Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2022 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 431 - AT - Service TaxWrongful availment of CENVAT Credit - inclusive of service tax contract - Construction of residential complex service - amount on which the Service tax has been charged was inclusive of VAT or not? - recovery of interest - levy of penalty - HELD THAT:- In view of the admitted facts when read in the light of Rule 3 of Cenvat Credit Rules, it becomes clear that once the service tax has been paid by the contractor and the invoices mentioning the said amount of service tax have been issued to the appellant, the appellant was very much entitled to have credit of the service tax paid. The appellant has availed Cenvat credit of service tax charged on the invoices. The impugned show cause notice as reflected in table one ‘18’ such invoices with the total amount of each invoices in the last column of said table. Further perusal shows that the said total / gross value of each invoice includes the value of free issue material at such rate as were provided by the appellant himself (Relied upon invoices as RUD 3 i.e. invoice No. 149 dated 20.3.2015). In the said invoices, service tax @ 4.80% has been charged on the gross value which is nothing but the sum total of steel and cement received by the contractor M/s. Ramavat Energy Pvt Ltd. from the appellant. Based upon the total value of the cement received vide 18 invoices of table No. 1 that the total amount of Rs.3,60,14,605/- has been worked out for cement - Credit availed by the appellant on the total amount of cement issued to the contractor freely by him is Rs.2,55,405/-. Similar are the findings with respect to all other items provided free to the appellant by the contractor and similar are the observations with respect to all 18 number of invoices. The contract price paid to the contractor by the appellant was @ Rs.4.78 per sq ft (26.29 lakh for construction of 5.50 sq ft. The said amount mentioned to have been inclusive of works contact tax / VAT. There is nothing on record to show that from the gross value of the invoices which appears to have been inclusive of VAT, there has been any deduction of the said amount of VAT - the service tax has been deducted based upon the said gross value and the Cenvat Credit has been availed by the appellant on the said amount of service tax. Reverting to Rule 2A of Service Tax (Determination of Value) Rules, 2006 as has been reproduced in Show Cause Notice as well as in the Order-in-Appeal, it is clear that the value of concerned service portion in execution of works contract shall be the gross amount charged for the works contract less the value of property in goods transferred in execution of said works contract. The explanation thereof makes it clear that the gross amount shall not include VAT. It has already been held that appellant shall be entitled to take Cenvat Credit on the amount of service tax paid by the contractor. Since the service tax has already been paid on the gross value /the total value, appellant cannot be denied availment of credit proportionate to the said value till the occasion arises for refund of the said service tax on the ground that the gross value on which the service tax was paid was inclusive of VAT. It is not the case of Department that excess Service Tax paid by the contractor has been refunded or has paid applied by the payee for the refund - the Commissioner (Appeals) has wrongly denied the entitlement of the appellant for claiming the Cenvat Credit on the service tax paid by his contractor. The order accordingly is held liable to be set aside. However discretion is given to the department to recalculate if refund of excess service tax paid is to be processed and in that situation, differential credit availed can be recovered from the appellant. Recovery of Interest - Levy of penalty - HELD THAT:- Hon’ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II VERSUS PEARL INSULATION LTD. [2012 (11) TMI 912 - KARNATAKA HIGH COURT] and in case of THE COMMISSIONER OF CENTRAL EXCISE, MADURAI VERSUS M/S. STRATEGIC ENGINEERING (P) LTD. [2014 (11) TMI 89 - MADRAS HIGH COURT] has held that provision of Rule 14 of Cenvat Credit Rules, 2004 for recovery of interest on said Cenvat Credit i.e. the credit availed on excess amount of service tax paid will not be attracted. Hence the Revenue’s stand for recovery of interest under said Rule and imposition of penalty can not succeed. Appeal allowed - decided in favor of appellant.
|