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TMI Blog2023 (1) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... tment with the fees payable for the last two months of the term. The Agreement, therefore, specifically refers to the amount as an advance which would be adjusted with the fees payable for the last two months. There is nothing in the Agreement which may even remotely suggest that the said amount can be treated as a security deposit. This is what has also been held by the Commissioner. Whether the appellant had correctly availed the CENVAT credit on goods which according to the appellant are capital goods? - HELD THAT:- This issue has been decided in favour of the appellant by the Tribunal in PRINCIPAL COMMISSIONER, CGST DELHI SOUTH COMMISSIONERATE VERSUS M/S. AST TELECOM SOLAR (P) LTD. [ 2021 (11) TMI 244 - CESTAT NEW DELHI ] where it was held that an output service provider under Rule 3 of CCR is entitled to take cenvat credit on all such goods without any distinction as to inputs or capital goods for rendering taxable output service. In the present case, items like MS angles, GI sheets, Bolts, Shelter Cabins, Structures of iron steel, MS nuts, fabricated and galvanized structures, have gone into the making of solar system, through which the appellant rendered taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received from clients in relation to the services to be provided and regarding irregular availment of CENVAT credit of Rs.2,28,64,576/- in respect of capital goods and utilization thereof. The relevant portions of the show cause notice is reproduced below: 1. Non payment of service tax on the advances received from clients in relation to the services to the provided. 4. Whereas, during the course of audit, it was noticed that the assessee had received advance from M/s Indus Towers Limited during the years 2010-11 2011-12 amounting to Rs.6,72,23,160/- for the services to be provided but the Service Tax was not paid on receipt of such advances. The scrutiny of the agreement namely Master Hybrid Solar Solution Installation Operation Maintenance Agreement (RUD-II) between the assessee and M/s Indus Towers Ltd. (ITL) revealed that the assessee was to be paid advances for the services as per Para 6.7 of the agreement, which were to be adjusted towards the payment for the assessee's services in the last two months of service availment period. The conditions of the agreement reflected that these amounts recorded as Advance were not a refundable deposit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding such wrong availment of CENVAT Credit, the assessee reversed an amount of Rs. 1,41,00,814/- on 31.03.2015, 05.04.2015, 31.10.2015 and 30.11.2015 through CENVAT Credit out of total inadmissible Cenvat Credit of Rs.2,28,64,576/-, albeit Under Protest on all items other than Shelter Cabin. However the assessee neither reversed the remaining Cenvat Credit availed on Shelter Cabin amounting to Rs.87,63,762/- nor paid any interest. In terms of Section 75 readwith Rule 14 of Cenvat Credit Rule, 2004. 5.4 Whereas from the above it appears that the Cenvat Credit amounting to Rs. 2,28,64,576/- claimed as Cenvat Credit as Capital Goods is not admissible to the assessee. Therefore, the assessee is required to reverse the same alongwith interest in terms of Rule 14 readwith Section 73 75 of Finance Act, 1994. 6. Thus, in the light of the discussions in the paras above, the total Service Tax liability of the assessee for the period 2010-11 to 2014-15 is tabulated as under:- Table 1 (Service Tax) S.No. Para No. of this notice Service Tax payable/ Cenvat Credit to be recovered (including Cess) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were not covered under the definition of Capital Goods 2014-2015 2,28,64,576/- 2,28,64,576/- SCN II: Irregular availment and utilization of CENVAT Credit in respect of capital goods 2015-2016 3,33,113/- 3,33,113/- Total 3,01,21,674/- 8. The first dispute relates to the amount of advance of Rs. 6,72,23,160/- received by the appellant from M/s Indus Tower Ltd, on which the department sought to levy service tax on the premise that such amount pertains to advance received towards the services to be provided , i.e., it is a consideration towards the service and not security deposit. 9. The second dispute pertains to the CENVAT credit availed by the appellant on goods namely MS angles, GI sheets, Bolts, Shelter Cabins, Structures of iron steel, MS huts, fabricated and galvanized structures. According to the department, these goods are not covered under the definition of capital goods as defined under rule 2(a) of the CENVAT Credit Rules, 2004 [ the 2004 Rules ]. 10. The appellant filed a reply to the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004. However, in the instant case the impugned gods viz. MS angles, GI sheets, Bolts, Shelter cabins, Structures of iron steel, MS huts, Fabricated and galvanized structures all do not fall under any of the chapter headings of the First Schedule to the Excise Tariff Act specified in the Rules, ibid. Hence, the aforesaid goods do not qualify to be treated as capital goods. 228. Since the impugned goods are not capital goods within the meaning of the above definition, the credit thereof taken by the assessee is in violation of the Rule 3 Rule 4 of the CENVAT Credit Rules, 2004 and thus not admissible. 229. I find that the Noticee has taken a plea that the impugned goods, if not capital goods, would be inputs as defined under Rule 2(k) of the CENVAT Credit Rules, 2004. I am not inclined to accept this plea. Since the period involved in this case is from 2010-11 to 2014-15 and the definition of input suffered changes in the year 2011, I am discussing the issue for the period prior to 2011 and thereafter. (emphasis supplied) 13. The contention advanced by the appellant that the extended period of the limitation could not have been invoked was also rejected and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, learned authorised representative appearing for the department, however, supported the impugned order and made the following submissions: (i) In regard to the first issue the amount received by the appellant was towards advances and in support of this contention reliance has been place upon the decision of the Tribunal in Central Power Research Institute vs. Commissioner of C. Ex., Bhopal [ 2017 (6) G.S.T.L. 42 (Tri.-Del.) ]; and (ii) The extended period of limitation was correctly invoked in the facts and circumstances of the case. 16. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 17. The first issue that arises for consideration is whether the amount of Rs. 6,72,23,160/- received by the appellant from M/s. Indus Towers Ltd. should be treated as an advance, on which service tax is to be levied as contented by the department, or it should be treated as a security deposit which is not susceptible to levy of service tax, as contented by the appellant. 18. Paragraph 6.7 of the Agreement provides that the appellant shall, at its own cost, install, operate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged for taxable service, which include any amount received towards the taxable service before, during or after provisions of such service . 20. There is, therefore, no error in the finding recorded by the Commissioner on this issue. 21. The second issue that arises for consideration is as to whether the appellant had correctly availed the CENVAT credit on goods which according to the appellant are capital goods. This issue has been decided in favour of the appellant by the Tribunal in AST Telecom Solar and the relevant portion of the decision is reproduced below: 1. The issue in this appeal is whether the Adjudicating Authority and the Commissioner (Appeals) have rightly allowed the cenvat credit with respect to the items like M.S. Angles, G.I. sheet, Bolts, Shelter Cabins, Structures Cabins, Structure of Iron and Steels, M.S. Huts, fabricated and galvanized structures, etc., finding that the same may be utilised by the respondent/assessee in providing taxable output service and also observing that these items were used by the assessee in fabrication or for support of capital goods. 2. The brief facts are that the respondent is registered with the Service Tax Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MS nuts, fabricated and galvanized structures. 23. The appellant was, therefore, in view of the aforesaid decision of the Tribunal in AST Telecom Solar entitled to avail CENVAT credit and the Commissioner was not justified in disallowing the credit. 24. The third issue that arises for consideration is regarding the invocation of the extended period of limitation in the show cause notice. The relevant portion of the show cause notice invoking the extended period of limitation is reproduced below: 8. Whereas, from the facts discussed above, it further appears that the assessee, by doing so, had intentionally and willfully suppressed the details of providing/receiving that impugned taxable services and did not file prescribed ST-3 Returns containing the details correctly therein with the intention to short payment/non-payment of the applicable Service Tax on such services. Agreements were never shared by the assessee with the Department so that the nature of these advances could be ascertained from the agreements. Thus there is a clear case of suppression on the part of the assesssee. The assessee was aware about the nature of such advances as he had entered into different ..... X X X X Extracts X X X X X X X X Extracts X X X X
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