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TMI Blog2024 (8) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... n the credit in their books of accounts, credit cannot be allowed particularly in view of the restriction that Cenvat Credit has to be taken within one year from the date of issue of invoice - Commissioner (Appeals) should have given a detailed speaking order as regards denying the Appellant s claim for said deductions also. Therefore, this issue needs to be re-determined by the Commissioner (Appeals) where the Appellants will be at liberty to produce all supporting documents for seeking such adjustment/deduction. Short payment of Service Tax by arriving at the demand on the net receipt basis, without giving them the benefit of cum-tax value - HELD THAT:- The Commissioner (Appeals) has already extended this benefit to the Appellant and recalculated the Service Tax paid as Rs.6,71,569/- (Para 14). Therefore, there is also no reason to interfere with this finding of the Commissioner (Appeals) on this ground. With regard to Service Tax of Rs.47,683/- confirmed after abatement of 67% as against applicable 60%, the Commissioner (Appeals) has in terms of Rule 2A(ii)(a) of the Service Tax (Determination of Value) Rules, 2006 held that abatement admissible will be 60% and not 67% and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules - Since the Commissioner (Appeals) has already given the benefit in this regard and this aspect is not being disputed by the Revenue, this issue is not being examined. However, the fact remains that though the Appellants have claimed bonafide belief of the practice that was being followed by them regarding deductions from the gross value, it could not be said that following wrong practice or inconsistent practice which is not permissible under the law, would tantamount to their disclosure of facts to the Department and in turn prevent the Department from invoking the extended period. In the facts of the case, the grounds on which the Commissioner (Appeals) has upheld the decision of the Adjudicating Authority for invoking extended period are correct and therefore, there is no need to interfere with the findings of the Commissioner (Appeals) on this issue. In other words, the extended period will be applicable in the facts of the case. The Order of the Commissioner (Appeals) does not need any interference, except to the extent of its confirming the demand of Rs.47,683/- which cannot be sustained and denial of adjustment for the years 2014-15, 2016-17 2017-18 (up to Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by the Appellants regarding the discrepancies noticed by the Department, there is no dispute regarding the nature of service and the nature of contract, which in this case is a composite contract. Their main argument was that they have worked out the abatement of 67% of the contract value in terms of formula which they apply under state VAT for payment of VAT on material portion of the contract. They had also submitted that they were deducting from the gross value, the Service Tax paid to the vendors under bonafide belief. The Adjudicating Authority, after going through the documents like Form 26AS, invoices, ledgers showing Cenvat credit and other details and after detailed calculation, came to the conclusion that Appellant had short declared the value to the tune of Rs.52,88,505/- resulting in short payment of Service Tax of Rs.7,69,476/- during the period 2014-15 to 2016-17. He also held that there was short payment of Service Tax during the period 2017-18 (up to June, 2017) resulting in recovery of differential Service Tax of Rs.77,002/-. 5. On the issue of payment of Service Tax by availing wrong abatement of 67% instead of 60% during the period 2014-15 to 2017-18 (u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Commissioner (Appeals) has observed that even after accounting for the lapse of reflecting only the taxable value instead of gross value there was difference in turnover on which Service Tax was confirmed and thereafter, after considering all the facts, he upheld the Tax demand confirmed in this regard. 9. On the second issue, Commissioner (Appeals) has upheld the demand by holding the applicability of Rule 2A(ii)(a) of Service Tax (Determination of Value) Rules, 2006. 10. As regards third issue, Commissioner (Appeals) observed that there is no dispute about the fact of short payment and the Appellant did not make any specific submission and therefore, upheld the demand. 11. However, Commissioner (Appeals) has also examined the Appellant s contention regarding eligibility of Cenvat Credit of Service Tax paid to their vendors/sub-contractors in view of statement showing invoice-wise details of input services availed along with copies of invoices and Form 26AS for 2015-16 of M/s Suraksha Services, who were claimed to be their subcontractor for maintenance services. Commissioner (Appeals) observed that Appellant had claimed that they had Cenvat Credit of Rs.7,10,856/- during the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of issue of invoice and therefore, rejected the remaining claim. Commissioner (Appeals) also recalculated the differential turnover, after applying cum-tax benefit to arrive at the total service tax short paid on account of difference between turnover in P L account and ST3 Return at Rs.6,71,569/- instead of Rs.7,69,476/-. He has also held that extended period is correctly invokable. 13. Learned Advocate for the Appellant has mainly reiterated the submissions made before the Original Authority and the Commissioner (Appeals) and has also submitted that while SCN alleged the violation of Notification No.26/2012-ST dt.20.06.2012, however, there is no provision for charging 40% abatement in respect of their services. He has also vehemently argued that in the facts of the case, there is no ground for suppression as it was within the knowledge of the Department and therefore, relying on certain case laws, alleged that extended period cannot be invoked and penalty cannot be imposed. He has also submitted that the Adjudicating Authority could not have resorted to valuation rules to apply 40% abatement as it was never invoked in the SCN. Their main ground is that they had inadverte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, abatement claimed and taxable values in the ST3 returns, etc., during the relevant period and therefore, as held by the Adjudicating Authority and upheld by the Commissioner (Appeals), the extended period is applicable. He also points out that though they have filed the Appeal for the disputed amount of Service Tax of Rs.5,84,088/-, in terms of Order of the Commissioner (Appeals), the total confirmed demand is only Rs.4,86,181/- and the penalty would also be equal. Learned Advocate agrees with this and submits that there was an error in reflecting higher amount as confirmed Service Tax and penalty. Learned AR further submits that after confirming the demand, the Commissioner (Appeals) allowed Cenvat credit of Rs.3,10,073/- for the year 2015-16 which has to be adjusted against the demand of Rs.3,67,771/- and that Commissioner (Appeals) further extended the cum-duty benefit as per Section 67(2) of the Finance Act, 1994 and reworked the demand as under:- a) For the year 2014-15 : Rs.46,328/- b) For the year 2015-16 : Rs.3,21,198/- c) For the year 2016-17 : Rs.3,04,043/- The total demand confirmed after readjusting the admissible credit, allowing cum-tax benefit etc., stands at Rs.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking order as regards denying the Appellant s claim for said deductions also. Therefore, this issue needs to be re-determined by the Commissioner (Appeals) where the Appellants will be at liberty to produce all supporting documents for seeking such adjustment/deduction. 21. On the issue of short payment of Service Tax by arriving at the demand on the net receipt basis, without giving them the benefit of cum-tax value, the Commissioner (Appeals) has already extended this benefit to the Appellant and recalculated the Service Tax paid as Rs.6,71,569/- (Para 14). Therefore, there is also no reason to interfere with this finding of the Commissioner (Appeals) on this ground. 22. With regard to Service Tax of Rs.47,683/- confirmed after abatement of 67% as against applicable 60%, the Commissioner (Appeals) has in terms of Rule 2A(ii)(a) of the Service Tax (Determination of Value) Rules, 2006 held that abatement admissible will be 60% and not 67% and therefore, upheld the demand of Rs.47,683/-. However, with regard to Service Tax demand of Rs.77,002/- confirmed on account of short payment of Service Tax for the period 2017-18 (up to June, 2017), since there was no dispute about the short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sub-contractor cannot suo moto become eligible for deduction from the gross value of recipient, which is required to be taken as basis for discharge of Service Tax. Since the Commissioner (Appeals) has already given the benefit in this regard and this aspect is not being disputed by the Revenue, this issue is not being examined by me. However, the fact remains that though the Appellants have claimed bonafide belief of the practice that was being followed by them regarding deductions from the gross value, it could not be said that following wrong practice or inconsistent practice which is not permissible under the law, would tantamount to their disclosure of facts to the Department and in turn prevent the Department from invoking the extended period. 25. I have perused the case laws relied upon by the learned Advocate. In the case of CCCE ST-III Vs Shriram Chits Pvt Ltd (cited supra), the Hon ble Supreme Court has dismissed the Civil Appeal in the case of Order of the Tribunal as reported at [2024 (127) GSTR 409]. In this case, the Tribunal, inter alia, examined the facts of the case and various case laws and held that material and relevant facts forming the basis of demand were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. 28. Similarly, in the case of Damnet Chemicals Pvt Ltd Ors (cited supra), the Hon ble Supreme Court, inter alia, held that non-mentioning of license agreement in the classification list would not lead to the conclusion that there has been willful suppression of facts with an intent to evade payment of duty. Therefore, this case is also distinguishable in the facts of the present case. 29. Therefore, in the facts of the case, the grounds on which the Commissioner (Appeals) has upheld the decision of the Adjudicating Authority for invoking extended period are correct and therefore, there is no need to interfere with the findings of the Commissioner (Appeals) on this issue. In other words, the extended period will be applicable in the facts of the case. 30. To sum up, the Order of the Commissioner (Appeals) does not need any interference, except to the extent of its confirming the demand of Rs.47,683/- which cannot be sustained and denial of adjustment for the years 2014-15, 2016-17 2017-18 (up to June, 2017) without giving adequate reasons for its denial. This issue therefore requires to be re-determined by the Appellant Authority on the basis of documents submitted including a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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