TaxTMI 
TaxTMI 
2021 (2) TMI 457
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....and the Appellant pay for these services and the service tax thereon to the EPC contractors. The appellant, on receipt of the services and on the strength of the invoices raised by the EPC contractors, claim Cenvat Credit of such service tax charged on the invoices raised on the Appellant, treating them as "input services". The credit of the service tax charged on the input service was taken by the Appellant, for purposes of adjusting the same against its output service tax liability on the provision of transportation of gas through pipeline. 2.2 Learned Counsel argued that the issue involved in the present case is if the appellant (engaged in transportation of gas through pipeline) was eligible to claim input service tax credit of the Service Tax charged by its EPC contractors (who were appointed directly by the Appellant) in connection with construction of the pipeline where such Service Tax was being paid by the Appellant to such EPC contractors? 2.3 Learned Counsel pointed out that the precise issue under consideration in this appeal has already been decided in favour of the Appellant in two decisions of the Tribunal including one in their own case. He argued that the iss....
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....ecision ought not to apply to the facts of the present case. He further submitted that in the instant case, the impugned services for construction of pipelines bear an integral nexus with the provision of output services of GSPL, which was not the factual pattern in the case of Mundra Port & Special Economic Zone. 2.6 Learned Counsel further argued that the input services provided by the EPC contractors to GSPL are covered under the first part of the definition of 'input services' the services of Transportation of goods through pipeline services. (i) He argued that for a service to qualify as input service, such service should be used by an output service provider 'for providing an output service'. He submitted that in the present case, the input services received from the EPC Contractors in respect of laying of gas transmission pipelines are utilised by the Appellant to render taxable output service pertaining to "Transport of goods through pipeline or other conduit service". Without the pipelines, it would not be possible for the Appellant to render the "Transport of goods through pipeline or other conduit service"- a fact that has not been disputed even in the SCNs. ....
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....manufacturer or the service provider. Various CBEC Circulars as also the decision of the APEC Court In AIFTP vs UOI (2007 (7) STR 625 (SC) establishes the fact the Service tax is a VAT concept. Since, Service Tax is a consumption tax, denial of CENVAT Credit to GSPL on the construction services (which are essentially integrally connected to the business of GSPL) would be contrary to the letter and spirit of the principles governing consumption tax. 2.9 He further argued that construction services received by the Appellant also fall within the inclusive part of the definition of 'input services' (i.e setting up the premises. He argued that the inclusive part of the definition of the term 'input services' also specifically includes services for setting up the 'premises' of the service provider. In the present case, the input services of the EPC contractors are used in relation to setting up of premises of GSPL (since the entire route of the pipeline constitute the 'premises' of the GSPL) and hence specifically covered under the inclusive part of the definition as well. The entire route of pipeline would qualify as a premise of GSPL even if it is laid beneath the earth- for support....
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.... nor the 'office' of the GSPL. Neither it is 'goods' nor a 'service'. No Service Tax is leviable thereon. Thus, credit of Service Tax paid on CICS cannot be availed of by GSPL. Learned Special Counsel argued that it cannot be said that the input services were used for setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises' or for advertisement or sales promotion, market research, storage up to the place of removal, procurement of input'. The output service rendered by GSPL does not fall under 'activities relating to business' since applying the rule of ejusdem generis it can be said that the enumerated activities are not at all of the nature of GSPL's services.Learned Special Counsel argued that the judgment relied upon by the Hon'ble High Courts and the Hon'ble Tribunal is the one rendered by the Hon'ble AP High Court in the case of Sai Samhita Storages (P) Ltd. The period involved in this judgment was 4/2005 to 9/2005 and the case related to cement and steel items, such as TMT bars, which were used for construction of storage tanks, reinforcement of storage tanks and construction of p....
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....gned services were not used for any of the services enumerated in the inclusive clause of the decision. Besides, Tribunal has taken the view that the Board's Circular is contrary to the plain language of the definition. 3.5 Learned Counsel argued that GSPL's own case arises from the Final order of the Tribunal dated 15.04.2013. The findings referred to at the hearing are as under: "5.2 The learned Special Counsel also submitted that in respect of services rendered to the contractor by other service providers, Notification No. 12/2003 does not disallow credit of service tax on such input services and therefore only contractors could have availed the credit. Therefore in such cases if the contractors did not avail the credit, appellant cannot avail. We find ourselves in agreement with this submission. It cannot be said that in respect of input services received by the contractors, appellant is eligible since those are not input services used for providing output service by the appellant but they are used for providing output service by the EPC contractors. 5.3 As regards the service rendered by the EPC contractors the ground canvassed is that what has emerged is ....
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....was paid by M's. GSPL directly? (ii) Whether the Tribunal committed an error in entertaining the ground of the respondent M/s. GSPL on such question of CENVAT credit in a Rectification Application and whether the Tribunal can be stated to have corrected the error apparent on the face of record?" Thus, these findings are under challenge and the decision of the High Court is awaited. 3.7 Secondly, the Hon'ble Tribunal has solely relied upon the AP High Court Judgement in the case of Sai Samhita Storages (P) Ltd. In this regard submissions made at Paras 6.1.1 to 6.1.5 above may kindly be perused. In view of the findings recorded in the aforesaid Final order ought not to be applied to the present appeal 4. We have considered the rival submissions, We find that the appellants are engaged in the business of transporting gas through pipe line. For the purpose of transporting gas through pipe line it is essential for them to lay pipe lines between their different station. For the purpose of laying pipeline the appellants engage various contractors to procure pipes and completed the activity of laying the pipeline. In this process these contractors get the price of materia....
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....ot the appellant. The definition of 'input' also would not be of any help to the appellant since definition of 'input' also requires the input to be used for providing output service. Appellant is not using pipes for providing any output service but have supplied it for construction of pipeline to the EPC contractor. Being a free supply material, if the value of the same is not included in the pipeline system by the output service provider, question of availment of credit also does not arise. The definition of input service also does not help the appellants to get the credit of duty paid on pipes. The definition requires the input services to be ''used for" providing an output service and it cannot be said that the inclusion clause helps them to take credit of service tax paid by the EPC contractor we are not able to find any provision which allows them to take credit of duty paid on pipes and also service tax paid on construction of pipeline system. A conscious decision was made by the appellant and the EPC contractor to avail the benefit of Notification No. 12/2003 especially in the case of appellants, they had also taken a legal opinion. Once a choice is made the consequence of ....
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....e of pertaining to availment of Cenvat Credit of Service Tax paid by Contractors to EPC contractors. It is his submission that at least in respect of Appeal Nos. 356/2009 and 320/2010, the appellant had availed Cenvat credit of the Service Tax paid on the inputs services like Engineering Consultancy, Inspection services, ROU/ROW consultancy services etc. received by them directly, for execution of the said contract laying of pipeline system. It is also the submission that the final order of the bench dated 15-4-2013 in paragraph No. 5.3 has specifically held that any services provided for laying the pipeline system, Cenvat credit shall be available of the service tax paid for the services. 4.2 The appeal filed by the revenue against this order of tribunal were rejected by Hon'ble High Court, Ahmedabad as reported in 2014 (34) STR 321. Against this order of Hon'ble High Court the revenue has approached Hon'ble Apex court. Hon'ble Apex Court has after condoning the delay issue the notice in the petition for special leave to appeal filed by revenue. 5. It is seen that the issue involved in the instant case is squarely covered by the decision of tribunal in the appellant's own ca....