2020 (1) TMI 589 - AT - Service Tax

Recovery of service tax - Supply of Tangible Goods Service - services provided as Lessee - CENVAT Credit - HELD THAT - We do not find that the Revenue has specifically alleged or pointed out any discrepancies in the observations recorded in the original order. Since upon proper analysis and verification the documentary evidences, the Ld.Adjudicating Authority has dropped the proposed duty demand on the assessee appellant, we are of the view that at this juncture, we cannot re-appreciate the arithmetical accuracy of the proposed demand of recovery, which has been adequately dealt with by the Ld.Adjudicating Authority. Thus, we do not find any infirmity in the impugned order, so far as the Ld.Adjudicating Authority has dropped the proposed demand of ₹ 65,86,87,931/-. CENVAT Credit - HELD THAT - The Ld. Adjudicating authority had referred to the sample copy of the invoices and also the Certificate furnished by the independent Practising Chartered Accountant. Since such observations recorded by the Ld. Adjudicating Authority were based on the available records, we also feel that the findings recorded in the impugned order cannot also be disturbed by taking a contrary view - Hence, we are of the opinion that dropping of proposed cenvat demand of ₹ 27,62,90,512/- in the impugned order is in inconformity with the statutory provisions. The terms of the contract clearly suggest that the equipments are to be used for execution of assigned task, wherein effective control and possession are retained by M/s BHEL. Since the effective control and possession of the equipments were not transferred to the appellant-assessee, as per the statutory mandates, such use of the equipment belonging to M/s BHEL cannot not be leviable to service tax under the category of Supply of Tangible Goods Service . The service tax demand confirmed in the original order under the taxable category of Tangible Goods Service , will not stand for judicial scrutiny - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Revenue challenging impugned order for recovery of service tax.
2. Assessee disputing taxable service under "Supply of Tangible Goods Service".
3. Allegation of denial of cenvat benefit and recovery.

Analysis:
1. The Revenue contested the impugned order, arguing that the Adjudicating Authority did not scrutinize documents properly, making the recovery proposal of ?65,86,87,931 unsustainable. However, the Tribunal found that the Authority examined documents and dropped the demand based on authentic records and a Chartered Accountant's Certificate. The Tribunal concluded that the Revenue failed to point out discrepancies, upholding the dropping of the demand.

2. Regarding the Assessee's appeal on taxable service, the Tribunal analyzed the contract with M/s BHEL. As per statutory requirements, since effective control and possession of the equipment remained with M/s BHEL, the service did not fall under "Supply of Tangible Goods Service." The Tribunal cited previous cases where non-transfer of right to use or possession of goods exempted transactions from service tax, leading to the allowance of the Assessee's appeal.

3. The Adjudicating Authority found that the Assessee availed cenvat credit after paying for taxable services. This observation was supported by invoices and a Chartered Accountant's Certificate. The Tribunal upheld this finding, concluding that the denial of cenvat benefit demand of ?27,62,90,512 was in line with statutory provisions.

In conclusion, the Tribunal dismissed the Revenue's appeal and allowed the Assessee's appeal, disposing of the case accordingly.