TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 305
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....e of the exempted services provided. In the same SCN, on the ground that the they have incurred foreign exchange towards import of service, they haver not paid the Service Tax on RCM basis Service Tax of Rs.4,90,476 was demanded.The appellants submitted that in respect of 'Erection and Commissioning services', where they have taken the abatement of 33%, they have not taken any cenvat credit. In respect of the common services utilized, they have already reversed the proportionate Cenvat Credit. After due process, the Adjudicating authority confirmed the demands along with interest and penalties. Being aggrieved by the impugned Order, the appellant is before the Tribunal. 2. The Ld Counsel, appearing for the appellant makes the following submissions: 2.1 During the material period the appellants have executed the following contracts :- (a) Cable Laying work for CESC (Taxable) (b) Pipe Laying for sewerage project executed at Imphal City, Manipur under the Executive Engineer, Drainage and Sewerage Division, PHED, Government of Manipur; (Exempted) (c) Construction of sewerage tunnels in Goa under Sewerage & Infrastructure Development Corporation of Goa L....
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.... 6% /5% reversal of proportionate credit of Rs.2,32,871/-. (i) Park Hospitals Vs. CST reported in 2025-VIL-223-CESTATKOL-ST (Para 9.2 and Para 9.3) (ii) Tuticorin Alkali Chemicals & Fertilizers Ltd. Vs. CCE reported in 2009(248) E.L.T 514 (Tri. Chennai) (Para 2) 2.8 The Appellant further submits that in any case if they have wrongly claimed CENVAT Credit, the such credit can be recovered under Rule 14 of the CENVAT Credit Rules, 2004 and they cannot be foisted with liability @ 6% /5% under Rule 6 of the CENVAT Credit Rules, 2004. Therefore, demand of @ 6% /5% of the exempted value instead of demanding CENVAT Credit is illegal and bad in law. The Appellant relies on the following judgments/ decisions:- (i) Tiara Advertising Vs. UOI reported in 2019 (30) G.S.T.L 474 (Telangana) (Para 15) (ii) M/s Texmaco Rail & Engineering ltd Vs. CGST & EX reported in 2021-VIL-626-CE-CESTAT-KOL-CE (Para 4 and 13) (iii) CCE Vs. Surya Vistacom Pvt. Ltd reported in 2022 (66) G.S.T.L 290 (Cal) (Para 13) 2.9 The Appellant most humbly submits that show cause notice in the instant case is issued on the basis of scrutiny of the books of accounts, returns et....
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....facts, we find that the appellant initially did not opt for reversal of the Cenvat Credit on proportionate basis. For this they have given the explanation that since the appellant was not required to be registered since they were Hospital and were providing the related services, they were not aware of the statutory provisions. Had they known the same, they would have ensured that they should take the cenvat credit only in respect of the taxable output services. After the Show Cause Notice was issued, on their own they have reversed Rs.25,02,361/-- [Rs.14,75,879 + Rs.10,26,482] along with applicable interest of Rs.6,71,531/- on 2nd September, 2013. This fact is also certified by their Chartered Accountant. We have gone through page 464 to 484 of the Appeal and find the claim of the appellant to be correct. We find that Tribunals and High Courts have been consistently holding that reversal of Cenvat Credit would amount nonavailment of the same and have also held that the demand of 6 to 8 percent of the value of the exempted services which is way above the proportionate credit to be reversed on account of exempted services, is legally not sustainable. 9.2 We have gone through....
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....n the case of ICON Pharma and Surgical (P) Ltd., 2000 (40) RLT 918. 25.The Tribunal again in a three Member Bench decision in the case of Tube Investment of India, Final Order No. 795/2002, wherein the specific issue was whether the reversal of credit subsequent to removal of goods, was fetal to the extension of benefits of the notification considered the matter at length. The majority decision upheld the argument of the assessee therein and held that reversal of credit subsequent to the clearance of exempted product is in line with the ratio of the Supreme Court judgment laid down in Chandrapur Magnet Wires Co. (supra). 31.In view of the above decision the writ petition is allowed and the demand of duty and penalty created by order dated 30-10-2001 and confirmed by the Tribunal is set aside. Any amount already deposited by the petitioner shall be refunded to the petitioner forthwith with interest at 10% per annum from the date of deposit to the date of refund, and this refund must be made within two months from today. The petitioner is also entitled for any consequential benefits. 2019 (30) G.S.T.L. 474 (Telangana) TIARA ADVERTISING Vs UNION OF ....
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.... the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. The Order-in-Original, to the extent that it proceeded on these lines, therefore cannot be countenanced. Tuticorin Alkali Chemicals & Fertilisers Ltd. Vs. CCE, Tirunelveli 2009 (248) E.L.T. 514 (Tri. - Chennai) 2. We have heard both sides. We find that the assessees reversed the credit taken on the input services used in non-dutiable goods subsequent to the clearance of such goods. They have also paid interest for the delay in reversal of the credit. In this circumstance, applying the ratio of the decision of the larger Bench of the Tribunal in Franco Italian Co. Pvt. Ltd. v. CCE - 2000 (120) E.L.T. 792 and the recent decision of the Tribunal in Mount Mettur Pharmaceuticals Ltd. vide Final Order No. 879/2008, dated 8-8-2008 [2009 (235) E.L.T. 664 (Tri.) = 2009 (13) S.T.R. 414 (Tri.)] and the Hon'ble Gujarat High Court in CCE v. Maize Products - 2009 (234) E.L.T. 431 (Guj.), the reversal of credit by the appellants subsequent to the clearance of the goods is as....
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.... In the cited High Court decision in the case of Hello Minerals, it has been held that reversal of cenvat credit would result in a situation of no cenvat credit being taken in the first place. In the Tiara decision, the Telangana High Court has gone one step further ahead holding that there is no statutory provision available to demand 6% / 8 %/ 10% in case the assessee does not fulfil the conditions of Rule 6 (3), it went on to hold that at the most the cenvat credit taken can be asked to be reversed. We also find that these decisions have been followed by the Chennai Tribunal and Kolkata Tribunal. Therefore, applying the ratio of these case laws, we hold that the confirmed demand of Rs. Rs.1,00,76,186/-, is legally not sustainable. Accordingly, we set aside the demand and allow the appeal to this extent. 17. Now we take up the issue of time-bar or otherwise of the Show Cause Notice which has been issued by invoking the extended period provisions. The Show Cause Notice has been issued on 19.04.2013 for the demand pertaining to October 2007 to April 2007. If see the demands, we find that the main demand is on account of 6% / 8 % Service Tax on the exempted services on the ....
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....has been brought in the SCN to the effect that they have indulged in any suppression with an intent to evade payment of Service Tax. We have held in similar circumstances, in the cited case of Park Hospitals that the extended period demand is legally not sustainable. Therefore, even in this case, we set that confirmed demand for the extended period, except for the demand in respect of foreign remittance RCM, which is not being contested by the appellant. 11. So far as the Service Tax demand of Rs.4,90,476/- on RCM basis is concerned, the appellant submits that they have paid the same on being pointed out and hence are not contesting the same. Since, the payment of Service Tax on RCM basis would also enable them to take the Cenvat Credit, we hold that this results in a revenue neutral situation. Hence, we set aside the penalty. In case the appellant has not paid the interest towards belated payment, the same is recoverable from them under Section 75 of the Finance Act 1994 12. The appeal stands allowed as per the above terms. The appellants would be eligible for consequential relief, if any, as per law. (Pronounced in the open court on...04.11.2025.) ============= Docum....