9911796707
TMI Blog2013 (12) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... unts with interest, penalties have been imposed under various sections of Finance Act 1994. Period involved is April 2007 to March 2010 and show cause notice was issued on 13-10-2010. 2. Heard both sides in great detail. There are several issues involved and each issue is discussed in brief and conclusion given therein. 3. ISSUE - 1 : Revision in value of taxable service rendered to Wardha Power Company Ltd. (SPV). In this case, the appellants were to charge 2% as Project Development fee for implementing a power project to be run by WPCL (SPV). According to the appellants, on 27-9-2008, the Board of the appellant company passed a resolution changing the milestones for recovery of the project development fee and as a result an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I : Consideration of ₹ 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. Even though these two issues have been listed separately by the appellants and treated as separate issues by the Revenue, we consider that both have to be considered together. According to the agreement entered between Zuari Cement Ltd. (ZCL), Sri Vishnu Cement Ltd. (SVCL) and the appellant, the ZCL and SVCL entered into a joint venture with the appellant through an SPV called Sitapuram Power Ltd. (SPL). Subsequently SVCL got merged into ZCL which really does not make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08. The Revenue has treated this as a business auxiliary service and since the appellant was entitled to keep this amount for a period of 10 years, calculating notional interest of 11%, Service Tax has been charged on the lump sum amount which comes to ₹ 4,06,52,040/-. It was vehemently argued that the demand in respect of first issue is time barred and as regards the second item as discussed above, is not liable to be paid since the service does not amount to business auxiliary service. The definition of business auxiliary service would show that assistance or service provided for procuring inputs is one of the items covered by the definition and in this case as it clearly emerges for discharging the responsibility of assured power s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have discharged the Service Tax since even advance payments received for rendering the service is liable to Service Tax and if and when the amount is refunded for not rendering the service, or any changes in conditions, such Service Tax can be adjusted/claimed as refund. Therefore, the proper procedure to follow) in this case was to pay the Service Tax when the amount was received and subsequently adjust it when same amount was paid back in accordance with law. In this case, the Commissioner has chosen to demand Service Tax on the notional interest at 11% for a period of 13 years which may not be sustainable. The issue definitely needs deeper consideration by going through the PPA, conditions of payment, amount received, statutes relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Investment in WPCL is one of the milestones in the project development and not an independent activity; the IPO and other related services received by the appellants have a direct nexus with the project development activity and even if it is assumed that the activity is an exempted service, credit of Service Tax paid under banking and other financial services would be admissible as per Rule 6(5) of Cenvat Credit Rules. After considering the submissions, we find that the issue is debatable and requires more detailed consideration. Prima facie the activities appear to be covered in the inclusive part of the definition. 6. ISSUE No. V : Credit of Service Tax paid on bank guarantee charges executed for continuous supply of coal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or waiver. 8. ISSUE No. VII : Credit taken on the basis of ineligible documents. Cenvat credit has been taken on the basis of documents not relating to the appellants. According to Revenue, bills were raised in the name of individuals for incentive charges etc. Total amount involved is ₹ 11,53,112/- and prima facie, the credit does not appear to be admissible since the invoices are not in the name of the appellant but in the name of individuals. Credit of ₹ 3,04,29,657/- has been denied on the ground that the documents were not made available for verification of credit. It was the submission of the appellant that they could not produce the documents since time given was not sufficient and now they have all the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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