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TMI Blog2015 (2) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to Rs. 49,25,935/- was disallowed and ordered to be recovered and the suo moto adjustment of service tax amounting to Rs. 2,60,910/- was also disallowed. Penalties under Sections 76 and 77 were also imposed. 2. The appellants had been providing Commercial or Industrial Construction Service (CICS) and Construction of Complex Service (CCS) and availed of the benefit of Notification No.1/2006-ST claiming abatement of 67% and while availing of the Composition Scheme to pay service tax under Works Contract Service they had utilised Cenvat credit on inputs and input services. Further they also did not pay service tax on the construction services i.e., CICS and CCS rendered to DDA, BSNL and NDMC, Reliance, Dr. B.L Kapur Memorial Hospital p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service distributor and found that the party has wrongly availed and utilised this inadmissible Cenvat credit towards discharging their service tax liability under Works Contract Service... and so disallowed the said Cenvat credit. An amount of Rs. 2,60,910/- which was suo moto adjusted by the appellants has been held to have been so done in violation of Rule 6(3A)(a) and 6(4)(B)(iii) of the Service Tax Rules, 2004 and so the said adjustment has also been disallowed by the adjudicating authority. 3. The appellants have contended that the denial of 67% abatement under Notifications No. 1/2006-ST on the ground that the value of free supplies had not been included is untenable in the light of the judgement of the Larger Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Show Cause Notice) while in the adjudication order it is stated that they took CENVAT credit of input and input services. In this regard, we find that for 67% abatement under the aforesaid Notifications (except Notification No.1/2006-ST) only credit of input and capital goods is not permissible. Thus there is variance between the Show Cause Notice and the adjudication order with regard to whether the appellants took CENVAT credit of only input services or both inputs and input services (and also capital goods) which needs to be reconciled. The adjudicating authority has stated that for the on-going projects, the classification could not be changed to Works Contract service with effect from 01.06.2007. In this regard, it is to state that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees. Therefore, the service rendered with regard to construction of flats for DDA is taxable under CCS. The buildings constructed for BSNL, Reliance or Municipal Corporation clearly satisfy the definition of Commercial or Industrial Construction Service (CICS). BSNL is a commercial organisation as is Reliance. Even the Municipal Corporation buildings are not outside the purview of commercial or industrial construction; indeed, many of its buildings are rented to various organisations. A claim has been made that the buildings made for the said hospitals is outside the purview of CICS on the ground that they were made for the charitable organisations. In this regard, there is no ambiguity that charitable organisation is not prevented fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evade payment of the said Service Tax." It is evident from the above para that adjudicating authority has simply declared the impugned credit to be inadmissible without analysing as to how that is so. 8. While disallowing suo moto adjustment of Rs. 2,60,910/-, the adjudicating authority has observed as under:- "The party has made a suo moto adjustments of Rs. 2,60,910/- (Rupees Two Lakhs Sixty Thousand Nine Hundred Ten only) during the months of April 2010 to Sept-2010 and Oct 2010 to March-2011 in violation of Rule 6(3A)(a) & 6(4)(B) (iii) of the Service Tax Rules, 2004. Thus, the Show Cause Notice in the instant case, is correctly issued for demand and recovery of said adjustment of Service Tax by invoking the provisions of Section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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