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TMI Blog2014 (12) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore they are eligible to work under the WCS service. Cenvat credit on input services - Held that:- Appellant has availed credit on input services only - the statement of ld. AR in the written submissions that the Cenvat Credit has been availed on materials is not a correct statement. The Composition Scheme as mentioned above only requires that the provider of service must not have taken Cenvat Credit on inputs. Therefore, there is no reason to deny the option of Composition Scheme to the appellant. Extended period of limitation - Held that:- it has been held in various judicial pronouncements that wrong classification cannot lead to the conclusion of suppression of facts etc. when no mens rea established. The Adjudicating Authority has also wrongly come to the conclusion that availment of input service credit will debar the appellant form the benefit of Notification 1/06. In the present case, this benefit of Notification has not been availed, rather option of Composition Scheme has been availed which does not bar the availment of Cenvat credit on input service.. Demand set aside - Decided in favor of assexxee. - Appeal No. ST/85387/14-Mum - Final Order No. A/170 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supply and installation components of the total services rendered but tax is paid only on the supply part, that, too after availing abatement of 67% under Notification 1/06. It was alleged that the appellants violated the condition of the Notification by availing Cenvat credit of ₹ 20,48,970/- and ₹ 15,55,107/- respectively on input services which is not permissible. Extended time period was invoked for part of the demands. Consequently, demand of duty was confirmed along with interest and penalties were imposed under Sections 77 78. 3. Heard both sides and considered the written submissions. 4. The ld. counsel Mr. M.H. Patil contended that as far as M/s. Air Liquide North India Pvt. Ltd. contract is concerned, they never changed the classification. After paying service tax during January to March 2008 under, ECI on full value at full rate of 12.36% on the objection of their customer they started availing benefit of Notification 1/2006 from April to 2008 onwards as they were eligible for abatement because of supply of materials also. The value charged to M/s. Air Liquide North India Pvt. Ltd. included supply element as well as service element. As regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly, payment of service tax under WCS composition scheme pertaining to the contracts of MCC PTA and SAIL is also reflected in the ST-3 returns. According to him, in any case wrong classification of a service cannot be considered as suppression or misdeclaration as held by the Tribunal in Indian Institute of Chemical Technology 2010 (17) STR 420 (T) as upheld by the Hon'ble AP High Court in 2012 (26) STR 97 (AP). Further, he argued that simply because the documents are not statutory required to be submitted with ST-3 returns cannot lead to the conclusion that extended period is invocable. 5. The ld. AR argued that as CENVAT was availed in the case of M/s. Air Liquid North India Pvt. Ltd. the benefit of Notification 1/2006 cannot be availed. Regarding the contract pertaining to MCC PTA he emphasised that the contract is not a composite contract as separate work order values and payment terms are provided for supply and installation. Installation portion being clearly distinct, the same can be classified under ECI Service only, and being a purely service activity, there is no scope for availment of abatement on the materials portion and service tax on 12.36% is payable on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of materials. Interalia, such as SS and MS pipes. They also produced certificate evidencing payment of Works Contract Tax to excise and taxation officer, Haryana and invoices evidencing payment of works contract tax at 4% on entire value and service tax at 12.33% on the abated value of 33% of invoice value under Notification 1/2006. The bills of quantities showing supply as well as selling of cement, concrete, brick work, steel bars etc. were also placed on record. 7.1 Revenue has raised an objection that Cenvat credit of ₹ 2,69,580/ was availed on input services and this is not permissible for availing abatement under Notification 1/06. In this matter there are several judgements of the Tribunal such as Khyati Tours Travels (supra), B.G. Shirke Technology (supra) and Ramkrishna Travels (supra) which have relied on the Supreme Court judgment in the case of Chandrapur Magnet Wires 1996 (81) ELT 3 all holding that once the credit has been reversed the benefit of Notification would be available. It would also a travesty of justice if service tax of ₹ 85 lakhs approx. is demanded only because a small amount of credit was first taken and thereafter reversed. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we proceed to analyze the facts with reference to statutory provisions. Service tax is levied under Section 66 of the Finance Act. The condition [clause (i) under explanation to Section 65 (105) (zzzza)] to be fulfilled for classifying a service under Works contract is that the transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods. Therefore, firstly, there must transfer of property in goods involved and secondly such transfer of property is leviable to tax as sale of goods. 7.1 Let us take the first aspect i.e. transfer of property in goods. The appellants' contention appears to be that merely because they have entered into a separate contract for supply of transmission towers (goods or materials) it cannot be concluded that the Service contract cannot be termed as a Works contract on its own footing. We note that there is no denying the fact that in the said Service contract, substantial amount of material has been used which is Cement, Steel, Bolts, Paints etc. It is also a fact that in many Works contracts, which involve making of foundations and fixing of structures thereon, material is an essential component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax as sale of goods, is also fulfilled. 8.2 The contention of the appellant is supported by CBEC Circular B1/16/2007-TRU dt. 22.5.2007 which states that: 9.8 Presently, erection, commissioning or installation service [section 65(105)(zzd)], commercial or industrial construction service [section 65(105)(zzq)] and construction of complex service [section 65(105)(zzzh)] are separate taxable services. 9.9 Various trade and industry associations have raised apprehension in respect of classification of a contract either under the newly introduced works contract service or under erection, commissioning or installation and commercial or residential construction services. 9.10 Contracts which are treated as works contract for the purpose of levy of VAT / sales tax shall also be treated as works contract for the purpose of levy of service tax . This is clear from the definition under section 65(105)(zzzza). .Emphasis supplied In this case the goods involved as part of Service Contract are subjected to payment of Sales Tax/VAT. In respect of both contracts the appellant have submitted documents evidencing payment of works contract tax under the West Bengal Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vider of service must not have taken Cenvat Credit on inputs. Therefore, there is no reason to deny the option of Composition Scheme to the appellant. 8.5 In view of the above, we hold that the demand of service tax in respect of contracts relating to the MCC PTA and SAIL is not sustainable. Although the issue stands decided above on merits, we may also go into the aspect of time bar. We find from the Adjudication order that no suppression is made out. In the case of M/s. Air Liquide North India Pvt. Ltd., we have already held that the service tax was correctly paid under ECI service and the calculation of duty clearly indicates that service tax was paid at the full rate of 12.36% on the abated value and there is no suppression of facts. In the case of other contracts also, the extended time period is sought to be invoked only for the reason that the service has been wrongly classified under WCS service instead of ECI service. We have already held that the service has been correctly classified under WCS. In any case, it has been held in various judicial pronouncements that wrong classification cannot lead to the conclusion of suppression of facts etc. when no mens rea establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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