2023 (1) TMI 937

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....ard is not available for some reason. 3. A show cause notice dated 18.04.2016 was issued to the appellant for the period 2010-11 to 2014-15 regarding non-payment of service tax of Rs. 69,23,985/- on the advances received from clients in relation to the services to be provided and regarding irregular availment of CENVAT credit of Rs.2,28,64,576/- in respect of capital goods and utilization thereof. The relevant portions of the show cause notice is reproduced below: "1. Non payment of service tax on the advances received from clients in relation to the services to the provided. 4. Whereas, during the course of audit, it was noticed that the assessee had received advance from M/s Indus Towers Limited during the years 2010-11 & 2011-12 amounting to Rs.6,72,23,160/- for the services to be provided but the Service Tax was not paid on receipt of such advances. The scrutiny of the agreement namely "Master Hybrid Solar Solution Installation Operation & Maintenance Agreement" (RUD-II) between the assessee and M/s Indus Towers Ltd. (ITL) revealed that the assessee was to be paid advances for the services as per Para 6.7 of the agreement, which were to be adjusted towards ....

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....ods appears to be inadmissible, and is thus, liable to be reversed under Rule 14 of the Cenvat Credit Rules, 2004 read with section 73 & 75 of the Finance Act, 1994. 5.3 Whereas, on being pointed out regarding such wrong availment of CENVAT Credit, the assessee reversed an amount of Rs. 1,41,00,814/- on 31.03.2015, 05.04.2015, 31.10.2015 and 30.11.2015 through CENVAT Credit out of total inadmissible Cenvat Credit of Rs.2,28,64,576/-, albeit Under Protest on all items other than Shelter Cabin. However the assessee neither reversed the remaining Cenvat Credit availed on Shelter Cabin amounting to Rs.87,63,762/- nor paid any interest. In terms of Section 75 readwith Rule 14 of Cenvat Credit Rule, 2004. 5.4 Whereas from the above it appears that the Cenvat Credit amounting to Rs. 2,28,64,576/- claimed as Cenvat Credit as Capital Goods is not admissible to the assessee. Therefore, the assessee is required to reverse the same alongwith interest in terms of Rule 14 readwith Section 73 & 75 of Finance Act, 1994. 6. Thus, in the light of the discussions in the paras above, the total Service Tax liability of the assessee for the period 2010-11 to 2014-15 i....

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....and utilization of CENVAT Credit in respect of capital goods 2015-2016 3,33,113/- 3,33,113/- Total 3,01,21,674/- 8. The first dispute relates to the amount of advance of Rs. 6,72,23,160/- received by the appellant from M/s Indus Tower Ltd, on which the department sought to levy service tax on the premise that such amount pertains to advance received towards the 'services to be provided', i.e., it is a consideration towards the service and not security deposit. 9. The second dispute pertains to the CENVAT credit availed by the appellant on goods namely MS angles, GI sheets, Bolts, Shelter Cabins, Structures of iron & steel, MS huts, fabricated and galvanized structures. According to the department, these goods are not covered under the definition of 'capital goods' as defined under rule 2(a) of the CENVAT Credit Rules, 2004 [the 2004 Rules]. 10. The appellant filed a reply to the show cause notice and the Statement of Demand denying the allegations. However, by an order dated 28.12.2018, the Commissioner confirmed the demand proposed in the show cause notice. 11. In regard to the non-payment of service tax amounting to Rs. 69,23,985/-, the Commissioner obs....

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....xcise Tariff Act specified in the Rules, ibid. Hence, the aforesaid goods do not qualify to be treated as capital goods. 228. Since the impugned goods are not capital goods within the meaning of the above definition, the credit thereof taken by the assessee is in violation of the Rule 3 & Rule 4 of the CENVAT Credit Rules, 2004 and thus not admissible. 229. I find that the Noticee has taken a plea that the impugned goods, if not capital goods, would be inputs as defined under Rule 2(k) of the CENVAT Credit Rules, 2004. I am not inclined to accept this plea. Since the period involved in this case is from 2010-11 to 2014-15 and the definition of input suffered changes in the year 2011, I am discussing the issue for the period prior to 2011 and thereafter." (emphasis supplied) 13. The contention advanced by the appellant that the extended period of the limitation could not have been invoked was also rejected and the relevant paragraph is reproduced below: "241. The very fact that the Noticee themselves termed the amount received as advances and distinguished the transactions of advance from security deposit in different agreements, the mens rea or supp....

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....ppellant was towards advances and in support of this contention reliance has been place upon the decision of the Tribunal in Central Power Research Institute vs. Commissioner of C. Ex., Bhopal [2017 (6) G.S.T.L. 42 (Tri.-Del.)]; and (ii) The extended period of limitation was correctly invoked in the facts and circumstances of the case. 16. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 17. The first issue that arises for consideration is whether the amount of Rs. 6,72,23,160/- received by the appellant from M/s. Indus Towers Ltd. should be treated as an advance, on which service tax is to be levied as contented by the department, or it should be treated as a security deposit which is not susceptible to levy of service tax, as contented by the appellant. 18. Paragraph 6.7 of the Agreement provides that the appellant shall, at its own cost, install, operate and maintain the Hybrid Solar Solution for a period of 10 years for which M/s Indus Tower Ltd. shall 5. Service Tax Appeal No. 52426 of 2019 decided on 22.10.2021 pay an advance in respect of each of th....

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....ecorded by the Commissioner on this issue. 21. The second issue that arises for consideration is as to whether the appellant had correctly availed the CENVAT credit on goods which according to the appellant are capital goods. This issue has been decided in favour of the appellant by the Tribunal in AST Telecom Solar and the relevant portion of the decision is reproduced below: "1. The issue in this appeal is whether the Adjudicating Authority and the Commissioner (Appeals) have rightly allowed the cenvat credit with respect to the items like M.S. Angles, G.I. sheet, Bolts, Shelter Cabins, Structures Cabins, Structure of Iron and Steels, M.S. Huts, fabricated and galvanized structures, etc., finding that the same may be utilised by the respondent/assessee in providing taxable output service and also observing that these items were used by the assessee in fabrication or for support of capital goods. 2. The brief facts are that the respondent is registered with the Service Tax Department providing taxable service under the category of "Business Support Service and "Business Auxiliary Service". The assessee was mainly providing 'Hybrid Power Solutions' for maintain....