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TMI Blog2024 (8) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... labour charges and thereafter, they had paid Service Tax on the labour charges (33%) only and reflected the same in the ST3 Returns. 2. On further verification, the Department noticed that there was still some difference between the turnovers shown in the P&L account and that shown in the ST3 even after 33% labour charges was amplified to 100% contract value considered for Service Tax purpose. It was also observed by the Department that the Appellant availed incorrect rate of abatement of 67%, instead of eligible 60% in terms of Notification No.26/2012-ST and that there was short payment of Service Tax in the year 2017-18 when compared to liabilities shown in the ST3 returns. 3. SCN was issued and adjudicated by the Original Authority, who examined all these three issues raised. 4. In view of the submissions made by the Appellants regarding the discrepancies noticed by the Department, there is no dispute regarding the nature of service and the nature of contract, which in this case is a composite contract. Their main argument was that they have worked out the abatement of 67% of the contract value in terms of formula which they apply under state VAT for payment of VAT on materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt Ltd Vs CCE & ST, Daman [2013-TIOL-1072-CESTATAHM- LB]. The Adjudicating Authority has only imposed penalty under Section 78 and not under Section 76 as proposed in the SCN and thereafter, confirmed the total demand of Rs.8,94,161/- [Rs.7,69,476/- (+) Rs.47,683/- (+) Rs.77,002/-] and imposed total penalty of Rs.8,94,161/-. 7. On appeal, Commissioner (Appeals) has gone through the three issues which were the basis for raising the demand and confirmation thereof, as under:- a) Difference between the turnover shown in the P&L account and ST3 Return involving demand of Rs.7,69,476/- b) Availing abatement of 67% instead of eligible 60% involving demand of Rs.47,683/- and c) Short payment of Service Tax in the year 2017-18 (up to June, 2017) against declared value involving demand of Rs.77,002/-. 8. On the first issue, Commissioner (Appeals) has observed that even after accounting for the lapse of reflecting only the taxable value instead of gross value there was difference in turnover on which Service Tax was confirmed and thereafter, after considering all the facts, he upheld the Tax demand confirmed in this regard. 9. On the second issue, Commissioner (Appeals) has upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/claiming credit and the substantive benefit of Cenvat credit which otherwise is found to be eligible cannot be denied on this ground. Therefore, he allowed the input service credit of Rs.3,10,073/- on the value of Rs.22,48,460/- for which the documents submitted and it was adjusted against the demand of Rs.3,67,771/- confirmed for the year 2015-16 on account of discrepancy in turnover and only the balance was upheld to be payable. 12. He has, however, not allowed input service credit for the year 2014- 15, 2016-17 & 2017-18, where the Appellant had failed to avail the credit/declare in ST3 returns and also failed to submit any Cenvat credit account showing that they had taken credit in their books of accounts etc., keeping in view statutory restrictions and particularly that Cenvat credit has to be taken within one year from the date of issue of invoice and therefore, rejected the remaining claim. Commissioner (Appeals) also recalculated the differential turnover, after applying cum-tax benefit to arrive at the total service tax short paid on account of difference between turnover in P&L account and ST3 Return at Rs.6,71,569/- instead of Rs.7,69,476/-. He has also held that ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, learned AR supports the Order passed by the Commissioner (Appeals), wherein Commissioner (Appeals) has already extended certain relief to the Appellants. He points out that the Appellant's contention regarding non-applicability of Notification No.26/2012-ST, in the facts of the case, is correct as already recorded by the Original Adjudicating Authority. However, by way of applicability of Rule 2A of determination of value of service portion in the execution of works contract, Rule 2A(ii) would be applicable which provides for payment of Service Tax on the 40% of the total amount charged for the works contract. There is no dispute on either side that nature of the contract being composite works contract. 16. He also supports that invocation of extended period is correct as the Appellants had failed to declare correct details of gross receipts, abatement claimed and taxable values in the ST3 returns, etc., during the relevant period and therefore, as held by the Adjudicating Authority and upheld by the Commissioner (Appeals), the extended period is applicable. He also points out that though they have filed the Appeal for the disputed amount of Service Tax of Rs.5,84,088/-, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une, 2017). Commissioner (Appeals) has only stated that as the Appellant failed to submit any Cenvat Credit account showing that they had taken the credit in their books of accounts, credit cannot be allowed particularly in view of the restriction that Cenvat Credit has to be taken within one year from the date of issue of invoice. Learned Advocate for the Appellant has vigorously argued that they are entitled for the said credit/deduction as they had submitted all the relevant documents in support of their eligibility/deduction for the remaining years and the Commissioner (Appeals) should have considered those documents as well instead of restricting only to the year 2015-16. I find some merit in this argument as there is not much detail as to why the remaining credit claimed has been denied for deduction. Commissioner (Appeals) should have given a detailed speaking order as regards denying the Appellant's claim for said deductions also. Therefore, this issue needs to be re-determined by the Commissioner (Appeals) where the Appellants will be at liberty to produce all supporting documents for seeking such adjustment/deduction. 21. On the issue of short payment of Service Tax by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, it is obvious that the Appellants were following certain method of calculation for discharge of Service Tax which was not proper or in accordance with the applicable laws, Rules, etc. The whole discrepancy was noticed only on detailed verification and plausible submissions made by the Appellants. Some of the submissions like deduction of Service Tax paid to the vendors, though accepted by the Commissioner (Appeals), and not disputed by Revenue, are debatable on the fair reading of applicable legal provisions which require service provider to discharge Service Tax and the service recipient is required to pay the Service Tax. The recipient of service on which service tax has been paid is also entitled to take credit and utilize against his further liability subject to provisions of Cenvat Credit Rules. Therefore, the payments including Service Tax made to the sub-contractor cannot suo moto become eligible for deduction from the gross value of recipient, which is required to be taken as basis for discharge of Service Tax. Since the Commissioner (Appeals) has already given the benefit in this regard and this aspect is not being disputed by the Revenue, this issue is not bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the unit of the Respondent being audited during the said period several times and there was physical inspections by the Department as well. No such facts are on record in the present case. 27. Similarly, in the case of Blue Star Ltd (cited supra), there was some bonafide belief as regards entry number of the product under erstwhile Item No. 29A(3) in view that facts were known to the Department as well as many High Courts have taken a view that tax on walk-in coolers will not be covered under Item No. 29A(3) and therefore, this case is also distinguishable in view of the facts that there was nothing on record to suggest that Appellants had any bonafide belief regarding method of calculation of gross value in view of any conflicting Court cases or directions of the Department regarding applicable method of valuation or claim of abatement in respect of their services etc. 28. Similarly, in the case of Damnet Chemicals Pvt Ltd & Ors (cited supra), the Hon'ble Supreme Court, inter alia, held that non-mentioning of license agreement in the classification list would not lead to the conclusion that there has been willful suppression of facts with an intent to evade payment of duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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