TMI Blog2020 (12) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... a composite contract for provision of services and supply of goods. According to the appellant, the composite contract has the essential character of a works contract , as it involves both supply of goods as well as provision of services. Hence, the various services provided by the appellant under the agreement will more appropriately being classified under works contract service which became taxable w.e.f June 1, 2007 - The impugned order also records a finding that the contract involves provision of services as well as supply of goods. Thus, the demand raised for a period prior to June 1, 2007 is not sustainable. Even for the period post June 1, 2007, the demand cannot be sustained as it has been raised under CIC and ECI and not under works contract service. The demand raised under CIC and ECI for the period July 1, 2007 and post June 1, 2007 cannot be sustained - Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 50940 of 2015 - Final Order No.51629/2020 - Dated:- 8-10-2020 - Hon ble Mr. Justice Dilip Gupta, President And Hon ble Mr. C.L. Mahar, Member (Technical) For the Appellant : Shri B.L. Narasimhan and Ms. Poorvi Asati, Advocates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the input service used for providing CIC and ECI, as there was no restriction in the said Notifications for availing such credit benefit. 7. However, with the supersession of previous Notifications by Notification dated March 1, 2006, the abatement on CIC and ECI continued, but with a condition that CESVAT credit on inputs, input services and capital goods used for provision of those output services shall not be availed. The Appellant claims that, it stopped availing CENVAT credit on CIC and ECI with effect from March 01, 2006. 8. The Appellant was also receiving input services of CE, for which purpose, the Appellant had sub-contracted design and engineering work to independent sub-contractors, who were also discharging their service tax liability on the input services under CE. The Appellant availed the credit of the same and utilized it for providing output service of CE only. 9. Since, there was no change in respect to CE with effect from March 1, 2006, the Appellant continued to pay service tax at the full rate after availing the credit of input services of CE used for providing the output service. 10. However, a show cause notice dated November 21, 2008 was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-J contains the list of total documents which were issued prior to 01.01.2006 (except the invoices mentioned at S. Nos. 6, 7 and 9 dated 07.07.2008, 07.07.2008 and 08.04.2008 issued by M/s. N.S. Consultants). Going through the copies of the said invoices submitted by the Noticee the dates mentioned against the Invoices in Annexure-J to the Show Cause Notice dated 21-11-2008 have been inadvertently indicated as 07.07.2008, 07.07.2008 and 08.04.2008 instead of 07.07.2005, 07.07.2005 and 08.04.2005 respectively. Therefore one thing is evident that all the aforesaid invoices had been issued prior to 01.01.2006. 10.10 As far as the question of the period of taking of the credit is concerned I find that in para 7 of the Show Cause Notice it has been specifically mentioned that the Noticee vide letter BSBK/NC/2008/1148 dated 11.09.08 informed that they had inadvertently missed to show the amount of CENVAT Credit availed amounting to ₹ 8,31,262/- in the month of December 05 and had added the same in the opening balance of Jan 06 and also furnished copies of invoices on which they had taken credits. I also find from the ST-3 return for the half-year ending 31.3.2006 that the clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the benefit of Notification No. 01/2006-ST is not available to the Noticee. ORDER A) In respect of show cause notice no. V (ST) 15-341/Commr/Bhi-II/2008/Adj/7223 dtd 21-11-2008: i) I confirm the demand of Service Tax amounting to ₹ 36,07441/- (Rs. Thirty Six lakhs Seven thousand four hundred and forth one) (₹ 35,34,746/- (Service Tax), ₹ 72,695/- (Edu Cess) on disallowed abatement for the month March 2006. Further I also confirm demand Service Tax, on account of disallowed abatement for the period thereafter, amounting to ₹ 5,33,37,753/- (Rs. Five Crores thirty lakhs seven thousand seven hundred and fifty three) (₹ 5,21,33,893/- + Ed Cess ₹ 10,40,703/- + SHE ₹ 1,63,157/-). I order for recovery of total service tax amounting to ₹ 5,69,45,194/- (Rs. five Crores sixty nine lakhs forty five thousand one hundred and ninety four only) under Section 73 along with interest under section 75 of the Finance Act, 1994. ii) I impose a penalty at the rate of two percent from the due date of payment to the actual date of payment on the amount of Service Tax evaded subject to the limit of ₹ 5,69,45,194/- under section 76 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices provided by the Appellant under the said agreement will be more appropriately classifiable under works contract services, which became taxable only from June 1, 2007. The demand raised for the period prior to June 1, 2007 is, therefore, not sustainable. For the demand raised post June 1, 2007, the same is also not sustainable as the demand has been raised under the category of CIC and ECI and not under works contract services. In this connection reliance has been placed on a judgment of the Supreme Court in Commissioner vs. M/s. Larsen Toubro Ltd. and Others 2015 (8) TMI 749 Supreme Court. ; (ii) The Appellant has availed the credit of input services for discharging its services tax liability on output service of CE only. The Appellant, in the instant case, received designs and drawings from sub-contractors and the service tax has duly been discharged by the sub-contractors under CE. These services have thereafter been used by the Appellant for provision of its output service of CE and the Appellant has utilized the credit availed for discharging its service tax liability under the CE. In this regard, reliance has been placed on a Circular dated August 23, 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) The design and engineering work provided by the Appellant is only incidental to the service provides for CIC and ECI and is not a separate activity; and (iv) The additional ground relating to works contract cannot be permitted to be raised at this stage. 18. The submissions advanced by learned Counsel for the appellant and the learned Authorized Representative of the Department have been considered. 19. The issue that arises for consideration in this appeal is regarding the admissibility of abatement under the Notification dated March 1, 2006 in regard to CIC and ECI. The impugned order has denied the abatement availed by the appellant during the month of March, 2006 on the ground that the appellant availed and utilized credit of ₹ 2,18,816/- for providing the output services of CIC for the month of March 2006, which is not permitted under the Notification dated March 1, 2006. 20. The appellant contends that till February 28, 2006, the appellant was availing abatement in respect of CIC under a Notification dated September 10, 2004 and on ECI under a Notification dated August 21, 2003. The appellant availed CENVAT credit in respect of input services use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrectly claimed the legitimate CENVAT credit available. 23. The decision of this Tribunal in M/s. IL FS Maritime Infrastructure Co. Ltd. Vs. Commissioner of Service Tax, Mumbai-I 2017 (7) TMI 644-Cestat Mumbai on a similar issue is also reproduced below: On careful reading of the above condition, we find that the notification shall not apply only in a case where the cenvat credit of service tax was availed in respect of that input services which was used for providing taxable service on which the abatement was claimed in terms of Notification No. 1/06-ST. In the present case as per the submission of the Ld. Counsel the cenvat credit was availed in respect of the service tax paid on those services, which were received and used prior to 1.3.2006 during which the cenvat credit was admissible. We agree with the submission of the Ld. Counsel that even though the credit was availed on or after 1.3.2006 but it pertains to the period prior to 1.3.2006. The services were used before 1.3.2006 for output service which was provided before 1.3.2006. The benefit of abetment under notification No. 1/2006-ST available on the output service provided on or after 1.3.2006 cannot be disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. In such circumstances, both the Commissioner (Appeals) as well as the Tribunal were justified in holding that the petitioner was not liable to the benefit of the notification dated 01.03.2006. It was submitted that, the petitioner could not have raised a contention of not liable to pay service tax, despite the fact that the petitioner had voluntarily registered under the category of 'commercial / industrial construction services' under the provisions of the Act, from 16.06.2005 and was paying service tax since 2005 under the said head of 'service tax'. 6.1. Having heard the learned advocates appearing for the receptive parties and having gone through the material on record, it emerges on record that the petitioner no.1 was rendering services classifiable as 'works contract'. This fact has neither been disputed by the Commissioner nor by the Tribunal. That only because the petitioner no.1 registered itself for the service tax under the head of 'commercial / industrial construction services', the petitioner cannot be fasten its liability to pay service tax on the services rendered by it as 'work contract' services. 6.5. Considering th ..... 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