2018 (2) TMI 941 - AT - Service Tax

Appellant prevails in CENVAT credit dispute, wins on service tax and short payment issues

The appellant successfully contested a demand for CENVAT credit of Rs. 30,58,160 for service tax payment on specific services. The judge ruled in favor of ... CENVAT credit - modernization, renovation or repairs of premises - Held that: - there is no dispute as to the services were availed by the appellant, in respect of modernization, renovation or repairs of premises - The First Appellate Authority has also recorded that these services are covered under inclusive part of the definition. If these services are undisputedly, used for modernization, renovation or repair of premises the question of denying the CENVAT credit of the service tax paid on the disputed services does not arise - Both the lower authorities have erred in rejecting the claim of appellant that they are eligible for CENVAT credit an amount of ₹ 30,44,044/-. Appeal disposed off. Issues:1. Availment of CENVAT credit2. Demand of short payment of service taxAvailment of CENVAT credit:The appellant contested a demand of CENVAT credit of Rs. 30,58,160 for payment of service tax on specific services. The appellant argued that the services were used for output services on which tax liability was discharged, and therefore, credit should not be denied. The appellant provided details annexed to the show cause notice to support their claim. The AR contended that the services received were only for interior works and did not fall under actual commercial or industrial construction services. The AR also stated that the appellant failed to provide evidence that the services were used for modernization, renovation, or repairs of premises.Upon review, the judge found that there was no dispute that the services were indeed used by the appellant for modernization, renovation, or repairs of premises. The First Appellate Authority had also acknowledged that these services fell under the inclusive part of the definition. As the services were undisputedly utilized for the mentioned purposes, the judge ruled that denying CENVAT credit for the service tax paid on these services was unwarranted. The judge concluded that both lower authorities had erred in rejecting the appellant's claim for CENVAT credit amounting to Rs. 30,44,044. Consequently, the appeal succeeded, and the impugned order was set aside in this regard.Demand of short payment of service tax:The issue of short payment of service tax amounting to Rs. 12,91,714 for the period of April 2011 to March 2012 was raised. The appellant contended that the short payment was rectified by filing a revised return on 21.07.2012, before the issuance of a show cause notice. The appellant argued that since the amount was already deposited and indicated in the returns, the question of short payment did not apply for the period in question. The judge noted that the First Appellate Authority had directed the Adjudicating Authority to verify the payments as per the revised returns, which was deemed appropriate.After careful consideration, the judge found merit in the submissions made by the appellant's counsel regarding the rectification of the short payment through revised returns. The judge concluded that since the amount had been deposited and reflected in the returns, the issue of short payment of service tax did not stand. The judge also acknowledged the First Appellate Authority's directive to verify the payments as per the revised returns. Consequently, the appeal was deemed acceptable to that extent, and the impugned order was set aside accordingly.In conclusion, the judge disposed of the appeal based on the findings and decisions outlined above.