9911796707
TMI Blog2024 (9) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of such formal requirement in wring to avail the scheme, the payment made by the appellant under the scheme is construed as deemed exercise of the option under the Scheme. This issue has been settled by the decision of the Hon ble Calcutta High Court in M/S. LARSEN TOUBRO LIMITED VERSUS ASSISTANT COMMISSIONER, SERVICE TAX COMMISSIONERATE, DIVISION-III, KOLKATA OTHERS [ 2022 (12) TMI 523 - CALCUTTA HIGH COURT ] where it was held that ' no format has been prescribed for making/exercising an option nor has it been specified as to whom the option must be addressed, the fact of the paying service at composition rate in the return filed by the service provider is enough indication to show that they have opted for payment under the works contract composition scheme.' - The appellant has rightly paid service tax under the Works Contract Composition Scheme and hence the demand confirmed under this category is not sustainable. Demand of service tax of Rs.56,172/- confirmed in the impugned order on the allegation that the Appellant should have discharged service tax @4.12% prevalent on the date of receipt of the taxable value as against the rate of 2.06% prevalent at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial balance and the income reflected in the ST 3 returns. However, it is observed that the adjudicating authority has not given any finding on this report in the impugned order - the demand confirmed on this count in the impugned order is not sustainable and accordingly, the same is set aside. Violation of Rule 6 of the CCR on account of non-maintenance of separate records with respect to input services user for dutiable and exempt output services - HELD THAT:- The appellant have maintained Contract-wise/project-wise separate records in its accounting software (SAP). In this method of accounting, each contract/project was shown as a separate profit centre. Therefore, separate records with respect to exempt and taxable outward supply were maintained by the Appellant in compliance with Rule 6 of the Cenvat Credit Rules. Thus, the appellant is not liable to pay an amount equivalent to 5/8% of the value of exempted goods, as demanded in the impugned order - reliance placed on the judgement of the Tribunal in the case of Essar Projects India Limited Vs. CCE [ 2011 (2) TMI 187 - CESTAT, AHMEDABAD] whereby it was held that the provision of Rule 6(3) does not apply if the Cenvat records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant containing 8 different allegations. The Notice was adjudicated by the Ld. Commissioner vide the impugned Order-in-Original No. 45/Comm/ST/KOL/2014-15 dated 25.07.2014, wherein he has confirmed the following demands and dropped the remaining demands raised in the Notice : Sl. No. Issue Involved Period Duty Demanded 1 Alleged Irregular Availment of Composition scheme with respect to TC No. 70 and TC No. 103 October 2007 to March 2012 68,02,449 2 Alleged short payment of tax due to discharge of tax at the rate prevailing on the date of provision of service and raising of invoice as against the rate prevailing on the date of receipt of the taxable value. November 2008 56,172 3 Alleged short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules by comparing the gross amount billed and gross amount received as reflected in the ST 3 returns of the Appellant. July 2011 to March 2012 18,95,028 4 Alleged short-payment of tax based on an improper comparison of select GL Codes appearing in the Trial Balance of the Appellant vis- -vis the income reflected in the ST 3 returns for the relevant period. October 2007 to March 2012 3,53,30,714 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raising of invoice thereof (i.e. 2.06% prior to 1 March 2008), the appellant submits that they have rendered the output services prior to 1 March 2008 when the rate of works contract composition scheme was 2.06%. The appellant submits that in so far as service tax is concerned, the taxable event is the rendition of service. Hence, rate of tax applicable is the one which was prevalent when the services were rendered and not when the payments were received. Reliance in this regard is placed on the judgement of the Hon ble High Court, Delhi in the case of Vistar Construction (P) Ltd. Vs. Union of India [2013 (31) S.T.R. 129. Thus, the appellant submits that the demand of service tax confirmed on this count is not sustainable. 5. Regarding the demand confirmed in the impugned order based on the difference between gross amount billed vis- -vis gross amount realised as reflected in the returns filed, the Appellant submits that they have submitted detailed reconciliation in response to the audit objection dated 29 May 2013 which made it evident that post introduction of POT Rules, they were discharging tax on accrual basis. A perusal of the invoices issued by them would reveal that VAT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n compliance with Rule 6 of the Cenvat Credit Rules. Reliance in this regard is being placed on the judgement of the Tribunal in the case of Essar Projects India Limited Vs. CCE [2011 (23) STR 140] whereby it was held that the provision of Rule 6(3) does not apply if the Cenvat records are maintained project-wise/contract-wise. The said judgement has been accepted by the department. Accordingly, the appellant submits that the demand of reversal of Cenvat credit confirmed in the impugned order on this count is not sustainable. 8. Regarding Irregular availment of pro-rata Cenvat credit attributable to bad debts written off, the appellant submits that the impugned notice is vague and against the principles of natural justice as it does not even put the Appellant to Notice as to the exact charge/violation inviting reversal of proportionate Cenvat credit on writing off of bad debts. Further, the appellant submits that there is no provision under the Cenvat Credit Rules, 2004 or in the Finance Act, 1994 which requires for reversal of cenvat credit for the services provided for which no consideration has been received by an assessee. Reliance in this regard is placed on the judgement of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproved the view taken by the tribunal in the case of Vaishno Associates Versus CCE ST, Jaipur (2018) VIL 217 wherein the court considered the composition scheme and pointed out that no format has been prescribed for making/exercising an option nor has it been specified as to whom the option must be addressed, the fact of the paying service at composition rate in the return filed by the service provider is enough indication to show that they have opted for payment under the works contract composition scheme. 14.1. By relying on the decision cited above, we hold that the appellant has rightly paid service tax under the Works Contract Composition Scheme and hence the demand confirmed under this category is not sustainable. Accordingly, we set aside the same. 15. Regarding the demand of service tax of Rs.56,172/- confirmed in the impugned order on the allegation that the Appellant should have discharged service tax @4.12% prevalent on the date of receipt of the taxable value as against the rate of 2.06% prevalent at the time of rendering of the service, we observe that the taxable event in this case is the rendition of service. Hence, service tax is payable at the rate applicable at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e providing or rendition of the taxable services. This is exactly what the Supreme Court had held in Association of Leasing Financial Service Companies (supra). 10. Therefore, the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. The instruction dated 28-4-2006 which is contrary to the law declared by the Supreme Court is clearly invalid. In Commissioner of Central Excise, Bolpur v. Ratan Meltins Wire Industries-2008 (12) S.T.R. 416. (S.C.) = 2008 (231) E.LT. 22( S.C.), a constitution bench of the Supreme Court observed as under: Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertified by a Chartered Accountant, along with the reply to the show cause notice. As per this report, we observe that there was no differences in the income reflected in the trial balance and the income reflected in the ST 3 returns. However, we observe that the adjudicating authority has not given any finding on this report in the impugned order. 17.1. The appellant submitted that there cannot be a straitjacket comparison between the income reported in the Trial Balance vis- -vis the income reflected in the ST 3 returns in case of construction companies executing EPC contracts. We find that this view has been taken by the Hon ble Madras High Court in the case of Firm Foundations Housing Pvt. Ltd. Vs. Pr. Commr. Of ST, Chennai [2018 (16) G.S.T.L. 209 (Mad.). The relevant part of the said decision is reproduced below: 15. AS 7 thus provides for a detailed methodology for the reporting and determination of the percentage of income from the contract over the term of the project and sets out the mode of computation for arriving at the same The basis of such recognition and reporting is the apportionment of the income earned and expenditure incurred over the tenure of the project. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts reflected therein have not been offered for service tax. The reporting of income in the P and L being irrelevant for the purposes of determination of service tax payable, the basis of the impugned assessment is erroneous. 26. It is a well settled position that when a statutory provision or rule addresses a specific scenario, such rule/provision is liable to be interpreted on its own strength and context and one need look no further to alternate sources to seek clarity in regard to the issue that has been addressed by the aforesaid rule/provision. 17.2. Thus, by relying on the reconciliation report submitted by the appellant and the decision of the Hon'ble Madras High Court cited above, we hold that the demand confirmed on this count in the impugned order is not sustainable and accordingly, we set aside the same. 18. Regarding the alleged violation of Rule 6 of the CCR on account of non-maintenance of separate records with respect to input services user for dutiable and exempt output services, the demand of Rs.49,90,185/- We observe that the appellant have maintained Contract-wise/project-wise separate records in its accounting software (SAP). In this method of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Cenvat credit, which prescribes that a provider of the output service shall be allowed to take Cenvat credit of any input service received by the provider of output service on or after 10th day of September, 2004. Admittedly, the services on which the appellant has taken Cenvat credit are input services' in terms of Rule 2(1) of the Cenvat Credit Rules, 2004 and is a provider of output service. Therefore, in terms of Rule 3 of the Cenvat Credit Rules, 2004, we hold that the appellant is entitled to avail Cenvat credit on input services in question. Further, we hold that there is no such provision in the Cenvat Credit Rules, 2004 or in the Finance Act, 1994 for reversal of Cenvat credit for the services provided for which no consideration for service provided is received by an assessee. Therefore, we hold that the appellant has correctly availed the Cenvat credit on input services although the amount of nonrecoverable taxable service has been written off by the appellant for the period prior to 01.04.2011. The appellant has admitted at bar that they have paid service tax on all the taxable services provided by them after 01.04.2011 at the time of provision of service. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
