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2025 (2) TMI 1498
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....l Accounts, Ledgers, Invoices, Contracts and S.T.-3 Returns were scrutinized by the Audit Officers. 2.1. During the course of audit, the Audit Officers observed that the appellant has not paid appropriate service tax on various services rendered by them. Accordingly, a Show Cause Notice dated 20.04.2015 was issued to the appellant demanding Service Tax under various categories of services. 3. The said Notice was adjudicated by the Ld. Commissioner, Service Tax Audit Commissionerate, Kolkata vide the Order-in-Original No. 21/COMMR/STA/KOL/16 dated 07.03.2017 (hereinafter referred to as the "impugned order") wherein the Ld. Commissioner has confirmed the following demands against the appellant: - "A. (i) I confirm the demand of Service Tax of Rs 3,65,07,819/- (including Cess) Rs 1,74,472/-(including Cess) and Rs 74,787/(including Cess), grand totalling Rs. 3,67,57,078/- (Rupees Three Crore Sixty Seven Lakh Fifty Seven Thousand Seventy Eight) only, against the Noticee under Section 73(2) of the Finance Act, 1994. (ii) I order for payment of interest at the rate as specified in Section 75 of Finance Act 1994 as amended from time to time on the tax amount indicat....
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....ty) only, against the Noticee under Section 78 of Finance Act, 1994. F. (i) I confirm the demand of late fine amounting to Rs. 20,100/-(Rupees Twenty Thousand One Hundred) only, against the Noticee under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994. G. (i) I Impose a penalty of Rs.10,000/- (Rupees Ten Thousand) only, against the Noticee under Section 77 of the Finance Act, 1994." 3.1. Aggrieved by the confirmation of the above demands, along with interest, and imposition of penalty, the appellant has filed this appeal. The appellant contested the demands on merit as well as on limitation. Erection, Commissioning and Installation Service: 3.2. In respect of the demand of Service Tax confirmed under the category of 'erection, commissioning and installation service', it is the submission of the appellant that they have provided the said services as a sub-contractor of M/s. Alstom India Ltd., who were engaged by M/s. Vedanta Aluminium situated in an SEZ, Jharsuguda. The appellant submits that they have rendered the said services within the SEZ area, which are exempted from payment of service tax; however, the ld. adjudi....
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.... acetylene gas, etc. Accordingly, the appellant contends that these services rendered by them, which include materials, are rightly covered under the category of 'works contract service' and they have rightly paid Service Tax on 50% of the value of services. Hence, the appellant submits that the demand raised on the 100% of the value from them is not sustainable in law. Manpower Recruitment and Supply Agency Service; and Supply of Tangible Good Service: 3.3. Regarding the demands of Service Tax under the categories of 'manpower recruitment and supply agency service' and 'supply of tangible goods service', the appellant contends that during the impugned period, they had rendered these services to M/s. Alstom India Ltd.in the SEZ area.; demand of Rs. 74,787/- along with interest has been confirmed under the category of 'manpower recruitment and supply agency service'. In this regard, the appellant cited the contracts and contended that in the contracts, it is categorically mentioned that they are liable to supply manpower to the said project. Regarding the demand of service on supply of tangible goods service, the appellant submits that they have given Gensets on hire t....
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....ENVAT Credit which is otherwise eligible to them cannot be denied on procedural infirmities and the appellant prayed for allowing the credit totally amounting to Rs.9,87,523/-. Service Tax demand on Miscellaneous Receipts 3.6. The appellant submits that in the FY 2009-10, they have received Rs. 1,89,786/- as 'refund of earlier recoveries after close of jobs' and in the FY 2010-11 they have received Rs. 1,64,978/- as 'expenses towards additional labour charges related to primary work' and also received Rs. 58,938/- as 'refund of house-keeping expenses'. All these recoveries were received in connection with their primary work of Erection Commissioning & Installation Service. In the year 2012-13, there is another receipt of Rs. 39,125/- under 'refund of crane hiring charge' on which service tax of Rs. 4,836/- has been demanded. In total, service tax (along with cess) amounting to Rs. 47,447/- has been confirmed in the impugned order. The appellant submits, that these demands are not sustainable as they are related to the service of 'erection commissioning and installation service rendered to SEZ. Hence, separate demand raised as 'Miscellaneous receipts' is not sustai....
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....Final Order No. 59511-59720 of 2024 dated 25.11.2024 in Excise Appeal No. 52178 of 2022 &ors. - CESTAT, New Delhi] and contended that the impugned order passed is without the authority of law. The appellant also cited the decision of the Hon'ble Delhi High Court in the case of M/s.VOS Technologies India Pvt. Ltd. Vs The Principal Additional Director General & ors. in W.P.(C) No. 4831 of 2021 dated 10th December, 2024 [Del.-HC] wherein the Hon'ble High Court has set aside the order on the ground of inordinate delay in completion of the adjudication proceedings. Hence, the appellant submits that on this count also the demand confirmed in the impugned order is not sustainable. 4. The Ld. Authorized Representative of the Revenue reiterated the findings of the adjudicating authority in the impugned order. Regarding the contention of the appellant that the adjudication order was not passed within the statutory time-limit prescribed, the Ld. Departmental Representative submits that the same Tribunal has been taking contrary views on the very same subject. He has cited the decision of the Tribunal, Delhi in the case of M/s. Citicorp Finance India Ltd. v. Commissioner of Service ....
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....ailable to the main contractor is equally applicable to the sub-contractor also when the services are rendered by the sub-contractor within the SEZ. 6.2. In this regard, we observe that the appellant has cited the decisions in the cases of M/s. Randhawa Construction v. Commissioner of Central Excise and Service Tax, Vadodara-I [(2024) 18 Centax 276 (Tri. - Ahmd.)] and M/s. Anjani Excavation Operation v. Commissioner of Central Excise and Service Tax, Bharuch [(2024) 21 Centax 344 (tri. - Ahmd.)]. We find that the decisions cited above are squarely applicable to the present case. In the case of M/s. Randhawa Construction (supra), the Tribunal at Ahmedabad has observed as under: - "4. Having heard both the sides, we find that only question which needs to be answered by us is whether the appellant being a subcontractor to the main contractor M/s. Samsung Engineering Company Limited which was appointed for rendering certain services to M/s. ONGC, located at SEZ Dahej, is entitled for the benefit of Notification No. 9/2009-ST dated 03.03.2009 as amended by various notifications being a subcontractor. Before proceeding further in the matter it will be relevant to reproduce he....
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....und that when the service has been provided by a subcontractor to the contractor of the SEZ Unit, the subcontractor will not be entitled to benefit of notification even though services have been provided to a SEZ unit. 5. We are of the view that since the services rendered to a SEZ unit on behalf of a Contractor who has formally been authorised by SEZ Unit for providing certain goods and services to them, irrespective whether the services directly provided by the main contractor or the main contractor has appointed a subcontractor makes no difference since the service has been rendered to SEZ Unit, the benefit of exemption notification is available to the appellant. While holding the above view, we take note of this Tribunal's decision in the case of M/s. Shyam Engineers Final Order No.12201/2023 dated 07.08.2023. The relevant extract of the same is reproduced below:- "5. We have carefully considered the submissions made by both the sides and perused the record. We find that Revenue has denied the exemption on payment of service tax under Notification No. 09/2009-ST only for the reason that the appellant being a subcontractor, have not provided service directly to....
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....r exemption Notification No. 04/2004-ST dated 31.03.2004. This issue is no longer res-integra as the same has been decided in various decision of the Tribunal cited by the learned counsel. Some of the judgments are reproduced below:- Commissioner of Service Tax, Mumbai -I Vs. M/s. FEDCO Paints and Contracts - 2017 (3) GSTL 364 (Tri. Mumbai) "5. After hearing both the sides, we find that the main ground of the appeal of the Revenue is that the respondent had never provided services directly to the SEZ unit but was contracted as a sub-contractor to provide services to a unit in SEZ. Hence, the benefit of Notification No. 4/2004-S.T. is not applicable. It is undisputed that during the period 1-4-2005 to 31-3-2009 the respondent had rendered various services to the unit situated in SEZ and being developed by the SEZ developer. It is also undisputed that appellant was a sub-contractor. On this factual matrix, we have to now consider the Notification No. 4/2004-S.T. which reads as under : "Service tax exemption to services provided to a Developer or units of Special Economic Zone - Notification No. 17/2002-S.T. superseded In exercise of the powers conf....
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....n exempts any taxable service provided by any service provider for consumption of the service within a Special Economic Zone, subject to following/adhering to the conditions. It is also undisputed that all the conditions mentioned in the notifications are satisfied by the SEZ developer i.e. M/s. Reliance Industries Ltd. On the face of such factual matrix, we find that the adjudicating authority was correct in coming to the conclusion that the proceedings initiated by show cause notice issued needs to be dropped. We also find as regards taxability of the service rendered to the SEZ developer was in dispute before this Tribunal in the case of Sujana Metal Products Ltd. v. Commissioner of Central Excise - 2011 (273) E.L.T. 112 (Tri.-Bang.) and this Tribunal came to a conclusion that where the services are rendered to SEZ or a unit in SEZ, as long as it is rendered for consumption in a Special Economic Zone, the services are exempt. We also note that the provisions of Section 26 of the Special Economic Zone overrides provisions of other law and exempts any services or taxes if the same are consumed in Special Economic Zone. 7. In view of the foregoing and the authoritative jud....
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....out any merits and therefore we set-aside the same. The appeal is allowed." 6.3. We find that the appellant has utilized various consumables while executing the services of erection, commissioning and installation. The value of such consumables used in providing the service has been included in the gross value of services rendered by the appellant and the demand confirmed in the impugned order. However, we observe that these consumables were also used in connection with the services provided in the SEZ area. Accordingly, we hold that no Service Tax is leviable on account of inclusion of the value of consumables, used in providing the service within the SEZ area. 6.4. Regarding the demand of Service Tax for the services provided by the appellant to M/s. Tata Projects Ltd., it is seen that the appellant have already paid Service Tax on 50% of the value, by treating the service rendered as a 'works contract service'. However, the Department has considered this service as 'erection, commissioning and installation service' and contends that the appellant is liable to pay Service Tax on 100% of the value of services rendered. In this regard, we find that the appellant has placed a ....
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....interest on advances, we find that the advances were received during the period 2009-10 (October to March) to 2012-13. The last advance payment was received on 31.03.2013. They have adjusted this advance and subsequently paid Service Tax. Therefore, there is no loss of revenue to the Government exchequer. We do not agree with the submission of the appellant. The appellant is liable to pay service tax on the advances immediately subsequent to the month in which the advance was received. Thus, the appellant is liable to pay interest for the delay in payment of service tax on the advances received. However, we observe that the appellant has not contested this issue on merits. They contested this issue only on limitation. We find that the demand under this category pertains to the period prior to 31.03.2013 and the Show Cause Notice was issued on 20.04.2015 which is beyond the normal period of limitation. As the appellant has not suppressed any information from the Department, we hold that the demand under this category is not sustainable on the ground of limitation. 8.1. Regarding the demand of Service Tax on advances received (pending advance) of Rs.7,88,890/-, the appellant has p....
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.... hire charges, etc., which are required for completion of the project and therefore the same are input services, which renders the appellant eligible to avail the credit. However, due to clerical error they have mentioned the CENVAT Credit availed in the 'inputs' column. We observe that the CENVAT Credit which is otherwise eligible to the appellant cannot be denied on procedural infirmities and accordingly, we hold that the appellant cannot be denied the credit totally amounting to Rs.9,87,523/-. Since there is no dispute regarding receipt and utilization of the services and payment of service tax on the input service, we hold that this credit availed cannot be denied to the appellant. 9.2. Since the demands confirmed in the impugned order are not sustained, we hold that the demands of interest and penalties confirmed in the impugned order are not sustainable and accordingly, we set aside the same. 9.3. Regarding the late fine of Rs. 20,100/- charged for delayed filing of return and penalty has been imposed under Section 77 of the Finance Act, 1994, we observe that the appellant has disputed this demand only on the ground of limitation and inordinate delay in adjudication. ....
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.... the inevitable conclusion that the impugned order would have to be set aside only for the reason that the adjudication was not completed within the time limit prescribed under sub-section (11) of section 11A of the Central Excise Act." 10.2. Thus, by relying on the decisions cited supra, we hold that the demands confirmed in the impugned order are liable to be set aside as the Show Cause Notice has been adjudicated in a delayed manner and the impugned order has not been passed within the time frame prescribed under the statutory provisions. 11. In the result, we hold that the demand is not sustainable on merits as well as on account of the inordinate delay in completion of the adjudication proceedings in terms of the decision in the case of M/s. Kopertek Metals Pvt. Ltd. (supra). 12. In view of the above discussions, the impugned order is set aside and the appeal filed by the appellant is allowed with consequential relief, if any, as per law. (Order pronounced in the open court on 18.02.2025) ============= Document 1 TATA Work Order No. WO Date Amendment No. Amendment Date SiBU - M & M / Insti 1x4060 Blast Furnace RSP / 116 09-DEC-10 Name of the Contracto....
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....also inclusive of all consumables lika welding electrodes, Oxy / Acetylene / Industrial gas, The Scope excludes the supply of al materials, cranes with consumables, hydra with consumables, and trallor for shifting of materials, welding machines, major tools, bed materials, scaffolding and civil job, During peak hours of erection contractor will deploy approximately 80 workmen per day. Site will be mobilized with tools and tackles like welding cables, Gas cutting sets, Grinding machines, Filter tools, welder tools etc Supervision of Erection and Commissioning: Under scope of Contractor, During peak hours of erection contractor will.deploy approximately 60 workmen per day. Site will be mobilized with tools and tackles like welding cables, Gas cutting sets, Grinding machines, Filter tools, welder tools etc Accommodation / Transportation of workmen Is under scope of contractor Contractor shall deploy requisite manpower to equipment supplier during commissioning of equipment this Work Order. Unit Rato an Integral part of Quantity annexures, form UOM to be read along with attached Description specified hereunder and Item Datalla As Per Annexure-1 ....