2024 (11) TMI 1345 - AT - Service Tax

Delay passing adjudication order - Short payment of the differential service tax - discharging service tax liability on construction services after taking 67% abatement in terms of Notification No. 01/2006-ST dated 01.03.2006 - HELD THAT - The period of dispute 2008-09 to 2010-11 and show cause notice was issued on 16.10.2014 whereas the Order-in-Original was passed on 22.03.2021 approximately after the expiry of seven years and there has been no correspondence from the department at all for a period of seven years; the department has not been able to give any cogent reason for such a delay in adjudication; the delay in adjudication has resulted in lapsing of other benefits of the appellant and has increased unnecessary interest liability on the appellant; therefore, the impugned order in first instance is violative of the principle of natural justice and is liable to be set aside as held in the cases of Unnayak Prop 2009 (7) TMI 947 - CESTAT, KOLKATA and Shirish Harshvadan Shah 2010 (1) TMI 508 - BOMBAY HIGH COURT Appellant has opted for the abatement scheme provided in Notification No. 01/2006-ST dated 01.03.2006 and has fulfilled all the conditions specified in the said notification and there is no dispute in this regard. Once the appellant has opted for the benefit of that notification and admittedly the said notification has not been withdrawn even after framing the composition scheme under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. Further, under the composition scheme, the appellant was required to give option for the same in terms of Rule 3 of the said Rules, whereas, in the present case, the appellant has not opted for the said scheme and continued to avail the benefit under Notification No. 01/2006 after fulfilling all the conditions prescribed therein. Decision of the Tribunal in the case of Bharat Heavy Electricals Ltd 2012 (4) TMI 197 - CESTAT, MUMBAI is applicable in the present case and benefit of the Notification No. 01/2006 cannot be denied to the appellant once they fulfilled the conditions of the same. Denial of benefit of Notification No. 01/2006-ST dated 01.03.2006 is bad in law therefore set aside the impugned order and allow the appeal of the appellant with consequential relief, if any, as per law.

Summary

Issues:
Interpretation of abatement scheme under Notification No. 01/2006-ST dated 01.03.2006; Delay in passing Order-in-Original affecting natural justice principles.

Analysis:
The judgment pertains to an appeal against an Order-in-Original issued by the Commissioner (Appeals) concerning the eligibility of an appellant for abatement under Notification No. 01/2006-ST dated 01.03.2006. The appellant, engaged in providing taxable construction services, was alleged to have short paid service tax due to incorrect abatement rate application. The Original Authority confirmed the demand, leading to the appellant's appeal. The appellant contended that the long delay of seven years in passing the Order-in-Original violated natural justice principles, depriving them of a fair opportunity to present their case. The appellant referenced precedents to support their argument, emphasizing the importance of timely adjudication for effective defense.

The appellant argued that they met all conditions specified in Notification No. 01/2006-ST and had not violated any provisions. They highlighted that the department did not dispute their compliance with the notification's requirements, including not availing Cenvat Credit and meeting specified conditions for abatement. The appellant also cited a relevant case to support their position, emphasizing their adherence to the notification's conditions. Additionally, the appellant pointed out that they did not opt for the composition scheme under the Works Contract Rules, indicating their eligibility for abatement under Notification No. 01/2006.

On the other hand, the Revenue's Authorized Representative contended that the appellant was only entitled to a 60% abatement under the composition scheme, not the 67% claimed. However, upon review of the submissions and evidence, the Tribunal found that the appellant had indeed fulfilled all conditions under Notification No. 01/2006-ST and had not opted for the composition scheme. The Tribunal relied on a previous decision to support the appellant's eligibility for the abatement scheme under the notification. Consequently, the Tribunal held that the denial of the benefit of Notification No. 01/2006-ST to the appellant was legally flawed and set aside the impugned order, allowing the appeal with consequential relief as per law.