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TMI Blog2021 (6) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... by utilizing the Cenvat credit of Rs. 1,82,16,059/- of service tax paid to their sub contractors. 1.1 The central government inserted section 102 of Finance Act, 1994 giving retrospective exemption to the service provided by the appellant to various government departments for the period 01.04.2015 to 29.02.2016 . Section 102 of Finance Act, 1994 also provided for the refund of the service tax paid by the assessees during the period 01.04.2015 to 29.02.2016. Section 102 of Finance Act, 1994 also provided for the timelines for filing of the refund claim of the service tax paid during the period 01.04.2015 to 29.02.2016. 1.2 The appellants vide their application dated 10.11.16 filed the refund claim of Rs. 2,78,07,833/- Service tax paid during the period 01.04.2015 to 29.02.2016 with reference to such refund claim, the Appellants were served show cause notice dated 22.12.2016 proposing to reject claim . 1.3 The Learned Deputy Commissioner after considering the appellants' reply dated 03.02.2017 rejected the refund claim vide order in original dated 10.02.2017 on the ground that the appellant have not followed the provisions rule 6 of Cenvat Credit Rules, 2004. Further, the governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s eligible for availing as Cenvat credit for output taxable service provider. Further as per Rules 3 (4) of Cenvat Credit Rules, 2004 the Cenvat credit can be utilized for payment of service tax on taxable output service. Therefore, the appellant have utilised the Cenvat credit of service tax paid on their input services in terms of Rules 3 of Cenvat Credit Rules, 2004. Therefore to reject the refund claim on the ground that the appellant discharged liability of service tax through utilisation of Cenvat credit is against the provision of Cenvat Credit Rules, 2004. 2.3 He further submits that in the facts of the present case, Rule 6 of Cenvat Credit Rules 2004 is inapplicable. Rule 6 of the Cenvat Credit Rules,2004 casts obligation on the output taxable service provider to maintain separate books of account and avail only that much Cenvat credit which may pertain to taxable output service in case the service provide is taxable as well as exempted services. To achieve the above object, Rule 6 has a specific formula for reversal of Cenvat credit of service tax paid on commonly used input services. 2.4 The appellants have paid the service tax to their sub- Contractors during the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal against such observations. The Revenue Department now cannot raise a point which was settled in favour of the Appellants and not objected to at relevant time. He further submits that in view of the decision of division bench of this Hon'ble Tribunal in case of Alembic Ltd. (supra) which is affirmed by Hon'ble Gujarat High Court also, the decision in the case of Shree Gurukrupa Constructions is not a good law. 2.8 He submits that in the case of M/s Almebic Ltd. it is held that the eligibility of the Cenvat credit is to be seen at the time of the receipt of services. At the time i.e. 01.04.2015 to 29.02.2016 the appellants were executing only taxable services and therefore they were eligible to claim the Cenvat credit. Rule 6 has no application if subsequently the refund is granted of the service tax so paid utilizing the eligible Cenvat credit. Therefore, invocation of Rule 6 of the Cenvat Credit Rules, 2004 now when Learned Commissioner (Appeals) has already concluded the issue in favour of appellants is not permissible. 2.9 He further submits that appellants have availed Cenvat credit of input services only of those services which were directly used in taxable projects duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o notice the provisions of Section 142(6)(a) of the Central Goods & Service Tax Act, 2017 wherein it is stated that if as a matter of finalization of appeal the refund claim of Cenvat credit is found inadmissible that has to be paid back to the assessee in cash. Therefore the appellants are otherwise eligible to claim refund in cash. 2.16 As regard the refund of amount of Rs. 38,11,497/- for the project B-2/12/2014-15. He submits that this refund was rejected also on the ground that the date of work order i.e. 16.03.2015 was considered as date of contract and the same is not eligible for refund as per section 102. He submits that in this case the tender was opened and stands accepted on 28.01.2015 therefore, that date has to be considered as date of contract. 2.17 He submits that it was submitted before the Learned Commissioner (Appeals) that the entire refund has arisen because the appellants have carried out certain work for government departments and the bid for project B-2/12/2014-15 for the tender was opened and appellants were declared as successful bidder. It was also submitted before the Learned Commissioner (Appeals) that in case of Government work no formal agreement/ c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services. It is observed though the Adjudicating authority has invoked rule 6 however, the learned Commissioner (Appeals) in para 7.1 of the impugned order observed as under:- "The lower adjudicating authority has rejected the refund claim on the ground that, out of total claim of Rs. 2,74,30,204/-, Rs. 1,77,42,041/- has been paid through Cenvat credit account and apart from these the appellant has declared exempted services in ST-3 returns for FY 2015-16, however, the appellant has not followed mandatory provisions of Rule 6 of the CCR,2004; that payment of service tax in cash does not grant them any exemption from compliance of Rule 6 of CCR,2004. The appellant has submitted that they have utilized Cenvat Credit only of those input services which are directly related to taxable output services only and they have maintained separate accounts as per the provisions of Rule 6 of the Cenvat credit Rules and that the service tax had been paid to the sub- contractors pertaining to this work was claimed as CENVAT. I find that when the appellant has maintained separate accounts in terms of Rule 6 of the Cenvat Credit Rules, 2004 and have availed Cenvat credit only on those input service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o take credit (hereinafter referred to as the CENVAT credit ) of- (i)- ...................... ....................... ........................ ......................... (viia).................. (ix) the service tax leviable under section 66 of the Finance Act [(ixa) the service tax leviable under section 66A of the Finance Act;] [(ixb) the service tax leviable under section 66B of the Finance Act;] (X) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004) [(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] [(xi) the additional duty of excise leviable under [ section 85 of Finance Act, 2005 (18 of 2005)] Paid on- (i)................ (ii) any input service received by the manufacturer of final product or by the provider of output services on or after t6he 10th day of September,2004,............... ...................................................... ......................................................... (4) The CENVAT credit may be utilized for payment of - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) a clinical establishment; or (iii) an art or cultural establishment; (c) a residential complex predominantly meant for self-use or for the use of their employees or other persons specified in Explanation 1 to clause (44) of section 65B of the said Act, under a contract entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date. (2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all material times. (3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President." 4.4 As per the plain reading of the above section 102 legislature knowing well that service tax on the construction service obviously paid not only on cash but also by utilizing the Cenvat credit on input service. With this clear understanding provision of refund of service tax paid on output service was also provided in section 102. There is no provision to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export. 1[(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if,- (i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or (ii) the said final product has been exempted absolutely under section 5A of the Act, and after deducting the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put service which was provided on payment of service tax. In this position neither denial of Cenvat credit nor denial of refund of service tax paid by utilizing such Cenvat credit has support of any law. 4.10 The identical situation of the case has been considered by the division bench of this tribunal in the case of M/s Almebic Ltd (supra). The facts in that case was appellant were providing construction service of residential complex. At the time of receipt of input service and construction of residential complex it was not certain that part of the residential complex would not attract the service tax due to the reason that it is sold after obtaining the occupation certificate and due to this reason whatever constructed portion sold after obtaining the occupation certificate no service tax was paid. It was the department's case that since no service tax was paid on the part of the residential complex; the assessee was not entitled for the Cenvat credit on the input service attributed to the said service on which no service tax was paid. This tribunal after considering all the provisions of Cenvat Credit Rules came to the conclusion that at the time of availing the Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the next issue of whether the appellants were also required to reverse proportionate credit, out of the valid input service credits availed by them during the period 2010 till obtaining completion certificate, i.e. availing during the time when whole of output service of construction of residential complex was taxable. It was argued by the appellants that out of business prudence, no developer wishes to have a situation where the properties are not sold as soon as possible and the property is converted into immovable property after receipt of completion certificate. It was also argued that as per Rule 3 of the CCR, 2004, credit eligibility is to be examined as on date of receipt of input service and not governed by later developments such as portion of property getting converted into immovable property after receipt of completion certificate. It was also argued that while Rule 6 of the CCR, 2004 deals with credits availed afresh, i.e. after output activity becoming exempt, however Rule 11 is the only provision which deals with credits availed in the past when output activity was wholly taxable however, at later point in time, became exempt. 13. We agree with such plea raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, it was legally entitled to take the credit on the date after the receipt of service bills/challans. Therefore, the availment of Cenvat credit by the respondent is absolutely legal and correct and in accordance with Rule 4(7) of the Rules. As at the time of taking credit, there was no existence of any exempted service, therefore, there is no application of Rule 6. That part of the service was exempted only after obtaining completion certificate and thereafter, the respondent was not required to avail the Cenvat credit on the input service, if any, received after obtaining the completion certificate. The respondent did not avail the Cenvat credit in respect of the services received after obtaining the completion certificate in respect of exempted service or avail proportionate credit attributed to the taxable output service. Therefore, Rule 6 has application for the period after obtaining the completion certificate. Rule 11(1), (2) and (3) of the Rules applicable to provision for manufactured goods to hold that in case of service becomes exempted at a later stage, there is no such provision in respect of the service. The only provision for the service is provided under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C.) at para 17 held as under :- "17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken. in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit-can be taken only on a final product that is manufactured out of the particular raw material to which the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said service tax even without considering the Cenvat credit is refundable in the hands of recipient of such service as the services of sub- contractors was also exempted. This argument of the appellant is supported by the judgment of Hon'ble Supreme Court in the case of Oswal Chemicals and fertilizers reported in 2015 (318) ELT 617 (SC) wherein it is held as under:- "7. Explanation (B) defines "relevant date". Though this date has reference to the calculation of limitation period for the purposes of seeking refund of the duty under the aforesaid provision. However, clause (e) while stating the "relevant date" clarifies that in case of a person, other than the manufacturer, the date of purchase of goods by other person would be the relevant date. This itself indicates that the person can be other than the manufacturer and Explanation (B) caters to such other person. It is not even necessary to embark on detailed discussion on this aspect inasmuch as we note that the Constitution Bench of this Court in ' Mafatlal Industries Ltd. and others v. Union of India and others' [1997 (5) SCC 536 = 1997 (89) E.L.T. 247 (S.C.)] has already settled this aspect in the following words :- "(xii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. In our opinion, this can be met by holding that the person aggrieved who is allowed to prefer an appeal would only be entitled to prefer appeal to the extent of the prejudice suffered by inaction of the original assessee through whom he claims the relief. This would rule out the possibility of matter going down the chain." 4.15 From the above settled position the appellant is otherwise eligible for refund in respect of service tax paid by the sub- contractors as a recipient of exempted service. 4.16 Shri H.K Jain Learned Assistant Commissioner (AR) appearing on behalf of the revenue heavily relied upon the decision of this tribunal in the case of Shree Gurukrupa Construction (supra). We find that this decision has not considered the latest legal position settled by Hon'ble Gujarat High Court in the case of M/s Almebic Ltd. Therefore, the decision in the case of Shree Gurukrupa is distinguished. 4.17 There is one more issue in the present case that out of the subject refund in the present appeal the Learned Commissioner ( Appeals) denied the refund of Rs. 38,11,497/- for project B-2/12/2014-15 on the ground that the contract was entered into after 01.03.2015 as per the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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