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TMI Blog2023 (6) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order - appeal allowed. - Service Tax Appeal No. 85338 of 2020 - FINAL ORDER NO. 85788/2023 - Dated:- 6-4-2023 - HON BLE MR. SANJIV SRIVASTAVA , MEMBER ( TECHNICAL ) Ms. Puloma Dalal, Chartered Accountant, for the Appellant Shri Vinod Kumar, Assistant Commissioner, Authorised Representative for the Respondent ORDER This appeal is directed against Order-in-Appeal No. NA/CGST/A-I/MUM/222/2019-20 dated 30.10.2019 passed by the Commissioner of CGST Central Excise (Appeals-I), Mumbai. By the impugned order, following has been held:- 6.2 Appellants have contended that they have rendered works contract service and availed credit in terms of Rule 2A of the Service Tax Determination of Value Rules. It is their contention that works contract service is not exempt service and that appellants were engaged a providing output service. Therefore, entire cenvat credit availed by them is admissible to them and that provisions of reversal under Rule 6(3) of CCR would not be applicable to them. I Find that be fact is undisputed that appellants availed credit of different input services for construction of entire complex. Once they received occupation certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordering recovering of tax-Failure by assessee to maintain regular separate accounts in respect of Non-Service Tax leviable activities despite being aware that Service Tax was not payable on its trading activity Invocation of extended period of limitation proper Adoption of method of proportionate turnover based attribution to assessee's liability by Adjudicating Authority reasonable-Assessee not entitled to set-off or benefit of Service Tax credit on entire amount paid but on proportionate amount as substantial part of its business was trading - Rules 2(e), 6(2), (3) of Cenvat Credit Rules, 2004 Wherever someone undertakes activities that cannot be called a service or which is not manufacture , that activity goes out of the purview of both Central Excise Act as well as Finance Act, 1994. In such cases, an assessee would be ineligible for claiming Input Service Tax Credit on an output which is neither a service nor excisable goods. There is no provision to cover situations where an assessee is providing a taxable service and is undertaking another activity which is neither a service nor manufacture [paras 16, 17, 18, 19, 20] Hon'ble Apex Court vide its decision dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have examined the contention. In the SCN the ineligible cenvat credit required to be reversed was mentioned as Rs. 31,46,324/- Thereafter, it has been stated that the assessee have already paid an amount of Rs. 10,13,174 It would be apt to quote from the SCN. Hence the said proportionate credit involved in the exempted services works out to Rs. 31,46,324/- as per formula mentioned in para 2 above. It is observed that the assessee have already reversed/paid an amount of Rs. 10,13,174/- in this regard. Therefore, it appears that the assessee have failed to reverse/pay the differential Cenvat Credit of Rs. 21,33.150 ie. Rs. 31.46.324/--Rs 10.13,174/-) on the said exempted services It is further seen that in the operative para 7 of the SCN, the assessee was required to Showcause as to why Cenvat credit of Rs 21,33,150- (Rupees Twenty One Lakhs Thirty Three Thousand One Hundred Fifty only) should not be disallowed and recovered under Rule 14 of the CENVAT Credit Rules, 2008 read with proviso to Section 73(1) of the Finance Act, 1994, alongwith appropriate interest under Rule 14 of the CENVAT Credit Rules, 2004, read with Section 75 of the Finance Act, 1994 . It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 issued on 25.06.2019 passed by the Assistant Commissioner, Dn-IX, CGST CX, Mumbai South Commissionerate, as under:- (i) After taking into account the payment of Rs. 10.13.174/- already made by the appellants, I hold that the demand liable for confirmation in pursuance of the SCN is Rs. 21.33.150/-. (ii) Penalty imposed under Section 78 is scaled down from Rs. 31,46.324- to Rs. 21.33.1.50/- (iii) The rest of the impugned Order is upheld. 3.1 I have heard Ms. Puloma Dalal, Chartered Accountant, for the appellant and Shri Vinod Kumar, Assistant Commissioner, Authorised Representative for the Revenue. 3.2 Arguing for the appellant, learned C.A. relies upon the following decisions in her support:- o Alembic Ltd. [2019 (28) GSTL 71 (Tri.-Ahmd.)] o Alembic Ltd. [2019 (29) GSTL 625 (Guj.)] o Shreno Ltd. (Real Estate Division) [2020 (34) GSTL 416 (Guj.)] o Prajapati Developer [2019-TIOL-806-CESTAT-HYD] o J Krishna Palemar [2019-TIOL-3329-CESTAT-BANG] o Shanti Construction Co. [2021 (54) GSTL 164 (Tri.-Ahmd.)] o Tractor and Farm Equipment Ltd. [2015 (320) ELT 357 (Mad.)]. 3.3 Learned AR reiterates the findings recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that no credit of inputs and input services, used for providing such taxable service, shall be taken; but shall not include a service - (a) which is exported in terms of rule 6A of the Service Tax Rules, 1994 (b) by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India. Upon receipt of completion certificate for the projects, the output activity of sale of residential units becomes non-service as per the provisions of Section 65B(44) of the Finance Act, 1994 which reads as under : 65(44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - (a) an activity which constitutes merely - (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim 12. For the purpose of invoking provisions of Rule 6 of the Rules in facts of the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-4-2016, the situation would be governed by Rule 3 of the Rules for availing Cenvat credit till such time i.e. till the time Rule 6 was specifically made applicable by virtue of the deeming fiction created. 14. As per Rule 3 of the Rules, Cenvat credit of service tax paid on input services used to provide output service, is eligible. In the facts of present case, it is evident that the respondent has started taking only proportionate credit after receipt of completion certificate which was after due intimation to the Revenue Department and also certified by independent CA. Therefore, Rule 6 of the Rules in toto cannot apply prior to 13-4- 2016 to the facts of the case since sale of immovable property is not exempt service at all. Therefore, in the light of the provisions of Rule 3 of the Rules, respondent cannot avail full Cenvat credit on input services received after obtaining completion certificate. Hence, the respondent cannot be expected to pay an amount equal to 8%/10% of sale price of immovable property after obtaining such completion certificate where no service tax is paid as if it is sale of immovable property since Rule 6 of the Rules per se does not apply to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lans. 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 sub-rule (4) of Rule 11 of the Rules which reads as under : 11(4). A person provider of output servic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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