2024 (3) TMI 1288 - AT - Service Tax

Availment of Cenvat credit in some contracts doesn't affect exemption eligibility under Notification 1/2006-ST for construction services

Smp Construction Pvt Ltd Versus Commissioner of C. E-Bharuch

CESTAT Ahmedabad allowed the appeal by remand regarding industrial/commercial construction services under Notification 1/2006-ST. The appellant provided ... Benefit of N/N. 1/2006 – ST dated 01.03.2006 - Industrial or Commercial Construction Services - appellant to provide the materials such as cement, steels etc., and in terms of some it was required for the appellant to provide the services along with the materials - Cenvat credit was being availed - HELD THAT:- The issue settled by this Tribunal in the appellant's own case M/S SMP CONSTRUCTIONS PVT LTD VERSUS C.C.E. & S.T. -VADODARA-II [2018 (8) TMI 179 - CESTAT AHMEDABAD] pertains to the condition as prescribed under Notification No. 1/2006-ST as regards exemption and benefit of abatement where it was held that the condition of the Notification was complied with, merely in some of the contract the appellant had availed the cenvat credit, and the same has no effect on the service where the exemption Notification No. 1/2006-ST was availed. Thus, following the above observations of this Tribunal, the adjudicating authority can reconsider the issue afresh based out of the factual matrix of the present case taking into account the submissions made by the Appellant as regards the effect of availment of Cenvat credit and abatement where credit was not availed at all. Therefore, the issue needs to be remanded back to the adjudicating authority for reconsideration. The appeal is allowed by way of remand to the adjudicating authority. Issues Involved:1. Applicability of Notification No. 1/2006-ST regarding abatement and Cenvat Credit.2. Whether the Appellant can avail abatement on some contracts while availing Cenvat credit on others.3. Interpretation of Notifications No. 15/2004-ST and 1/2006-ST.4. Effect of centralized registration on the availment of benefits under the notifications.Summary:1. Applicability of Notification No. 1/2006-ST regarding abatement and Cenvat Credit:The Appellant, M/s. SMP Constructions, provided Industrial or Commercial Construction Services under different contracts, some of which included materials like cement and steel. Under Notification No. 1/2006-ST dated 01.03.2006, an abatement was provided with the condition that Cenvat Credit on inputs or capital goods or input services should not be availed. The Appellant discharged their Service Tax Liability at different rates depending on the contract terms and maintained records accordingly.2. Whether the Appellant can avail abatement on some contracts while availing Cenvat credit on others:The Tribunal in the Appellant's own case (Order No. A/11599/2018 dated 01.08.2018) had previously settled that the condition of Notification No. 1/2006-ST was complied with if Cenvat credit was not availed on the services where the abatement was claimed, even if credit was availed on other contracts. This interpretation was supported by the judgment in Bharat Heavy Electrical Ltd, stating that the Notification does not prevent an assessee from availing Cenvat credit on some contracts while claiming abatement on others.3. Interpretation of Notifications No. 15/2004-ST and 1/2006-ST:The Tribunal reiterated that the conditions of non-availment of Cenvat credit apply to specific cases or contracts and not uniformly across all contracts executed by the assessee. The Notifications allow the assessee to choose whether to avail Cenvat credit or abatement on a contract-by-contract basis.4. Effect of centralized registration on the availment of benefits under the notifications:The Tribunal clarified that centralized registration is only for accounting purposes and does not affect the availment of benefits under Notifications No. 15/2004-ST or 1/2006-ST. The benefits can be availed as long as the conditions specified in the notifications are met.Conclusion:The appeal was allowed by way of remand to the adjudicating authority to reconsider the issue afresh based on the factual matrix of the present case, taking into account the submissions made by the Appellant regarding the effect of availment of Cenvat credit and abatement. No findings were recorded on the merits of the issue.