TaxTMI 
TaxTMI 
2022 (8) TMI 63
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.... 58,14,51,192/- (Rupees Fifty-eight Crore Fourteen Lakh Fifty-one Thousand One Hundred Ninety Two) only in terms of Section 78 of the Finance Act, 1994, as amended; if the demands confirmed above and the interest payable thereon are paid by the notice within thirty days of the date of communication of this order, the amount of penalty under Sec 78 shall be 25% of the Service Tax so determined. The benefit of reduced penalty shall be available only if the amount of penalty so determined has also been paid within the period of thirty days referred above; 4.4 I disallow the Cenvat Credit (including Cess) and confirm the demand amounting to Rs. 18,01,047/-(Rupees Eighteen Lakh One Thousand Forty-seven) only on availing of inadmissible Cenvat credit in terms of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(2) of the Finance Act, 1994 as amended, as discussed in para-3.7.5. I drop the demand for recovery of Cenvat credit (including Cess) of Rs.10,25,76,067/-( Rupees Ten Crore Twenty-five Lakh Seventy-six Thousand Sixty Seven) only for the reasons discussed in para-3.7.5 above; 4.5 I order to pay interest on the amount of Cenvat credit disallowed in parag....
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....I Interest on delayed payment of service tax 3572360 2.3 A show cause notice dated 29.01.2015 was issued to the appellant asking them to show cause as to why: i. Service tax including Education cess and SHE cess amounting to Rs. 58,14,51,191/- (Rupees Fifty Eight Crore Fourteen Lakhs Fifty One thousand One Hundred and Ninety Two only) should not demanded and recovered from them under Section 73(1) of the Finance Act, 1994 read with 1st proviso to the said section. ii. Interest on the above amount at an appropriate rate should not be charged and recovered from them under Section 75 of the said act; iii. Penalty under section 78 of the said act should not be imposed upon them for failure to pay Service Tax including Education Cess & SHE Cess by wilful suppression of material facts with intent to evade payment of service tax. iv. Total Cenvat credit of Service Tax, E Cess & SHE Cess of Rs 10,43,77,114/- (Rupees Ten Crore Forty Three Lakhs seventy seven thousand one hundred and fourteen only) availed an/ or utilized by the M/s SPML should not be disallowed and recovered from them under Rule 14 of The CENVAT Credit Rules 2004 read with Sectio....
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....pt of complete details from customer adjustment entries were passed in the books of accounts. Thus the amount booked mobilization account was transferred to its respective debtors account. Demand of service tax was totally arbitrary and was required to be set aside. Moreover, the contention that no primary documents were submitted is not correct since the mobilization ledger was submitted at the time of investigation. Service tax demanded on credit balance of erection and labour charge as reflected in trial balance during the period 2012-2013 Entries booked in the ledger were inclusive of Service Tax. We have attached sample copy of the contract having project code C033 as per which it is evident that the contract was inclusive of service tax. Department failed to consider that debit balance appearing in the WC Receipt labour (M) and WC Receipt erection account were on account of reversal entry passed towards service tax and VAT already included in the credit figure. Credit entries were not in relation to billing however it included reversal entries of revenue which were booked in the debit side which were not considered by the department. As per t....
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.... not paid the tax accordingly extended period of limitation has been invoked against them for making these demands. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 The appellant before us is a construction company engaged in providing various taxable services as referred in para 2. Construction contracts are the contracts which run over period of time and are not limited strictly by the Financial Year. For the purpose of accounting and monitoring of the projects undertaken in terms of such contractual agreement Accounting Standard AS-7 has been developed which provides as follows: "Accounting Standard 7 (AS 7) relates with accounting of construction contracts. The very purpose of this accounting standard is to specify the accounting treatment of revenue and costs associated with construction contracts. Typically, the date at which a construction contract is entered into is different from the date at which such a contract is completed. This means that the date of entry and the date of completion of a construction contract fall into different accounting periods. It is due to the nature....
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.... recognized as revenue in the statement of P&L in the accounting period in which the contract is performed. Similarly the contract costs are recognized as an expense in the statement of P&L in the accounting periods in which the work is performed. (ii) Work in Progress Work in progress refers to costs due from the customer on account of such costs relating to the future activity on a contract. Thus, these contract costs are recognized as an asset, provided it is expected that such costs will be recovered. VII. Determination of Stage of Completion There are different methods to determine the stage of completion of the contract. These include: • proportion of the contract costs incurred with respect to the estimated total cost. Contract costs incurred relate with a work performed up to the reporting date. • surveys of work performed • completion of physical proportion of the contract work However, there are cases when the result of a construction contract cannot be measured reliably. In such cases, revenue should be recognized only to the extent of contract costs incurred whose recov....
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....es recorded in the book of accounts toward the expected revenue and expense recognition and not on the basis of the actual amounts realized against the contracts undertaken by the appellant. 4.5 The Service tax is paid on the basis of the revenue realized towards the provision of the taxable services and not on the basis of the revenue recognition. Impugned order do not point out a single case whereby the amounts realized by the appellant against any of the project undertaken by the appellant were not reflected in their ST-3 return. ST-3 return is based on the revenues realized by the appellant during the period of the return and not on the basis of revenue recognition. Accordingly, we do not find any merits in the impugned order. However in our view the revenue should have undertaken the exercise of reconciliation of the revenue realized against each of the project with the entries made in the ST-3 return and should arrive at any conclusion in respect of the demand of service tax. In case the revenue realized against the project is not reflected in the service tax returns filed over the period of time, then only revenue demand can be sustained otherwise the demand needs to be s....