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TMI Blog2024 (8) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... x leviable for provision of - "Transportation of goods through pipeline/conduit service" and "Erection, Commissioning & Installation Services", was issued to the appellant. In addition it also proposed recovery of inadmissible Cenvat Credit amounting to Rs. 2,97,617/- availed by the noticee during 2010-11 and 2011-12. Demand for interest and penal provisions were also invoked in the said show cause notice. As per the said show cause notice the taxable value and service tax recoverable, are indicated category-wise in the following table : (Amounts in Rupees) Category Received amt. Taxable Value Service Tax A Advance Received against Transmission Charges from Tea Estate and other consumers 37580200 37580200 4077945 B Fuel Surcharge 16012999 16012999 1699598 C Minimum Demand Charge (MDC) 135784718 135784718 14794332 D Advance Received against Transmission Charges from PWD & APGCL 12681286 12681286 1306172 E Amt. Received against cost of Gas Meter and Installation Charges 26196440 8644825 950633 F Amt. against cost of Meter and Installation Charges received from Domestic Consumers 64489062 21281390 2263502 G Reconnection Charges Collection against R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest @ 3% and refundable at the time of termination of the contract. It is also noticed that the same is also meant as a cushion and can be adjusted against the outstandings of the contracted party in case of any short payment thereto. In support of their contention, the appellant have also enclosed evidence, by way of records/returns indicating refund of the amount on termination of the contract on account of above. The said amount is duly reflected in the balance sheet and ledger account of the appellant with details of interest paid etc.. We note that it is settled proposition of law that such interest bearing deposit cannot be considered as part of service and leviable to service tax. We are of the view that any interest accrued (or notional) on such sums by way of a security advance, cannot form part of the value of a taxable service rendered. The of the Hon'ble Apex Court in the case of MORIROKU UT INDIA (P) LTD. vs. State of U.P. [2008 (224) E.L.T. 365 (SC)], is squarely to this legal proposition. Moreover, such amount of interest as accrued on security deposits cannot be considered as part of a taxable service, towards consideration received by the appellant without esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to derive, more than the contractual quantity i.e. 90%, through pipeline, in the circumstances is by way of a penalty charged on the customer for failure in meeting the contractual obligation. The amount thus received by the appellant by way of penalty can by no stretch be termed as provision of any service. Thus, respectfully following the precedent decision, we are of the view that no Service Tax is leviable this count. We allow the appeal to this extent. (d) Advance Received against Transmission Charges from PWD & APGCL. 6. The appellant submits that the work involved therein was with reference to erection, commission and installation of the pipeline and the appellant has paid Service Tax on 33% of the total amount of Rs. 4,30,972/- received, in terms of Notification No. 1/2006-ST dated 01.03.2006. The appellant submits that challan thereof was produced before the lower authorities. However, the lower authorities failed to take note thereof. In view of the demand already having been paid appropriately by the appellant on this count, in accordance with law, there is no case for elaborating on the demand aforesaid. The balance demand with all attendant liabilities is thus set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egory of issues on which Service Tax was demanded we strongly feel that the question of limitation therefore now remains to be of only academic interest. However, at the same time we would hasten to add that we do not find anything on record that would substantiate the department's charge of suppression of material facts from the department with intent to evade payment of Service Tax or of misstatement of the value of the taxable services. We thus are of the view that the matter did not call for invocation of extended period at all. It is on record that the DGCEI authorities had sourced all information and records from the appellant way back in 2004 under summons seeking from them their written profile and disclosing the nature of business activities carried out along with the requisite records of the case. Hence we hold that the confirmed demand for the extended period is time barred. 12. As far the second show cause notice dated 01.04.2014, demanding service tax for the period April, 2012 to March 2013 and adjudicated vide order dated 05.12.2014/08.12.2014 issued on similar lines as discussed hereinabove, we would add that our findings and observations with regard to each of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit taken on capital goods as discussed in para 10 equally relate to the show cause notice dated 01.04.2014 and we hold on similar lines that the same being a curable defect, the amount is otherwise eligible for availment of Cenvat credit and allowed. 12.2 Our findings thus as in foregoing paras 2-10 are replicated and made applicable towards the demand made out by the show cause notice of 01.04.2014. The same being elaborated in para 12.1 (i)-(vi) above. 13. In view of our conclusions aforesaid, we modify the two orders under challenge to the extent as discussed in foregoing paras. The amount of demands paid, under various heads stated herein - paid/not contested and/or appropriated by the lower authority are settled accordingly. The demand under various heads as held payable by us are accordingly confirmed. 14. The appeals filed by the appellants are therefore allowed on aforesaid terms with consequential relief, if any, as per law. The amount as held payable by us shall be paid by the appellant forthwith, alongwith interest as applicable in law. Penal liabilities imposed upon the appellants are set aside. (Operative part of the order was pronounced in the open Court.) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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