https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769422 https://www.taxtmi.com/caselaws?id=769422 Recovery of Cenvat Credit along with applicable interest and penalty - Input service - admissibility of Credit availed on service tax paid for the design and construction of an RCC water storage tank by M/s KMV Projects Ltd. - HELD THAT:- The input service on which the impugned credit was availed by M/s GMR Hyderabad International Airport Ltd., for construction and works contract services which are covered in the exclusion clause of the input service definition under Rule 2(l) of the Cenvat Credit Rules, 2004. Since both the contracts are composite supplies they fall under exclusion clause of input service definition Rule 2(l) prohibits availment of Cenvat Credit of service tax paid on works contract services when the same are used to construct a building or civil structure or when such services are used to lay down the foundation or making a structure to support capital goods. Service provided by M/s KMV Projects Ltd., is design and publication of storage tank which is recognised as capital goods under Rule 2(a)A of Cenvat Credit Rules, 2004 and hence they eligible for the credit. Although, storage tank is included in the definition of capital goods, but it is not the case that the appellant party is availing capital goods credit on storage tank - The works contract service itself is an input service and is excluded from the definition of input service vide Rule 2(l) of Cenvat Credit Rules, 2004. The nature of services provided is not construction of works contract and that M/s Enerpark Energy Pvt Ltd., have charged full rate of service tax and deposited the same under erection, Commissioning and Installation Services. As per the description of services mentioned in the said P.O. as Design, engineering, construction, erection, commissioning and the description clearly mentions works of foundation of main control room, foundation of inverter room, foundation of transformer, structure foundation, completion of internal road, completion of rain water drain etc. The above services are in the nature of construction services/services portion in the execution of works contract, used for construction of civil structure or laying foundation for capital goods, which are specifically covered in the exclusion clause of the input service definition. The Department's case is that the Adjudicating Authority had dropped the demand for recovery of irregular Cenvat Credit of Rs. 4,71,885/- on the basis of certificate of Chartered Accountant without proper examination of other documents such as ST-3 returns and Cenvat Credit Ledger. The certificate issued by a Chartered Accountant which only corroborative evidence as held by Hon'ble High Court of Karnataka in Aurangabad Vs Toyota Kirloskar Motors [2009 (12) TMI 529 - KARNATAKA HIGH COURT] which was upheld by the Apex Court in TOYOTA KIRLOSKAR MOTOR PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2011 (3) TMI 1362 - SUPREME COURT]. In the light of above decision, Commissioner remanded the matter for further examination is just and proper. Conclusion - The works contract service itself is an input service and is excluded from the definition of input service vide Rule 2(l) of Cenvat Credit Rules, 2004. The Commissioner (Appeals) passed an order based on law and fact both. Therefore, no any interference requires in the impugned order and appeal is liable to be dismissed - appeal dismissed. Case-Laws Service Tax Wed, 23 Apr 2025 00:00:00 +0530