Service tax demands dropped after tribunal finds authorities collected tax but denied credit on same transactions

The CESTAT Bangalore held that service tax demands against the appellant were unsustainable across multiple periods. For October 2005 to March 2007, the SC in Larsen Toubro case established that Erection, Commissioning or Installation service provisions did not apply to composite contracts before June 1, 2007. For 2007-2009, the appellant legitimately paid service tax on full invoice value for labor services provided. Regarding CENVAT credit denial for 2006-2008, the tribunal ruled that authorities cannot deny credit after collecting service tax from the same transactions, especially when the service provider wasn't before the tribunal. The appeal was allowed with penalties also being unsustainable.

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Issues:
1. Alleged erroneously availed CENVAT credit of input services
2. Demand of service tax with interest and penalties
3. Applicability of service category "Erection, Commissioning or Installation" to composite contracts
4. Demand related to service provided to American Power Corporation of India Ltd
5. Allegations of non-production of evidence for having paid Service Tax
6. Jurisdiction to challenge the payment of service tax by the service provider
7. Entitlement of recipient manufacturer to avail benefit of duty paid by supplier manufacturer
8. Validity of invoking extended period of limitation
9. Recovery of irregularly availed credit with interest
10. Applicability of Rule 2(l) of Cenvat Credit Rules 2004

Analysis:
1. The appellant, registered under taxable categories of "Management consultancy" and "Maintenance and repair services," faced allegations of erroneously availing CENVAT credit of input services. The Adjudication Authority confirmed the demand of duty with interest and penalties, leading to the present appeal.
2. The appellant argued that the demand for a specific period was covered by a Supreme Court judgment and was unsustainable. They also disputed the demand related to services provided to American Power Corporation and highlighted their compliance with service tax payments.
3. The Tribunal found that the demand for the first period was unsustainable based on the Supreme Court judgment. The demand for the subsequent period related to services provided to American Power Corporation was also deemed unsustainable due to lack of evidence supporting the allegations.
4. The Tribunal emphasized the appellant's entitlement to CENVAT credit based on previous judgments and rejected the demand against the credit availed. The jurisdiction's inability to question the credit without reopening the service provider's assessment was highlighted.
5. The validity of invoking the extended period of limitation was discussed, with the appellant arguing against its sustainability due to the absence of evidence regarding suppression or fraud.
6. The Revenue's argument that the credit availed by the appellant was irregular and needed to be recovered was rejected by the Tribunal. The Tribunal emphasized the legislative intent behind CENVAT credit rules to avoid cascading effects.
7. The Tribunal allowed the appeal, providing consequential relief based on the discussions and decisions on the issues raised during the hearing. The order was pronounced in open court on a specified date.

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