TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 9
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Services, Business Auxiliary Services, etc. During audit, certain irregularities were noticed and thereafter, proceedings were initiated. After issuing show-cause notice, adjudicating authority as per the common impugned order confirmed the demand and also imposed penalty for different period. Aggrieved by the said order, present appeals are filed. 3. When the appeal came up for hearing, the learned advocate for the appellant drew our attention to the details of demand as per the following chart. Sl. No. Issues Involved Amount of Service Tax/Cenvat Credit involved (In Rs.) Total Period of dispute Oct. 2010 to March 2013 April 2013 to March 2014 April 2014 to March 2015 1 Irregular availment of cenvat credit of on the service portion in the execution of works contract and construction services 61,12,955 9,14,918 0 70,27,873 2 Non-payment of service tax of on lease rental income; 6,61,957 0 0 6,61,957 3 Non-reversal of cenvat credit of as per Rule 6(3) of the Cenvat Credit Rules (CCR), 2004 89,89,129 52,24,195 57,86,329 1,99,99,653 4 irregular availment of abatement with respect to repair and ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elationship in such transaction, there is no service rendered by one unit to another unit and demand is unsustainable. 5. As regarding the third issue of non-reversal of cenvat credit as per Rule 6(3) of the Cenvat Credit Rules, 2004, the learned counsel submitted that the valuation adopted in terms of Rule 2A of the Valuation Rule is not covered under the purview of 'Exempted Service' and thus, no reversal is required under Rule 6 of the Cenvat Credit Rules. The learned counsel submitted that the adjudicating authority while considering the issue regarding eligibility of availment of cenvat credit by the appellant on the service portion in the exclusion 'works contract', construction services has not been considered the above said amendment and concluded that Wind Turbines are capital goods and the input services are directly linked to laying of foundation of capital goods and thereafter, further concluded that service relating to construction of civil structure will not be considered as an input service unless it is provided by subcontractor to the main contractor. Since the service rendered by the appellant does not fall under the category of 'specified service' and this clarif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r maintenance or repair or conditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent of the total amount charged for the works contract; (C) in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property, service tax shall be payable on sixty percent of the total amount charged for the works contract." However, the adjudication authority as per the impugned order held that: "It can be seen that erstwhile Rule 2A(ii)(C) of Service Tax (Determination of Value) Rules, 2006, will apply only when the case of other work contract, not covered under sub-clauses (A) and (B). In the instant case, the assessee are providing "Maintenance and Repair Service" of wind turbines for various customers. It will get covered under erstwhile Rule 2A(ii)(B) of Service Tax (Determination of Value) Rules, 2006, wherein it is emphasized that in case of works contracts entered into for maintenance or repair or reconditioning or restoration or servicing of any goods. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... them but for the customer is unsustainable, since the Rule does not consider the ownership of the goods. Thus, once it is found that the appellant had claimed ineligible cenvat credit, it is considered as deemed irregular and recoverable under Rule 14 of CCR, 2004. 9.1 As regarding taxability of service tax on lease rental income, he submitted that the said demand was confirmed based on the records maintained by the appellant and appellant failed to provide sufficient evidence to prove that the divisions were part of same legal entity. 9.2 As regarding non-payment of service tax on maintenance and repair charges, he submitted that appellant had availed abatement of 40% and 60% on repairs and maintenance and repair service, and considering the abatement as exempted service, the appellant was required to pay 6% of the value of the exempted portion under Rule 6(3) of CCR, 2004. Thus, the adjudicating authority rightly confirmed the demand based on 6% of the value of the exempted portion. As regarding irregular availment of abatement for maintenance and repair service, learned AR submitted that the correct abatement should be 30% under Rule 2A(ii)(B) and not 40% as availed by the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for - (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or] From 01.03.2011 it was amended as follows: '(l) "input service" means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rent is received from the associated enterprise. The associated enterprises is benefiting with respect to the space. This arrangement would, therefore, fall under the category of sharing of expense. In this connection reference can be made to the decision of the Supreme Court in Gujarat State Fertilizers & Chemicals Ltd. v. Commissioner of C. Ex. 2016 (45) S.T.R. 489/[2016] 76 taxmann.com 357/59 GST 240 (S.C.). In M/s. Historic Resort Hotels (Pvt.) Ltd. v. CCE, Jaipur-II 2017 (9) TMI 1066-CESTAT New Delhi = 2018 (9) G.S.T.L. 422 (Tri.) a division of the Tribunal also held that sharing of expenditure cannot be treated as service rendered by one to another." Following the ratio of the above decision, service tax demand on lease rental income is set aside. 14. With regard to the third issue of non-reversal of cenvat credit of Rs.1,99,99,653/- as per Rule 6(3) of the Cenvat Credit Rules (CCR), 2004; we find that the issue is squarely covered by the CBIC Circular No.213/3/2019-ST dated 05.07.2019. where the specific question (2) and (3) are answered as below: "2.0 Issue : Is reversal under rule 6(3) of the Cenvat Credit Rules, 2004 additionally required for all the services specifie....