TaxTMI 
TaxTMI 
2025 (8) TMI 498
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....in providing certain services to M/s Andhra Pradesh Mineral Development Corporation (APMDC) in relation to excavation and removal of overburden and barytes ore. This was in terms of agreement dated 04.07.2008 executed with M/s Andhra Pradesh Mineral Development Corporation (APMDC). 3. The appellant had further sub-contracted the entire work in terms of said agreement on back to back basis to one M/s Vijay Leasing Company (now known as M/s Vijay Mining & Infra Corp Pvt Ltd) (VMICPL) and based on the work carried out by the latter, payments were being made by M/s APMDC to the appellant and on receipt of the said payment, the said amount was being passed on to the sub-contractor M/s VMICPL after retaining the agreed upon commission. 4. The adjudicating authority confirmed the demand insofar as providing of mining services to M/s APMDC is concerned. As far as demand for the irregular availment of Cenvat credit is concerned, the same was also confirmed. The adjudicating authority has also upheld the invocation of extended period and imposed penalty. 5. Learned Advocate for the appellant has submitted that as far as the issue of demand relating to mining service is concerned, th....
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....s paid by them to the Government. He has relied on the judgment in the case of Arise India Ltd [2018 (10) GSTL 182] in relation to VAT provisions by Hon'ble Delhi High Court, wherein, it has been held that buyer is not expected to keep track of whether the selling dealer has in fact deposited the tax so collected or has been lawfully adjusted. Further, Hon'ble Supreme Court in the case of Assistant Commissioner of State Tax Vs Suncraft Energy Pvt Ltd [2023 (13) CENTAX 189 (SC)], has upheld the judgments passed by the Hon'ble Calcutta High Court holding that denial of credit due to supplier's default as unconstitutional, especially, when there is no collusion, missing supplier, or lack of assets, etc. He is also relying on the fact that Department was treating non-payment of service tax by supplier of service i.e., VMICPL as default and have already collected about Rs. 2.47 crores short paid and also attached the movable properties of VMICPL towards recovery of remaining paid service tax. 7. Learned AR for the department has reiterated the findings of the adjudicating authority in the impugned order. 8. Heard both sides and perused the records. 9. Insofar as the issue of no....
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....(supra) is distinguished on the fact as the issue which was being considered by the Tribunal was whether the mining services could be considered as services or the said services were towards production/manufacture of excisable goods of iron ore which was specified under Chapter 26. In view of nature of contract, it was observed that the activity carried out was that of mining of iron ore and not manufacture thereof. Whereas, as discussed supra, here the mining of ore is being treated as production of ore and the term 'production' is also covered within the purview of section 2(f) of the Central Excise Act apart from 'manufacture' and the same term has been used in the negative list and therefore, applying the ratio of Sesa Goa Ltd (supra), the said activity would tantamount to production of ore. Therefore, we find that on merit, no service tax can be levied on the amount received towards extraction of baryte ore. Since on merit itself there is no chargeability of service tax, we are not independently examining the issue on limitation for this demand." 10. Further, in this case, it is obvious that whatever activities were being carried out by the sub-contractor, he was raising bi....
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.... extract was not available. Therefore, veracity of said invoices could not be verified. Similarly, invoice wise data in respect of 7 invoices from Sl.No.10/15.02.2013 to 12/31.03.2013 and 01/15.05.2013 to 03/15.07.2013 also could not be verified, as the same were also not available on their record and that M/s VMICPL had not provided ledger extract to the appellant. It was also pointed out that for the period 01.01.2013 to 31.03.2016 M/s VMICPL had filed 'nil' ST-3 returns. The adjudicating authority also relied on the observation of the Commissioner in his Order dt.24.10.2016, to the effect that M/s VMICPL had not paid service tax and also filed Nil ST3 returns for the period from 2011-12 onwards, had filed VCES declaration bearing No. 1819/2013 dt.31.12.2013. 14. Therefore, the adjudicating authority felt that credit cannot be allowed based on Cenvat ledger maintained by them, which is not a prescribed document and also held that the appellant did not produce these invoices raised by M/s VMICPL to the investigating agency, whereas, it is only after investigation and during the course of adjudication proceedings, the appellants have produced the said invoices raised by M/s VMIC....
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.... the ST3 returns regarding their having taken credit against said invoices and that in terms of Rule 9(6), the burden of proof regarding admissibility of credit is upon the manufacturer or provider of output service taking such credit. 16. Therefore, essentially, in this case, there is an allegation that appellant have taken credit despite the followings: a) Sub-contractor M/s VMICPL had not paid service tax and filed Nil ST3 returns during the relevant period. b) Documents i.e., invoices submitted by the appellant were found to be of doubtful nature in view of the fact that no service tax was apparently paid by M/s VMICPL and on verification by the the concerned agency, it was reported that there was no breakup of mining charges and service tax payable thereon separately in their books of accounts and therefore, it was difficult to say whether service tax was reflected separately or paid separately or otherwise. c) That the copies of invoices were not submitted to the Anti-Evasion wing of the Commissionerate or DGGSTI by the appellant prior to adjudication proceedings. 17. Admittedly, certain invoices were produced before the adjudicating authority....
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....pellant. This is clear from ST-3 returns filed during the relevant period. Therefore, on one hand, they were taking credit of service tax paid to M/s VMICPL and on the other hand, the same was being utilized for payment of service tax by them on output service to M/s APMDC. It is also obvious that value for discharging service tax is higher for the appellant as compared to VMICPL, as 10% was deducted from the amount recovered from APMDC while making payment to VMICPL. Thus, the appellants, overall, have paid more service tax on output service than the credit taken on input service. It is also to be noted that both the activities were same i.e., mining services, which was considered as taxable service by the department during material period but ultimately held to be not liable to pay any service tax as discussed, supra, while dealing with the issue of service tax on said activities. Therefore, essentially, no service tax was liable to be paid either by M/s VMICPL or by the appellant on their activities relating to mining of barytes ore during the relevant period. However, as there was some dispute going on as regards its leviability under the Finance Act or otherwise, if a consolid....
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....of VMICPL, to the extent that service tax was not being paid as it was not leviable on such excavation. In fact, the Investigating Agency, which investigated this matter resulting into issuance of show cause notice, asked the adjudicating authority to get the genuinity of the invoices verified from the Jurisdictional Commissionerate. The Jurisdictional Commissionerate reported that they were not having invoice wise data or party wise ledger so as to verify the veracity of invoices. Essentially, the reason why the bonafide of the invoices on the strength of which the appellant had taken the credit has been doubted is the inability of the concerned agencies to corroborate and to come to a definite conclusion whether service tax component was also there in the consolidated payment made to VMICPL or otherwise. It is further an admitted fact that the consolidated payments were made for the services received. We find that in the absence of any concrete evidence that these invoices were of fabricated nature or bogus and also the fact that taking of consolidated credit was duly reflected in the ST-3 during the relevant period itself, the bonafide of the invoices, per se, cannot be doubted.....
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....ut by them. Moreover, even during the material time, the Department had already collected close to Rs. 2.47 crores of service tax not paid by VMICPL and had also attached certain properties for recovery of remaining amount. Therefore, essentially it was a case where M/s VMICPL had collected the service tax from the appellant and not paid the same during the material time on the services provided, which ultimately held to be not payable at all. The Department was required to recover the said amount, if at all, from M/s VMICPL and for default in payment of the same, the Department could not have forced the appellant to reverse the credit or to pay an amount equivalent in case the same has already been utilized. We find force in the judgments relied upon by the appellant, supra, in support that they are not debarred from taking the credit and utilizing the same as long as the bonafide nature of consignee's transaction is not in dispute. In this case, the consolidated payment by the appellant to VMICPL is not in dispute. They have also reflected two separate components in their books of accounts. Had there been some doubt about veracity of ledger or books of account, the department cou....
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....ken the credit as an admission of guilt and malafide intent despite this knowledge, the appellant had taken credit. We find that there was no legal bar by the appellant in taking the credit when they were otherwise paying the service tax component also for the services received irrespective of the fact that the provider had not actually paid the said service tax to the Government. Moreover, we note that as per Rule 4(7) of Cenvat Credit Rules 2004, providing for certain conditions for allowing Cenvat Credit, inter alia, requires that input service credit shall be allowed only after such service tax is paid. Therefore, in other words, the credit can be taken only once the service tax payable thereon has been actually discharged. We, however, note that this restrictive provision was brought w.e.f. 01.03.2015 and there was no such statutory provision which restricted taking of the credit of input service in a situation where service tax was not paid by the supplier of output service during the relevant time. Thus, on this ground also non- payment of service tax cannot be a ground for debarring the appellant from taking the credit, as such. 25. There is another aspect in this case. ....
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....d as such. In that event, as per Rule 3(5) of Cenvat Credit Rules, 2004 the appellants are required to pay duty equal to the credit taken thereon and the appellants have paid duty more than the credit availed. 11. The learned Advocate also relied on several case laws, wherein it was held that when duty paid at the time of clearance equal to or higher than the credit availed, the same is to be treated as reversal of credit. Therefore, no further reversal of credit is required as held by this Tribunal in the case of Repro India Ltd. (supra), Punjab Stainless Steel Industries (supra), Drish Shoes Ltd. (supra), SAIL (supra). In this case, it is admitted fact that the department has accepted duty paid by the appellants on their clearances and as per judicial pronouncement in the case of Ashok Enterprises (supra), Super Forgings (supra), SAIL (supra), M.P. Telelinks Ltd. (supra), Creative Enterprises (supra) which was upheld by the Hon'ble Apex Court that once duty on final products has been accepted by the department in the case, CENVAT credit cannot be denied even if the activity does not amount to manufacture." 26. We further find that this order was upheld by Hon'ble High....
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....ause notice was also issued for recovery of said defaulted amount. It was also pointed out that the issue whether their activity would be covered under service tax or otherwise was a subject matter of adjudication and finally it was held to be non-leviable to service tax. Therefore, the non- payment of service tax by M/s VMICPL, which is the main ground taken by the Adjudicating Authority for denying the credit and recovery thereof, cannot sustain and for the same reason, the invocation of extended period in the absence of any other positive and cogent evidence to suggest that it was with an intent to evade payment of tax would also not sustain. Moreover, non-payment of same by supplier cannot cast doubt on their intent when they have paid the full amount. We also note that it is not the case of the Department that the amount received by them, when the service tax was not considered as leviable by the appellant or for that matter by M/s VMICPL, was treated as amount received in the guise of service tax. Had it been so, the demand would have been raised against the appellant as well as M/s VMICPL under Section 73A and not under Section 73. We have also perused the statement of Shri ....