2017 (10) TMI 805 - AT - Service Tax

Tribunal Upholds Commissioner's Decision on CENVAT Credits and Service Tax Valuation

The Tribunal upheld the Commissioner(Appeals)' decision, allowing CENVAT credit for construction service, consulting engineer service, and mapping survey ... CENVAT credit - input services - construction service - consulting engineer service - mapping survey service - Held that: - the construction service, consulting engineer service and mapping service are activities relating to the business of the respondent, and get covered in the inclusive part of the definition of input service being activities relating to the business of the assessee - the decision in the cases of Reliance Gas Transportation Infrastructure Ltd. Versus Commissioner of Service Tax, Mumbai II [2016 (8) TMI 91 - CESTAT MUMBAI], M/s Vamona Developers Pvt Ltd Versus Commissioner of Customs, Central Excise And Service Tax, Pune-III [2015 (12) TMI 1111 - CESTAT MUMBAI] referred. The construction service, mapping service and consulting engineer service fall in the definition of input service even before 01/04/2011 and after 01/04/2011 - the credit could not be denied on the ground that the services were used for construction of the premises which is not excisable - appeal dismissed - decided against Revenue. Issues:1. Eligibility of CENVAT credit on construction service, consulting engineer service, and mapping survey service.2. Applicability of penalties under Section 76, 77, and 78 of the Finance Act, 1994 and Rule 15(1) of the CENVAT Credit Rules, 2004.3. Consideration of various services for payment of service tax.4. Correct adoption of the point of taxation.5. Maintaining separate accounts for the utilization of input services for taxable and exempted services.Analysis:Issue 1:The appeal centered around the eligibility of the respondent for CENVAT credit on construction service, consulting engineer service, and mapping survey service. The Commissioner(Appeals) allowed the appeals of the respondent, permitting CENVAT credit for the period April 2008 to March 2011 on all three services. However, for the period April 2011 to March 2012, CENVAT credit was limited to consulting engineering service only. The Revenue contended that the services in question did not fall under the definition of input service before and after the relevant amendment dates. The respondent argued that these services were essential for their business activities and cited precedents supporting their stance. The Tribunal upheld the Commissioner(Appeals)' decision, emphasizing that the services were integral to the business and fell within the definition of input service.Issue 2:Regarding penalties under Section 76, 77, and 78 of the Finance Act, 1994, and Rule 15(1) of the CENVAT Credit Rules, 2004, the Commissioner(Appeals) set aside the penalties imposed in the Order-in-Original. The Revenue challenged this decision, arguing that the impugned order did not consider a specific circular prohibiting CENVAT credit on services used for construction of immovable property. However, the Tribunal found no fault in the Commissioner(Appeals)' order and dismissed the Revenue's appeal.Issue 3:The case involved the consideration of various services for the payment of service tax. The respondent had collected rent, water charges, and common facility charges but had only paid service tax on rent, neglecting the other charges. Additionally, incorrect adoption of the point of taxation led to underpayment of service tax. The Tribunal's decision focused on the correct valuation of services and the payment of due service tax on all taxable components.Issue 4:The correct adoption of the point of taxation was crucial in determining the accurate payment of service tax. The respondent had underpaid service tax due to incorrect adoption of the point of taxation from July 2011. The Tribunal's analysis considered the implications of this error on the overall tax liability and compliance with tax regulations.Issue 5:Maintaining separate accounts for the utilization of input services for taxable and exempted services was another aspect of the case. The respondent had not maintained separate accounts for the utilization of input services, resulting in excess availment of CENVAT credit. The Tribunal's decision highlighted the importance of proper record-keeping and compliance with CENVAT credit rules to prevent any misuse or excess credit claims.In conclusion, the Tribunal upheld the Commissioner(Appeals)' decision, emphasizing the eligibility of the respondent for CENVAT credit on specific services and the necessity of proper compliance with tax regulations and record-keeping practices.