TMI Blog2021 (6) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant period i.e. 01.04.2015 to 29.02.2016 the output services were very much taxable - The appellant was legally entitled for the Cenvat Credit on the input service received from the sub- contractors and used in providing the output service. As per the plain reading of section 102 legislature knowing well that service tax on the construction service obviously paid not only on cash but also by utilizing the Cenvat credit on input service. With this clear understanding provision of refund of service tax paid on output service was also provided in section 102. There is no provision to given a different treatment of service tax paid on output service that whether the entire service tax was paid from cash or partly paid from cash and partly from Cenvat credit. Therefore, in whatever manner the service tax paid irrespective partly from cash and partly from Cenvat credit, total tax paid by the assessee was mandated to be refunded to the service provider. Also, the provision of Rule 11 of the Cenvat Credit Rules, 2004, is applicable only in the case where the assessee has taken the Cenvat Credit on Input Service and the said credit is lying unutilized and the output service beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of 01.04.2015 to 29.02.2016. During the period the appellants paid the total service tax of ₹ 2,78,07,833/- on their works contract service. Out of the sum of ₹ 2,78,07,833/- the appellants discharged the service tax by utilizing the Cenvat credit of ₹ 1,82,16,059/- of service tax paid to their sub contractors. 1.1 The central government inserted section 102 of Finance Act, 1994 giving retrospective exemption to the service provided by the appellant to various government departments for the period 01.04.2015 to 29.02.2016 . Section 102 of Finance Act, 1994 also provided for the refund of the service tax paid by the assessees during the period 01.04.2015 to 29.02.2016. Section 102 of Finance Act, 1994 also provided for the timelines for filing of the refund claim of the service tax paid during the period 01.04.2015 to 29.02.2016. 1.2 The appellants vide their application dated 10.11.16 filed the refund claim of ₹ 2,78,07,833/- Service tax paid during the period 01.04.2015 to 29.02.2016 with reference to such refund claim, the Appellants were served show cause notice dated 22.12.2016 proposing to reject claim . 1.3 The Learned Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paid as service tax. There is no such qualification that the amount of service tax should have been paid only through payment in cash / bank. 2.2 Rule 3 of Cenvat credit rules 2004 provides that service tax leviable under provisions of Finance Act, 1994 is eligible for availing as Cenvat credit for output taxable service provider. Further as per Rules 3 (4) of Cenvat Credit Rules, 2004 the Cenvat credit can be utilized for payment of service tax on taxable output service. Therefore, the appellant have utilised the Cenvat credit of service tax paid on their input services in terms of Rules 3 of Cenvat Credit Rules, 2004. Therefore to reject the refund claim on the ground that the appellant discharged liability of service tax through utilisation of Cenvat credit is against the provision of Cenvat Credit Rules, 2004. 2.3 He further submits that in the facts of the present case, Rule 6 of Cenvat Credit Rules 2004 is inapplicable. Rule 6 of the Cenvat Credit Rules,2004 casts obligation on the output taxable service provider to maintain separate books of account and avail only that much Cenvat credit which may pertain to taxable output service in case the service provide is taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the present case the Learned Commissioner (Appeals) has categorically observed in Para 7.1 of the impugned order in appeal that Rule 6 of the Cenvat Credit Rules, 2004 is not applicable to the present case. The revenue department has not objected or filed any appeal against such observations. The Revenue Department now cannot raise a point which was settled in favour of the Appellants and not objected to at relevant time. He further submits that in view of the decision of division bench of this Hon ble Tribunal in case of Alembic Ltd. (supra) which is affirmed by Hon ble Gujarat High Court also, the decision in the case of Shree Gurukrupa Constructions is not a good law. 2.8 He submits that in the case of M/s Almebic Ltd. it is held that the eligibility of the Cenvat credit is to be seen at the time of the receipt of services. At the time i.e. 01.04.2015 to 29.02.2016 the appellants were executing only taxable services and therefore they were eligible to claim the Cenvat credit. Rule 6 has no application if subsequently the refund is granted of the service tax so paid utilizing the eligible Cenvat credit. Therefore, invocation of Rule 6 of the Cenvat Credit Rules, 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Cenvat credit register. After the introduction of GST, the appellants are otherwise eligible for refund in cash. He take support from this tribunal judgment in the case of Vatsal Construction reported in 2018 (11) GSTL 328 (tri. Ahmd). 2.15 Shri Shah, Learned counsel brought to notice the provisions of Section 142(6)(a) of the Central Goods Service Tax Act, 2017 wherein it is stated that if as a matter of finalization of appeal the refund claim of Cenvat credit is found inadmissible that has to be paid back to the assessee in cash. Therefore the appellants are otherwise eligible to claim refund in cash. 2.16 As regard the refund of amount of ₹ 38,11,497/- for the project B-2/12/2014-15. He submits that this refund was rejected also on the ground that the date of work order i.e. 16.03.2015 was considered as date of contract and the same is not eligible for refund as per section 102. He submits that in this case the tender was opened and stands accepted on 28.01.2015 therefore, that date has to be considered as date of contract. 2.17 He submits that it was submitted before the Learned Commissioner (Appeals) that the entire refund has arisen because the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid by the appellant by utilizing the Cenvat credit has been denied by the Learned Commissioners (Appeals) on the ground that by the virtue of section 102 of Finance Act, 1994 the output service was exempted therefore, in terms of rule 6 the appellant was required to reverse the Cenvat credit availed on input services. It is observed though the Adjudicating authority has invoked rule 6 however, the learned Commissioner (Appeals) in para 7.1 of the impugned order observed as under:- The lower adjudicating authority has rejected the refund claim on the ground that, out of total claim of ₹ 2,74,30,204/-, ₹ 1,77,42,041/- has been paid through Cenvat credit account and apart from these the appellant has declared exempted services in ST-3 returns for FY 2015-16, however, the appellant has not followed mandatory provisions of Rule 6 of the CCR,2004; that payment of service tax in cash does not grant them any exemption from compliance of Rule 6 of CCR,2004. The appellant has submitted that they have utilized Cenvat Credit only of those input services which are directly related to taxable output services only and they have maintained separate accounts as per the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant time. The appellant was legally entitled for the Cenvat Credit on the input service received from the sub- contractors and used in providing the output service. The relevant rule 3 of Cenvat Credit Rules, 2004 is reproduced below: 3 . (1) A manufacturer or producer of final products or a provider of [output] service shall be allowed to take credit (hereinafter referred to as the CENVAT credit ) of- (i)- ...................... ....................... ........................ ......................... (viia).................. (ix) the service tax leviable under section 66 of the Finance Act [(ixa) the service tax leviable under section 66A of the Finance Act;] [(ixb) the service tax leviable under section 66B of the Finance Act;] (X) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004) [(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and] [(xi) the additional duty of excise leviable under [ section 85 of Finance Act, 2005 (18 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a local authority or a Governmental authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession; (b) a structure meant predominantly for use as (i) an educational establishment; (ii) a clinical establishment; or (iii) an art or cultural establishment; (c) a residential complex predominantly meant for self-use or for the use of their employees or other persons specified in Explanation 1 to clause (44) of section 65B of the said Act, under a contract entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date. (2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all material times. (3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules. (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export. 1 [(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Cenvat credit and utilization thereof and also payment of service tax on the output service was correct. Hence, the of sub- rule (4) of Rule 11 of the Cenvat Credit Rules is not at all applicable in the facts of the present case. 4.9 Therefore, unlike Rule 6 and/ or Rule 11 of Cenvat Credit Rules no machinery provision was provided to take back the Cenvat credit availed and utilized for providing the output service which was provided on payment of service tax. In this position neither denial of Cenvat credit nor denial of refund of service tax paid by utilizing such Cenvat credit has support of any law. 4.10 The identical situation of the case has been considered by the division bench of this tribunal in the case of M/s Almebic Ltd (supra). The facts in that case was appellant were providing construction service of residential complex. At the time of receipt of input service and construction of residential complex it was not certain that part of the residential complex would not attract the service tax due to the reason that it is sold after obtaining the occupation certificate and due to this reason whatever constructed portion sold after obtaining the occupation certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) Connected to the question (d), whether the appellants are eligible to seek refund of the amount paid under protest towards credit availed from 2010 till receipt of completion certificate, based on CERA audit objection wherein such credit was sought to be reversed based on considering square feet area where Service Tax was paid and balance area where Service Tax will not be paid after completion certificate? 12. As regards to the next issue of whether the appellants were also required to reverse proportionate credit, out of the valid input service credits availed by them during the period 2010 till obtaining completion certificate, i.e. availing during the time when whole of output service of construction of residential complex was taxable. It was argued by the appellants that out of business prudence, no developer wishes to have a situation where the properties are not sold as soon as possible and the property is converted into immovable property after receipt of completion certificate. It was also argued that as per Rule 3 of the CCR, 2004, credit eligibility is to be examined as on date of receipt of input service and not governed by later developments such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/or recovered unless specific machinery provisions are made in this regard. Sub-rule (7) of Rule 4 of the Rules held that the assessee is not required to wait till output service is sold to the service recipient and the assessee can take the credit immediately after the day on bill/challan of input service is received. In facts of the case, there is no dispute that the respondent availed the credit after receipt of bill/challan in respect of input service and, therefore, it was legally entitled to take the credit on the date after the receipt of service bills/challans. Therefore, the availment of Cenvat credit by the respondent is absolutely legal and correct and in accordance with Rule 4(7) of the Rules. As at the time of taking credit, there was no existence of any exempted service, therefore, there is no application of Rule 6. That part of the service was exempted only after obtaining completion certificate and thereafter, the respondent was not required to avail the Cenvat credit on the input service, if any, received after obtaining the completion certificate. The respondent did not avail the Cenvat credit in respect of the services received after obtaining the completion cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in the present case is no longer res-integra. On the issue that admissibility of the Cenvat credit has to be considered at the time of receipt of input service and not for the subsequent event, the Hon ble Karnataka High Court has considered the case of Tata Advance Material Ltd 2011 (271) ELT 62(Kar.) wherein it is observed as under 5 .The Supreme Court in the case of the Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd. reported in 1999 (112) E.L.T. 353 (S.C.) at para 17 held as under :- 17. It is clear from these Rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken. in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. 4.12 In view of the above judgment it is clear that in the present case there is no dispute in availment of Cenvat credit at the time of receipt of input service. Therefore, subsequent exemption by virtue of section 102 of Finance Act, 1994 will not make disentitle the appellant from the said Cenvat credit. 4.13 The learned counsel also argued that the refund claim of the portion of service tax paid through Cenvat credit which was paid as service tax by the sub- contractors. The said service tax even without considering the Cenvat credit is refundable in the hands of recipient of such service as the services of sub- contractors was also exempted. This argument of the appellant is supported by the judgment of Hon ble Supreme Court in the case of Oswal Chemicals and fertilizers reported in 2015 (318) ELT 617 (SC) wherein it is held as under:- 7 . Explanation (B) defines relevant date . Though this date has reference to the calculation of limitation period for the purposes of seeking refund of the duty under the aforesaid provision. However, clause (e) while stating the relevant date clarifies that in case of a person, other than the manufacturer, the date of pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, has demonstrated the prejudice that would be occasioned. It is in that context that this court rightly had directed the appellant to move an application to seek relief to prefer an appeal. The tribunal unfortunately misread the judgment of this court and proceeded to examine whether an appeal itself lies. It is true that the tribunal in its judgment has noted that conferring a right on the person other than manufacturer may create adverse impart on the ordinary claim of the Revenue and fiscal administration. In our opinion, this can be met by holding that the person aggrieved who is allowed to prefer an appeal would only be entitled to prefer appeal to the extent of the prejudice suffered by inaction of the original assessee through whom he claims the relief. This would rule out the possibility of matter going down the chain. 4.15 From the above settled position the appellant is otherwise eligible for refund in respect of service tax paid by the sub- contractors as a recipient of exempted service. 4.16 Shri H.K Jain Learned Assistant Commissioner (AR) appearing on behalf of the revenue heavily relied upon the decision of this tribunal in the case of Shree Gurukru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is amount also. 5.2 The appellant also claimed refund of interest amount of ₹ 3,77,629/- which was paid due to delay in payment of service tax during the relevant period. The lower authorities have rejected the refund of this amount on the ground that section 102 provides the refund of service tax and not of interest. 5.3 We find that the said interest was paid on the service tax which is refundable under Section 102. When there is no levy of service tax the government cannot retain the interest paid on such non levy therefore, even though it is not specifically provided under Section 102. The interest paid on the service tax which is to be refundable is nothing but a piggy back of refundable service tax. Hence, the same is eligible for the refund to the appellant. 6. As per our above discussion and findings, we are of the view that appellant is entitled for the refund of service tax paid through Cenvat credit and also the interest paid for delay in payment of service tax. 7. Accordingly, the impugned order is modified to the above extent and appeal is allowed with consequential relief, if any, in accordance with law. (Pronounced in open court on 18.06.2021) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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