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2022 (5) TMI 141 - CESTAT HYDERABADValuation - amount of withhold tax paid by the Appellant, over and above the consideration paid to the foreign service providers, to be included in the assessable value or not - import of services - reverse charge mechanism - period from May 2006 to March 2010 - recovery of CENVAT Credit on various input services availed in connection with the construction of the hotel. Service Tax liability on the withholding tax component - HELD THAT:- It is true that, the issue is covered in favour of the Appellant in various decisions relied upon by the learned counsel for the Appellant. However, it is observed that, the issue as to how the withholding tax paid in India would be treated by the Foreign Service provider, while determining his tax liabilities, has not clearly come out in those decisions - With regard to limitation, the decision in M/S. T.V.S. MOTOR COMPANY LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, CHENNAI [2021 (9) TMI 81 - CESTAT CHENNAI], is squarely applicable to this case, where it was held that when the TDS amount has been borne by the assessee and only the consideration for the services as agreed upon by the parties has been paid to the service provider, the same cannot be included in the taxable value for determining the Service Tax liability. The demand of Service Tax of Rs.10,24,257/- for the period May 2006 to March 2010, by way of issue of SCN on 08.06.2011, by invoking the extended period of demand, is not sustainable, in the absence of any justification for invoking the extended period. Accordingly, the above demand of Service Tax, along with demand interest and penalties is set aside as time barred. CENVAT Credit - HELD THAT:- During the relevant period, the definition of the term “input service” specifically covered services used in relation to “setting up of the premises of the provider of output services”. The reliance placed by the Commissioner on CBEC Circular No.98/1/2008 dated 04- 01-2008, is not sustainable in as much as the said circular has been held to be contrary to the provisions of law, in several judgments. It is a fact on record that these services were used for construction of hotel premises, from which various taxable services would be provided by the Appellant, after completion of construction - The definition of the term “input” has been amended from 07.07.2009 so as to specifically exclude the goods used for construction of immovable property from the scope of “inputs”, whereas there is no such restriction in the definition of “input service”. Even though there was an observation in the impugned order that the disputed credit has been reversed voluntarily by the Appellant, admitting their ineligibility to credit, the said observation is effectively countered by the learned counsel for the Appellant, by drawing reference to the reply to the SCN and written submissions. The demand for denial of CENVAT Credit is not sustainable in law. Since the demand itself is not sustainable, the demand of interest and imposition of penalty are also liable to be set aside. Since the credit has already been reversed, the Appellant is entitled for consequential relief as per Section 142 (6)(a) of CGST Act, in view of the introduction of GST - Appeal allowed.
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