2016 (6) TMI 199 - AT - Service Tax

Tribunal rules in favor of appellant on all issues, allowing appeal based on findings and terms.

Areva Renewable Energies India Pvt. Ltd. Versus Commissioner of Central Excise, Chennai

The Tribunal ruled in favor of the appellant on all issues. It held that the services availed were integrally connected to the plant installation, the ... Admissibility of Cenvat credit - service tax paid on the taxable service used for procurement of plant but not for installation - Held that:- services were so integrally connected with the plant and commissioning thereof erecting at the site, that cannot be ruled out. Services were utilised for erection and commissioning of the plant. The indispensable nature of the services is appreciable from the description provided in the SCN itself. That cannot be ruled out. Period of limitation - Held that:- the element of suppression and fraud should have 'intention to evade' but that is not present in the SCN. In absence of allegation in that behalf, there is no foundation in the SCN to allege in adjudication order. This can be said following the Apex Court judgment in the case of Continental Foundation Jt. Venture Vs CCE Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT OF INDIA]. So also, when mala fide is not patent from record, the appellant also gets the benefit of the Apex Court judgement in the case of Uniworth Textiles Ltd. Vs CCE Raipur [2013 (1) TMI 616 - SUPREME COURT]. As a result, both on merit as well as on limitation, appellant succeeds. Imposition of penalty - Held that:- appellant says that tax element has been paid and he will instruct his client to discharge the interest element, if any, on the service tax demand of ₹ 4,94,400/-. Upon compliance of interest payment within a month of receipt of this order, there shall be no penalty at all. - Decided in favour of appellant Issues:1. Whether the services availed were integrally connected to the installation and erection of the plant.2. Whether the show cause notice (SCN) issued pertains to a period without allegations of suppression or fraud.3. Admissibility of cenvat credit claimed on service tax paid for taxable services.4. Allegations of suppression of facts by the appellant regarding the utilization of services for erection and commissioning of the plant.5. Time limitation for the case and the presence of intention to evade in the SCN.6. Resolution of service tax demand and interest payment.Issue 1 - Integration of Services with Plant Installation:The appellant argued that the services availed were crucial for the installation and erection of the plant, as highlighted in the show cause notice and described by the adjudicating authority. The counsel emphasized that without these services, the plant's installation would be impracticable. The Tribunal agreed, noting the indispensable nature of the services for erection and commissioning, thereby ruling in favor of the appellant.Issue 2 - Allegations in the Show Cause Notice:The appellant contended that the SCN issued for a specific period did not include any accusations of suppression or fraud to evade revenue. Citing a Supreme Court judgment, the appellant argued that in the absence of an intention to evade, the SCN lacked a foundation. The Tribunal concurred, referencing previous legal precedents, and ruled in favor of the appellant on this ground as well.Issue 3 - Cenvat Credit Admissibility:The Revenue argued that the cenvat credit claimed on service tax paid for taxable services should not be allowed as the services were used for procurement of materials, not for installation. However, the Tribunal did not find merit in this argument and ruled in favor of the appellant on this issue.Issue 4 - Allegations of Suppression:The Revenue claimed that the appellant suppressed facts regarding the utilization of services for erection and commissioning of the plant, leading to an undue claim of cenvat credit. The Tribunal considered both sides' submissions and found no evidence of suppression or mala fide intent, thus ruling in favor of the appellant.Issue 5 - Time Limitation and Intention to Evade:Regarding the time limitation and the presence of an intention to evade in the SCN, the Tribunal emphasized that for an allegation of suppression and fraud to stand, there must be a clear intention to evade. As the SCN lacked such allegations, the Tribunal ruled in favor of the appellant, citing relevant legal judgments.Issue 6 - Service Tax Demand and Interest Payment:The appellant agreed to pay the tax element and instructed to discharge any interest element on the service tax demand. Upon compliance with the interest payment within a specified period, no penalty would be imposed. Consequently, the appeal was allowed on the mentioned terms and conditions.This detailed analysis of the judgment highlights the key issues addressed by the Tribunal, the arguments presented by both parties, and the legal reasoning behind the final decision in favor of the appellant.