TaxTMI 
TaxTMI 
2022 (5) TMI 142
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....0 apartment units. The apartments would be sold by the appellant to various buyers by entering into sale deed for transfer of undivided share of land along with a construction agreement. The entire construction activity was sub contracted to the Appellant's group company, M/s IJM (India) Infrastructure Limited. The Appellant was paying Service Tax for the amounts received from the buyers, under "Construction of Complex Service" and the Appellant was also availing CENVAT Credit of the Service Tax paid by M/s IJM (India) Infrastructure Limited and various other service providers and utilizing such credit for payment of their Service Tax liabilities. Wherever the CENVAT was not sufficient to discharge their liability the appellant have paid Service Tax in cash also. 2. In this connection, a Show Cause notice dated 23.07.2010 was issued to the Appellant wherein it is alleged that in as much as the Appellant is not undertaking any construction by themselves, but the entire construction activity is sub-contracted to M/s IJM (India) Infrastructure Limited.The Appellant is not providing any taxable service. Thus, the entire amount of Service Tax collected by the Appellant from their buy....
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....the Hon'ble Supreme Court, viz., CCE Vs Ratan Melting & Wires Industries - 2008 (231) ELT 22 SC; Ranadey Micronutrients Vs CCE 1996 (87) ELT 19 SC, wherein it was held that the circular issued by the Government is binding on department. • During the relevant period there was widespread confusion in the matter of Service Tax liability of builders and most of the builders were paying Service Tax. • Much later, the Hon'ble Supreme court held in the case of CCE V Larson and Toubro Ltd [2015(39) STR 913 SC] that composite contracts involving transfer of property in goods are liable to Service Tax only under works contract service with effect from 1.06.2007 and not under construction of complex service. But the show cause notice in this case was not issued on this ground. • The learned Counsel for Appellant has also relied on the decision of the Hon'ble Supreme Court in case of State of AP vs. Larson and Toubro Ltd. [MANU/SC/3876/2008] wherein it has been held that in cases where entire construction activity is subcontracted, the transfer of property in goods for the purpose of VAT would be directly from the sub-contractor to the customer and not th....
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....nt of the Hon'ble Bombay High Court in the case of Indian National Shipowners Vs UOI - 2009 (13) STR 235 Bom, which has also been upheld by the Hon'ble Supreme Court in the case of Union of India Vs. Indian National Shipowners Association [2010 (17) STR J57 SC]. 5. Per contra Shri C. Mallikarjun Reddy, learned Authorized Representative for the Department made the following submissions;  A point wise rejoinder to the written submissions filed by the Appellant was filed by the department.  By relying upon Circular F.No 332/35/2006/TRU dated 1.8.2006 the builder/promoters are not liable to Service Tax and hence the demands are sustainable.  As per the decision of the Hon'ble Supreme Court in L&T case [2015(39) STR 913 SC] the Appellant is not at all liable to pay Service Tax. Reliance was placed on the decision of Tribunal in Krishna Homes - 2014 (34) STR 881 (Tri-Del) to canvass that the Appellant is not liable to pay Service Tax. Reliance was also placed on Indu Eastern Province Projects Pvt. Ltd.[2019(20) GSTL 88 Tri-Hyd] where the facts are identical.  With regard to the demand of Service Tax on the import of s....
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.... Dilip Kumar & Co. and Others (supra), "In applying rule of plain meaning, any hardship and inconvenience cannot be the basis to alter the meaning of the language employed by the legislation. This is especially so in fiscal statutes and penal statutes." We, therefore, hold that the appellant is not liable to pay service tax in this factual matrix and any amount which they collected as representing service tax is liable to be deposited with the Government under Sec. 73A(2) of the Finance Act, 1994. Since, they were not required to pay service tax, they were not entitled to take Cenvat credit and they have wrongly done so. 11. Having taken Cenvat credit which they were entitled to, the appellant debited the credit so taken as "payment of Service Tax". An argument of the Learned Counsel for the appellant is that if it is held that they are not liable to pay service tax and the amount which they have collected is held to be liable to be deposited under Sec. 73A, the amount which they debited in their Cenvat account should be considered as deposit under Sec. 73A. We find nothing in the Cenvat Credit Rules, 2004 which entitles someone who is not liable to pay service tax to clai....
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....ence of any statutory provision, the demand of interest is not sustainable. 14. As far as the penalties imposed on the appellants are concerned, we find that they have disclosed their operations to the department and also expressed their doubts if they were liable to pay service tax at all. We find sufficient reason to invoke Sec. 80 to set aside the penalties and we do so. 15. In conclusion : (a) The demand under Sec. 73A(3) read with Sec. 73A(2) of the amounts collected by the appellants from their clients as representing service tax is confirmed. The amounts already deposited in cash will be setoff against this amount. (b) The demand of interest under Sec. 73B on the above amount is set aside as the amounts under Sec. 73A(2) are not liable to interest under Sec. 73B. (c) The demand of reversal of ineligible Cenvat credit taken by the appellant is confirmed and the amount reversed as payment of service tax will be treated as reversal. (d) Interest under Rule 14 of CCR is confirmed for the period between the taking of credit and its reversal. (e) All penalties are set aside invoking provisions of Sec. 80 of the Finance....
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....esenting service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. 13. By relying upon the following finding of this Tribunal in the case of Indu Eastern Province Project Pvt Ltd we set aside the demand of interest under Section 73B of the Finance Act, 1994. "13. As far as the demand of interest under Sec. 73B is concerned, it applies to cases where an amount has been collected in excess of tax assessed or determined referred to [in] Sec. 73A(1). There does not appear to be a corresponding provision for collection of interest under Sec. 73B where any amount has been collected as tax which is not required to be collected [Sec. 73A(2)]. In the absence of any statutory provision, the demand of interest is not sustainable." 14. We are of the view that the penalty of Rs.5000/- imposed on the Appellant under section 77(2) of Finance Act 1994 is not sustainable in view of the fact that issues are contentious and there was widespread confusion during the relevant time. 15. Once it is held that Appellant is not liable to pay Service Tax they are accordingly not entitled to Cenvat credit. Hence the decision of Ld.Commissio....