2023 (4) TMI 434 - AT - Service Tax

CENVAT Credit - input services - sludge/waste removal service - invoices not bearing registered address of the appellant and only having the address of the head office at Kolkata - actual use certificate not produced (for services received from Chhtrapati Engineering and Sai Engineering Works) - demand of service tax - tax paid under reverse charge mechanism (Sai Enterprises collected service tax on the 100% value and deposited the same to the government exchequer/double taxation) - expenses incurred on fee paid to various government department - suppression of facts or not - extended period of limitation.

Denial of Cenvat credit on sludge/waste removal service - HELD THAT:- The disposal of waste generated out of manufacturing is a statutory obligation of the appellant and violation of the same would attract penal consequences. This service has been held to be input service by the Tribunal in the case of COMMISSIONER OF C. EX. & SERVICE TAX (LTU) VERSUS LUPIN LTD. [2012 (4) TMI 499 - CESTAT, MUMBAI] wherein the Tribunal has held that transportation and clearance of waste is an activity of the appellant’s manufacturing business. The service availed by the appellant is an integral part of the manufacturing process and hence the appellant is eligible for Cenvat credit.

CENVAT Credit denial on the ground that the invoices not bearing registered address of the appellant and only having the address of the head office at Kolkata - HELD THAT:- The services were availed in Baddi but inadvertently address of the head office was mentioned in the invoice. The Tribunal has been consistently holding that the Cenvat credit/substantial benefit cannot be denied on technical/procedural lapse as held by the Tribunal in the case of M/S RAJENDER KUMAR & ASSOCIATESS VERSUS COMMISSIONER OF SERVICE TAX, DELHI-II [2020 (11) TMI 621 - CESTAT NEW DELHI] and M/S ADBUR PRIVATE LIMITED VERSUS CST, DELHI [2017 (5) TMI 101 - CESTAT NEW DELHI] - thus, the appellant is entitled to Cenvat credit on the input service received from D.K.Chajjar & Co.

Denial of CENVAT Credit - stand of the department is that the said activity was used for building structure whereas the stand of the appellant is that these services were availed with regard to repair and maintenance of plant and machinery - HELD THAT:- The appellant has not given any material to show or the certificate from the chartered engineer regarding the actual use of these services. Hence, the appellant is not entitled to avail Cenvat credit on the services received from Chhtrapati Engineering and Sai Engineering Works because the said the service is excluded from the definition of input service as provided under Rule 2 (l) of Cenvat Credit Rules, 2004 - Credit denied.

Service availed from Sai Enterprises - Sai Enterprises collected service tax on the 100% value and deposited the same to the government exchequer - double taxation - HELD THAT:- This issue has also been considered by the Tribunal in the case of M/S. MAHANADI COALFIELDS LIMITED VERSUS COMMISSIONER OF CGST & CX, ROURKELA COMMISSIONERATE [2020 (9) TMI 477 - CESTAT KOLKATA] and MANDEV TUBES VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI [2009 (5) TMI 102 - CESTAT, AHMEDABAD] wherein it has been held that even if the tax is liable to be paid under RCM but the same is paid by the service provider, it was not open to the department to demand the same again from the assessee - demanding service tax from the appellant under reverse charge mechanism is not sustainable in law.

Demand of service tax paid to legal consultancy services - HELD THAT:- The same has been accepted by the appellant and amount of Rs.7,155/- has already been paid along with interest and penalty and the same has been appropriated by the original authority in their order.

Demand of service tax under reverse charge mechanism on the expenses incurred on fee paid to various government department - HELD THAT:- The issue is covered by the circular No.192/02/2016-ST dated 13.4.2016 and as per this circular the appellant is liable to service tax on this service. Moreover, the appellant has failed to explain as to why the fee was paid to the government department if not for some activity in return, as claimed by the appellant.

Extended period of Limitation - HELD THAT:- There is force in the appellant’s contention and in view of law laid down by the Apex Court in the case of M/S. UNIWORTH TEXTILES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE. RAIPUR [2013 (1) TMI 616 - SUPREME COURT] - In absence of positive action, suppression of facts, wilful misstatement with intent to evade duty, the extended period cannot be invoked.

The demand is confirmed is restricted to normal period only in the case of input service received from Chhtrapati Engineering and Sai Engineering Works used for building structure and also expenses incurred on fee to Govt. department. In the circumstances, penalty under section 78 and 77 of Finance Act, 1994 are dropped.

Appeal is allowed by way of remand.