis:
The judgment revolves around the issue of the appellant being engaged in construction activities and availing the benefit of abatement under Notification No.1/2006-ST while also claiming Cenvat credit for inputs and input services. The revenue initiated proceedings against the appellant for denial of credit amounting to ?23,89,810. The Additional Commissioner observed that the benefit of abatement should be denied as the appellant had availed Cenvat credit before the notification benefit. However, the Commissioner (Appeals) upheld the decision to vacate the show cause notice, leading to the revenue's appeal.

The appellate tribunal found that if an assessee avails both Cenvat credit and abatement benefits simultaneously, one of them must be denied. In this case, the revenue initially accepted the appellant's choice of availing the abatement benefit, leading to the subsequent issuance of a show cause notice for reversing the credit availed. The tribunal emphasized that the appellant cannot retain both benefits and reversed the decision of the lower authorities who granted relief based on technical grounds related to the notice's wording.

The tribunal noted that the appellant's advocate agreed that the abatement benefit was more favorable and acknowledged the need to reverse the Cenvat credit. Consequently, the tribunal allowed the revenue's appeal, directing the appellant to reverse the Cenvat credit while retaining the benefit of abatement under Notification No.1/2006-ST. The judgment clarifies the legal position regarding the simultaneous availment of Cenvat credit and abatement benefits in the context of construction services, emphasizing the need to choose one benefit and denying the other to prevent dual advantages.