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2024 (10) TMI 1129 - AT - Service TaxLiability to pay service tax on supply of water to Government of Odisha - re-availment of Cenvat Credit subsequent to change of option under Rule 6(3) of Cenvat Credit Rules, 2004 - Cenvat Credit availed on invoices after one year of issuance in the year of return. Whether the appellant is liable to pay Service Tax on supply of water by Government of Odisha in terms of Section 66(B)A of the Finance Act, 1994? - HELD THAT - The said issue has been settled by this Tribunal in the case of M/S. PARADEEP PHOSPHATES LIMITED VERSUS COMMISSIONER OF CGST EXCISE, BHUBANESWAR-I, BHUBANESWAR 2024 (6) TMI 1410 - CESTAT KOLKATA wherein this Tribunal observed ' The appellant is, therefore, justified in asserting that the Agreement executed between the appellant and the government is for supply of water for which charges are paid by the appellant on the basis of volume of water drawn and it is not a case of assignment of right to use natural resources of the government.' - As issue has already been settled by the decision of this Trbunal for water supply by Government of Odisha, the appellant is not liable to Service Tax. Therefore, issue is no more res-integra and appellant is not liable to pay Service Tax. Re-availment of Cenvat Credit subsequent to change of option under Rule 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT - The appellant has intimated to the Department vide letters dated 01.12.2016 and 12.01.2017 and which were in well knowledge of the Department. Therefore, no suppression can be alleged against the appellant. Therefore, no demand can be raised against the appellant for re-availment of credit subsequent to change of option under Rule 6(3) of the Cenvat Credit Rules, 2004. Therefore, the demand of Rs. 183,09,57,095/- is set aside. Cenvat Credit availed on invoice after one year of the issuance - HELD THAT - The same has been shown by the appellant in the ER-1 return which was filed on 12.01.2017 and which has well within the knowledge of the Department in 2017 itself, therefore, no suppression of facts can be alleged against the appellant. Therefore, Cenvat credit cannot be denied to the appellant only on the reason that they have shown in the ER-1 return beyond one year period. Interest and penalty - HELD THAT - As no demand is sustainable against the appellant, consequently no interest is payable by the appellant and no penalty is imposable. The impugned order is set aside - appeal allowed.
Issues Involved:
1. Liability to pay Service Tax on the supply of water by the Government of Odisha. 2. Re-availment of Cenvat Credit subsequent to change of option under Rule 6(3) of the Cenvat Credit Rules, 2004. 3. Denial of Cenvat Credit availed on invoices after one year of issuance. Detailed Analysis: Issue 1: Liability to Pay Service Tax on Supply of Water by Government of Odisha The appellant contested the demand for Service Tax on water supplied by the Government of Odisha, arguing that this supply does not constitute a taxable service under Section 66D(a)(iv) of the Finance Act. The Tribunal referenced previous cases, notably Sasan Power Ltd. and Paradeep Phosphates Ltd., where it was determined that agreements for water supply do not equate to an assignment of rights to use natural resources. The Tribunal concluded that the supply of water by the Government of Odisha to the appellant is not liable to Service Tax, as it is not an assignment of rights but a mere supply of water. Therefore, the demand for Service Tax on this account was set aside. Issue 2: Re-availment of Cenvat Credit Subsequent to Change of Option Under Rule 6(3) of the Cenvat Credit Rules, 2004 The appellant had initially reversed Cenvat Credit based on Rule 6(3A) and later opted to change to Rule 6(3)(i), which allows for a different calculation method. The appellant argued that this change was communicated to the Department, and no objections were raised at the time. The Tribunal found that the appellant had complied with procedural requirements and that the Department's claim of ineligibility was unfounded. The Tribunal also noted that the Show Cause Notice was issued beyond the permissible period, making the demand unsustainable. Consequently, the demand for Rs. 183,09,57,095/- was set aside. Issue 3: Denial of Cenvat Credit Availed on Invoices After One Year of Issuance The appellant had availed Cenvat Credit on invoices within the stipulated time but reflected this in the ER-1 returns after a year. The Tribunal held that since the credit was recorded in the appellant's books and Cenvat register within the required time frame, denying the credit based solely on its late reflection in the ER-1 returns was unjustified. Furthermore, the Tribunal emphasized that the Show Cause Notice was issued beyond the limitation period, and thus, the demand was not sustainable. The Tribunal set aside the denial of Cenvat Credit on this ground. Conclusion: The Tribunal concluded that no demand was sustainable against the appellant on all three issues, citing procedural compliance, the absence of suppression of facts, and the expiration of the limitation period for issuing the Show Cause Notice. Consequently, no interest or penalties were imposed, and the appeal was allowed. The operative part of the order was pronounced in open court.
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