2013 (12) TMI 1625 - AT - Service Tax

Summary

Issues Involved:
1. Revision in value of taxable service rendered to Wardha Power Company Ltd. (SPV).
2. Consideration of Rs. 23 crores received towards development of SPV (Sitapuram Power Ltd) treated as consideration for service of Management and Business Consultant service & Demand of Service Tax on notional interest for consideration towards power purchase agreement.
3. Denial of Cenvat credit of Rs. 4,95,43,376/- on the ground that the credit was used for providing exempted service.
4. Credit of Service Tax paid on bank guarantee charges executed for continuous supply of coal to the special purpose vehicles during the period from April 2007 to September 2008.
5. Credit taken on input services not relating to output services.
6. Credit taken on the basis of ineligible documents.

Issue - 1: Revision in value of taxable service rendered to Wardha Power Company Ltd. (SPV).
The appellant faced a demand for Service Tax due to a discrepancy in the project development fee charged to WPCL (SPV). Despite a communication gap resulting in delayed payment, the appellant ultimately paid the Service Tax on the entire amount. The Tribunal found a prima facie case for waiver considering the circumstances and documents involved.

Issues No. II and III: Consideration of Rs. 23 crores received towards development of SPV (Sitapuram Power Ltd) treated as consideration for service of Management and Business Consultant service & Demand of Service Tax on notional interest for consideration towards power purchase agreement.
The Tribunal consolidated these two issues as they were interrelated. The demand for Service Tax on the amount received for power supply was contested, arguing that the tax should have been paid upon actual receipt, not on the notional interest. The Tribunal deemed the issue debatable and requiring further examination based on agreements and tax regulations.

Issue No. IV: Denial of Cenvat credit of Rs. 4,95,43,376/- on the ground that the credit was used for providing exempted service.
The denial of Cenvat credit was challenged by the appellant, asserting that the investment in WPCL was integral to project development activities. The Tribunal found this issue debatable and necessitating detailed scrutiny due to the direct nexus between the activities and project development.

Issue No. V: Credit of Service Tax paid on bank guarantee charges executed for continuous supply of coal to the special purpose vehicles during the period from April 2007 to September 2008.
The appellant sought credit for Service Tax paid on bank guarantee charges related to coal supply, arguing its connection to project development services. The Tribunal acknowledged the debatable nature of the issue and the necessity to determine the appropriate category for the tax payment.

Issue No. VI: Credit taken on input services not relating to output services.
The appellant included various insurance premiums and services for credit, which were generally allowed based on established decisions. The Tribunal considered this a prima facie case for waiver.

Issue No. VII: Credit taken on the basis of ineligible documents.
Cenvat credit was taken based on invoices not in the appellant's name, leading to a denial by the Revenue. The appellant requested time to produce the necessary documents for verification. The Tribunal found the issue of admissibility of credit debatable and allowed the appellant an opportunity to provide the required documentation.

In conclusion, the Tribunal directed the appellant to deposit a specified amount within a set timeframe for the purpose of hearing the appeal, with a waiver of pre-deposit for the remaining dues during the appeal's pendency.