TMI Blog2021 (6) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... vor of appellant. - ST/12148-12150/2018-SMC - FINAL ORDER NO. A/12259-12261 / 2021 - Dated:- 24-6-2021 - MR. RAMESH NAIR, MEMBER (JUDICIAL) Present For the Appellant : Shri Jigar Shah, Advocate Present For the Respondent : Shri V. Lukose, Superintendent (AR) ORDER The brief facts of the case are that during the period 01/04/2015 to 29/02/2016. The appellant have provided Works Contract Service to various Government departments. The appellant have also availed input services in the nature of Works Contract Service from various sub-contractors on which the sub contractor have discharged the Service Tax and the same was availed as Cenvat Credit by the appellant. The said Cenvat Credit was utilized for discharging the service tax liability by the appellants during the period from 01/04/2015-29/02/2016. During this period the appellants paid Service Tax on works contract which is their output service. The Central Government inserted section 102 of Finance Act, 1994 giving retrospective exemption to the services provided to the various Government departments for the period from 01/04/2015 to 29/02/2016. Section 102 of Finance Act, 1994 also provided for the refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 provisions of Rule 6 of the Cenvat credit Rules and that the service tax had been paid to the subcontractors pertaining to this work was claimed as CENVAT. I find that when the appellant has maintained separate accounts in terms of Rule 6 of the Cenvat Credit Rules, 2004 and have availed Cenvat credit only on those input services which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 2005)] Paid on- (i)................ (ii) any input service received by the manufacturer of final product or by the provider of output services on or after t6he 10th day of September,2004,............... ...................................................... ......................................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession; (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 from the date on which the Finance Bill, 2016 receives the assent of the President. 4.4 As per the plain reading of the above 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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. (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 received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if,- (i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 certificate no service tax was paid. It was the department s case that since no service tax was paid on the part of the residential complex; the assessee was not entitled for the Cenvat credit on the input service attributed to the said service on which no service tax was paid. This tribunal after considering all the provisions of Cenvat Credit Rules came to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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 portion of property getting converted into immovable property after receipt of completion certificate. It was also argued that while Rule 6 of the CCR, 2004 deals with credits availed afresh, i.e. after output activity becoming exempt, however Rule 11 is the only provision which deals with credits availed in the past when output activity was wholly tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 certificate in respect of exempted service or avail proportionate credit attributed to the taxable output service. Therefore, Rule 6 has application for the period after obtaining the completion certificate. Rule 11(1), (2) and (3) of the Rules applicable to provision for manufactured goods to hold that in case of service becomes exempted at a later st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore indefeasible. It should also be noted that there is no corelation of the raw material and the final product; that is to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso 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 purchase of goods by other person would be the relevant date. This itself indicates that the person can be other than the manufacturer and Explanation (B) caters to such other person. It is not even necessary to embark on detailed discussion on this aspect inasmuch as we note that the Constitution Bench of this Court in Mafatlal Industries Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal 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 Gurukrupa Construction (supra). We find that this decision has not considered the latest legal position settled by Hon ble Gujarat High Court in the case of M/s Alembic Ltd. Therefore, the decision in the case of Shree Gurukrupa is distinguished. 4.17 There is one more issue in the present case that out of the subject refund in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It can be seen that the above order has considered the identical issue and the Division Bench of this Tribunal has held that the appellant is entitled for refund as well as the interest paid on the Service Tax payment. Following the above decision of this Tribunal, I am of the view that the appellant is entitle for refund on merit of Service Tax and interest, if an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tender for the project the prices includes cost of material, labour, other incidental expenditures, taxes applicable at the time of entering into contract, the schedule of rate is quoted. At the material time when these tenders were placed no Service Tax was applicable and thus, there arises no question of including the same in the Schedule of Rate. Therefore, only on the basis that the agreement uses the terminology that the price is inclusive of all taxes does not mean that the service recipient has paid the applicable Service Tax. It is also undisputed that the appellant have shown an amount of ₹ 51,91,234/- as outstanding in their balance sheet under sundry debtors as receivable from Gujarat Council of Primary Education. I find that on this basis, the Commissioner (Appeals) held that the amount is not lying under Service Tax receivable which is necessary pre-condition to be satisfied for granting of refund. The appellant submitted that the treatment of amount in the balance sheet is not a determining factor for grant of refund. I find that the appellant had submitted the ledger account of Service Tax payable wherein the total amount of Service Tax payable in case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. This view is supported by the following judgments of this Tribunal: (1) Commissioner of Central Excise S.T., Kanpur vs Executive Engineer 2019 (2) TMI 951-CESTAT Ahmedabad wherein it was held as follows: 4. On appeal against the said orders, Commissioner(Appeals) scrutinized all the documents and found that the observations of the original adjudicating authority that the assessee had not filed any documents/invoices to show that the Service Tax paid by them related to the services specified in entry 12A of the mega exemption Notification are not proper inasmuch as there were all the documents to show that the services provided by them were covered by the said entry. As regards unjust enrichment angle he observed as under:- 3.4 Further, it is observed that for executing these work orders, the appellants did not raise any bill/invoice on the concerned department of the Government of Uttar Pradesh and on the basis of their estimates provided to the Government of Uttar Pradesh for such works, they had received the funds from the Government of Uttar Pradesh. Since prior to 01.04.2015, Service Tax on such work orders, was exempt under Sl.No.(a), (c) (f) of the entr ..... 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