2014 (12) TMI 917 - AT - Service Tax

Appellant granted total waiver of dues & pre-deposit, recovery stayed. Distinction shown for CENVAT Credit eligibility.

The Tribunal granted the appellant a total waiver of the adjudged dues and waived the pre-deposit requirement, staying the recovery during the appeal's ... Waiver of pre-deposit of Service Tax - Availment of CENVAT Credit on pure service contract and scheme of abatement in other cases - maintenance and Repair, Erection, Commissioning and Installation services and Commercial or Industrial Construction service - Held that:- Applicant could able to show before us referring to sample work orders that there were pure service contracts and also contracts where services coupled with supply of material are provided. Prima facie, we find that the applicant had been claiming abatement under Notification No. 1/2006-ST dated 1/3/2006, in those cases only where alongwith services, they have supplied materials to their clients. The Ld.Advocate before us submitted that in their reply to the show cause notice, they have enclosed a statement, contract wise, explaining elaborately that in relation to composite contracts, they have availed abatement but did not avail CENVAT Credit; whereas for contracts rendering services only, they availed CENVAT Credit on the input services. It is his submission that Ld. Commisssioner, nowhere, has recorded any contrary observation to the said statement. Regarding the eligibility of CENVAT Credit on Pure service contract and abatement on composite services under Notification No. 1/2006-ST dated-1/03/2006 simultaneously, prima facie, we find it is covered by the decision of this Tribunal in the case of SMP Constructions Pvt. Ltd (2009 (6) TMI 80 - CESTAT, AHMEDABAD). In the result, we are of the view that the applicant could able to make out a prima facie case for total waiver of dues adjudged - Stay granted. Issues:Application for waiver of pre-deposit of Service Tax and penalty under Section 78 of the Finance Act, 1994.Detailed Analysis:1. The appellant sought waiver of pre-deposit of Service Tax and penalty imposed under the Finance Act, 1994. The appellant, during the relevant period, had undertaken various services chargeable to Service Tax. They claimed to have discharged service tax on the gross taxable value using CENVAT Credit for pure service contracts and availed abatement under Notification No. 1/2006-ST for composite contracts. The demand notice alleged that they could not avail abatement once they chose to discharge service tax after availing CENVAT Credit for pure service contracts. The appellant argued that there is no provision debarring them from availing CENVAT Credit for pure service contracts and abatement for composite contracts, citing a Tribunal decision in SMP Construction Pvt. Ltd. vs. Commr. of Central Excise, Vadodara-II. The appellant also contested the Commissioner's interpretation of finishing services under the notification, claiming their services did not fall under this category.2. The Revenue contended that the appellant failed to provide evidence to establish that for work orders where abatement was claimed, they did not avail CENVAT Credit on input services. The burden of proof for satisfying the conditions of an exemption notification lies with the assessee, as per the Supreme Court judgment in Commr. of C. Ex., New Delhi vs. Hari Chand Shri Gopal. The Revenue argued that the appellant did not meet this burden in the present case.3. After hearing both parties and examining the records, the Tribunal found that the appellant could demonstrate, with sample work orders, the distinction between pure service contracts and contracts involving supply of materials. The Tribunal noted that the appellant claimed abatement only for contracts where materials were supplied along with services. The appellant provided a detailed statement, contract-wise, explaining their approach to availing abatement and CENVAT Credit. The Tribunal observed that the eligibility of CENVAT Credit for pure service contracts and abatement for composite services under Notification No. 1/2006-ST simultaneously was supported by the Tribunal's decision in SMP Constructions Pvt. Ltd. The Tribunal concluded that the appellant established a prima facie case for total waiver of the adjudged dues and waived the requirement of pre-deposit, staying the recovery during the appeal's pendency.