TaxTMI 
TaxTMI 
2025 (5) TMI 1832
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.... KKC & SBC) amounting to Rs. 3,63,21,198/- (Rupees Three crore sixty three lakh twenty one thousand one hundred ninety eight only) short/ not paid by the Assessee during the F.Y. 2015-16 to 30/06/2017 and order for recovery of the same by invoking the extended period of limitation under proviso to Section 73 (1) of the Finance Act, 1994; further read with Section 142 & 174 of the CGST Act, 2017; (iii) I confirm the demand of Cenvat credit amounting to Rs.70,224/- (Rupees seventy thousand two hundred twenty four only) not reversed by the Assessee as per Rule 6(3) of the Cenvat Credit Rules, 2004 which is used in exempted service provided during the F.Y. 2015-16 to 30 June, 2017 and order for recovery of the same by invoking the extended period of limitation under proviso to Section 73 (1) of the Finance Act, 1994 along with interest under Section 75 of the Finance Act, 1994; further read with Section 142 & 174 of the CGST Act, 2017; (iv) I confirm the demand of interest under Section 75 of the Finance Act, 1994 on the amount as confirmed at (ii) above and order for recovery of the same; further read with Section 142 & 174 of the CGST Act, 2017; (v) I impos....
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....ct service; (ii) short paid service tax under reverse charged mechanism due to wrong availment of abatement on works contract services received by it; (iii) failed to reverse the CENVAT credit under Rule 6(3) of CENVAT credit Rules, 2004 [CCR] on common input services; and (iv) short paid service tax which was deduced after reconciliation of revenue shown in financial records with the ST-3 returns. Accordingly, a show cause notice proposed recovery of the service tax and CENVAT credit as above with interest and penalties which culminated in the issue of impugned order. 3. We have heard Shri P.K. Sahu learned counsel for the appellant and Shri Manoj Kumar, learned authorized representative appearing for the revenue and perused the records. 4. We now proceed to examine each of the issues. Short payment of service tax amounting to Rs. 3,41,99,857/- on alleged completion and finishing services. 5. The appellant receives bare structures of newly constructed commercial buildings with roof and floor from its clients and converts them into a modern commercial showrooms/ outlets. This work involves making useable floor, proper ceiling, internal walls a....
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....x on the basis of the actual value of the services rendered by deducting the total of the goods (which were 60.23%) treating the rest 38.73% as service. Therefore, there is no case for the Revenue to demand service tax on 70% of the value of the works contracts either way. The demand also cannot be sustained because it invokes the extended period of limitation under section 73 which is invokable only if the non-payment or short payment is by reason of fraud or collusion or willful mis-statement or suppression of fact with an intent to evade the payment of service tax. The appellant had been rendering service tax and regularly filing service tax returns. Therefore, all its activities were within the knowledge of the department and it cannot be alleged that the appellant had suppressed anything. Further, audits for the earlier period (2010-11 to 2014-15) were conducted on several dates and the Deputy Commissioner(Audit) had clearly held that the activities of the appellant were original works on which service tax had to be paid only on 40% of the contract price under Rule 2A(ii)(A) of the Valuation Rules. The present show cause notice is only issued because the subsequent audit team ....
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....act under this clause. (ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:- (A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract: PROVIDED that where the amount charged for works contract includes the value of goods as well as land or undivided share of land, the service tax shall be payable on twenty-five per cent. of the total amount charged for the works contract: PROVIDED that where the amount charged for works contract includes the value of goods as well as land or undivided share of land, the service tax shall be payable on thirty per cent. of the total amount charged for the works contract: PROVIDED FURTHER that in case of works contract for construction of residential units having carpet area up to 2000 square feet or where the amount charged per residential unit from service recipient is less than rupees one crore and the amoun....
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....they will be covered by 2A(ii)(A) of the Valuation Rules and will be entitled to 60% abatement. Service Tax has to be paid only on 40% of the value which the appellant did. We also note it is value taken by previous audit teams who audited the appellants work. Therefore, demand on this count cannot be sustained either on merits or on limitation. The amount payable under reverse charge mechanism -Rs. 19,51,873/- 11. Scrutiny of ST-3 returns showed that the appellant had paid service tax on the services which it had received from its sub-contractor after availing the abatement of 60% of the value of works contract services provided by the sub- contractor. It is undisputed that the nature of work provided by the sub-contractors was works contract services. It is also undisputed that the appellant had availed the entire amount of service tax so paid as CENVAT credit. The impugned order confirmed the service tax demand of Rs. 19,51,871/- in respect of services provided by the sub-contractors on the ground that the services provided by the sub-contractors were not in the nature of original works but was only in the nature of completion and finishing services. Therefore, as per Rule....
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....period of limitation. As far as the demand within normal period of limitation is concerned, we find it would be fruitless at this stage to remand the matter to compute service tax for the normal period of limitation because from 2017 the service tax has come to an end and CENVAT credit which was available to assessees was converted into tax credit under the GST. Any payment of service tax under reverse charged mechanism for a normal period of limitation would have to relate back to the time when the services were received and CENVAT credit would also have been available on the same date which would have reduced the service tax liability on the output services corresponding. 15. At this stage, when the CENVAT provisions under service tax are no longer in existence, it would be fruitless to exercise to go through all this paperwork because revenue will not be entitled to even a rupee of additional service tax. Every rupee the appellant will pay under reverse charge mechanism will necessarily will available to it as CENVAT credit and it would necessarily reduce a rupee as service tax on output services of the appellant. 16. We, therefore, find that the demand on this count needs....
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.... the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation 2. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. Explanation 3. - For the purposes of this sub-rule and sub-rule (3A),- (a) "non-exempted goods removed means the final products excluding exempted goods manufactured and cleared upto the place of removal; (b) "exempted goods removed means the exempted goods manufactured and cleared upto the place of removal; (c) "non-exempted services means the output services excluding exempted services." 19. The appellant does not dispute that it had not reversed the amount. His contention is that in view of the prescription in Explanation to rule 3 of the Cenvat Credit Rules, there is no need to reverse any cenvat credit under rule 6(3) on common input services. The Principal Commissioner has considered the use of the goods in the execution of works contract as trading and, therefore, exempted service. Accordingly, he has asked Rs.70,224 to be reversed on common input se....
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....ce tax short paid (Rs.) Advance from Customer 1640399 - - - - Manufactures Goods 186974340 - - - - Traded Goods 326538743 322703746 322638948 64799 6804 Sale of Services 449250 10508681 10503362 5319 798 Scrap Sale 9000 - - - - Excise Duty 20774927 - - - - Interest on Bank Deposits 4552110 - - - - Interest on Others 164921 - - - - Profit on sale of assets 334531 - - - - Other non operating income 3011 - - - - Total 499891378 333212427 333142310 70118 7602 Reconcillation of balance sheet and ST-3 Returns for the financial year 2017-18 (April-June) Head Amount as per Balance Sheet Taxable (as per revenue ledgers) Amount shown in ST-3 Return Diff. Advance from customer - - - - - Manufactures Goods 28365588 - - - - Sale GC (in relation to Works Contract Service) 94030250 94030250 93991692 38558 4049 Stock Transfer-sale CG 558313 - - - - Revenue Services (installation charges) &....