TaxTMI 
TaxTMI 
2026 (9) TMI 189
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.... amount under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 as discussed supra. (III) I impose a penalty of Rs. 2,06,11,174/- (Rupees Two Crores Six Lakhs Eleven Thousand and One Hundred Seventy Four only) upon the party, under Rule (15)(3) of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 for the aforesaid contraventions as discussed supra. (IV) I impose penalty of Rs. 10,000/- (Rupees Ten Thousand only) upon the party under Section 77 of the Finance Act, 1994 as discussed supra. The dues adjudged above shall be paid forthwith. 2.1 Appellant are registered with service tax vide Centralized Registration No. AAACH1645PST002 for providing output services namely Information and Data Access / Retrieval", "Commercial Training & Coaching Centre, Management", "Maintenance or Repair Service", "Business Support Service" and "Business Auxiliary Service", as defined under erstwhile Section 65(105) (zh), (zzc). (zzg). (zzzq) and (zzb) of the Finance Act, 1994 (hereinafter referred to as the Act). They are availing the facility of Cenvat credit in respect of input services used for providing output ser....
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....d of audit objection of Rs.93,75,625/-. (b) For Para No. 2 They have taken the Cenvat Credit of Rs. 1,12,35,549/- on account of maintenance, repair, modernization of the existing premises and not on setting of any new office or structure of the office and under the cenvat credit rules, cenvat credit of service tax paid on account of repair. maintenance etc is eligible. 2.4 On conclusion of enquiries and investigations, department was of the view that appellant has wrongly availed CENVAT credit of Rs.2,06,11,174/- (Rs.93,75,625/-+1,12,35,549/-) under Rule 2 & 3 of Cenvat Credit Rules, 2004 read with section 69 of the Finance Act, 1994 and the same is liable to be disallowed and recovered from them along with interest under Rule 14 of CENVAT Credit Rules, 2004. 2.5 Further it was noticed that appellant has not shown any sanctity to the statutory provisions and they have proceeded in a manner defiant to the rule of law and vehemently worked in a prejudicial way in as much as they ➢ out-rightly negated the procedure for adding the branches in their Centralized registration in terms of Notification No. 11/2008-ST Dated 1/3/2008 w.e.f. 1/4/2008 issued for A....
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....Mohan, Authorized Representative for the revenue on 28.07.2026. After conclusion of hearing following order was made Order Sheet Heard both the sides. Order Reserved. Both the sides at liberty to file written submissions within one week. Appellant has filed additional submissions which has been taken on record. Revenue has not filed any submissions. 3.2 Arguing for the appellant learned counsel submits: ➢ Credit availed in respect of unregistered premises. Issue is no longer res-integra and it has been constantly held that CENVAT Credit is admissible even in respect of the services which are received at the unregistered premises. Reliance is placed on the following decisions: ○ Samsung India Electronics Pvt. Ltd. [2017 (52) STR 497 (T-All)] affirmed by Hon'ble Allahabad High Court as reported at [2017 (52) STR J253 (ALL)] ○ HCL Technologies [Final Order No 70912/2024 dated 28.08.2024 in Service Tax Appeal No 70985/2018] ○ Samsung India Electronics Pvt. Ltd. [Order dated 17.07.2017 of Hon'ble Allahabad High Court in Central Excise Appeal No 85-87/2017] ○ MPortal India Wireless Solution P Ltd. [2012 (27) S....
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....r has travelled beyond the show cause notice. ➢ Interest is not payable as the appellant has rightly availed the credit. ➢ Penalty is not imposable. In the written submissions filed subsequent to the hearing appellant has only re-stated what has been submitted during the course 3.3 Authorized Representative re-iterated the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 The issues involved in the present appeal can be grouped in following categories: a. Whether the credit availed by the appellant in respect of the services availed in respect of the unregistered premises could have been denied. b. Whether credit availed by the appellant in respect of the work contract services would be admissible to the appellant. c. Whether extended period of limitation could be invoked for making this demand as per proviso to Section 73 (1) of the Finance Act, 1994. d. Whether interest under Section 75 is demandable from the appellant. e. Whether penalty under Section 77 or 78 of the Finance Act....
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....and, inter alia, contends that the services received in the case are in relation to modernization, repairs, renovation etc of its office premises which are specifically mentioned in the inclusion-clause of the definition of input services. The party has also provided copies of some invoices on sample basis to support their contention. In this regard, I find that the definition of input services was amended with effect from 01.04.2011 vide Notification No. 03/2011 CE (NT) dated 01.03.2011. With effect from 01.07.2012 vide Notification No. 28/2012 CE (NT) dated 20.06.2012, the definition of input services was again amended. The definition after the respective amendments read as under, Rule 2(I) (w.e.f 01.04.2011 to 30.06.2012) "input service" means any service,- (0) used by a provider of output service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an ....
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....office relating to such factory or premises, advertisement or sales promotion, market research, storage up to 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, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal but excludes,- (A) service portion in the execution of a works contract and construction services including service listed under 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 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 (B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods, or (BA) service of general insurance business, servicing, repair and maintenance, ....
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....ed under means and inclusion clause of the definition is not acceptable as such services have been excluded from the definition of eligible input services, even if such services have been used for the provision of taxable output services. Further, on examination of the sample invoice produced by the party I see no ground to conclude that the services received did not fall in the exclusion clause as provided under Rule 2(1) of the CENVAT Credit Rules, 2004. 5.3.3. I observe that the party has placed reliance upon various case laws in support of their contentions wherein services of repair, renovation and modernization of the premises were held to be an input service in terms of Rule 2(1) of the CENVAT Credit Rules, 2004 and the credit was duly allowed: Commissioner Vs Exide Industries Limited, 2016(43) STR463 (Tri-Del and Pr. Commr. Of Central Tax and C. Ex. Raipur Vs Jindal Steel and Power Ltd 2019 (2) TMI 1732. In the case of Exide Industries, Hon'ble Tribunal Delhi has also hold that the Construction of a factory is excluded from the definition of input service. In the instant case, the party has availed the CENVAT credit on the construction/setting up of BP....
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.... the contracts of the respondents have been held by the learned Judges of the Court below to be. The several forms which such kinds of contracts can assume are set out in Hudson on Building Contracts, at p. 165. It is possible that the parties might enter into distinct and separate contracts, one for the transfer of materials for money consideration, and the other for payment of remuneration for services and for work done. In such a case, there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agreement to sell, from the agreement to do work and render service and to impose a tax thereon cannot be questioned, and will stand untouched by the present judgment." (at page 427) 18. Similarly, in Kone Elevator India (P) Ltd. v. State of T.N. - (2014) 7 SCC 1 = 2014 (34) S.T.R. 641 (S.C.) = 2014 (304) E.L.T. 3 (S.C.), this Court held :- "Coming to the stand and stance of the State of Haryana, as put forth by Mr. Mishra, the same suffers from two basic fallacies, first, the supply and installation of lift treating it as a contract for sale on the basis of the overwhelming component test, because there....
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....or a contract for works and satisfies the primary description of works contract. Once the characteristics or elements of works contract are satisfied in a contract then irrespective of additional obligations, such contract would be covered by the term "works contract". Nothing in Article 366(29A)(b) limits the term "works contract" to contract for labour and service only. The learned Advocate General for Maharashtra was right in his submission that the term "works contract" cannot be confined to a contract to provide labour and services but is a contract for undertaking or bringing into existence some "works". We are also in agreement with the submission of Mr. K.N. Bhat that the term "works contract" in Article 366(29-A)(b) takes within its fold all genre of works contract and is not restricted to one specie of contract to provide for labour and services alone. Parliament had all genre of works contract in view when clause (29-A) was inserted in Article 366." (at para 72) 20. We also find that the assessees' argument that there is no charge to tax of works contracts in the Finance Act, 1994 is correct in view of what has been stated above. 21. This Court in Mathu....
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....12 and 16) 22. Equally, this Court in Govind Saran Ganga Saran v. CST, 1985 Supp SCC 205, held :- "The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity." (at para 6) 23. To similar effect is this Court's judgment in CIT v. B.C. Srinivasa Setty, (1981) 2 SCC 460, held :- "Section 45 charges the profits or gains arising from the transfer of a capital asset to income tax. The asset must be one which falls within the contemplation of the section. It must bear that quality which brings Section 45 into p....
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....tracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract. 4.4.4 Undisputedly the issue in the present case is in respect of the CENVAT....
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....ation could be invoked for making this demand as per proviso to Section 73 (1) of the Finance Act, 1994. 4.5.1 On limitation appellant had made following submissions before the adjudicating authority, which have been recorded in the impugned order. "3.13. WITHOUT PREJUDICE, THERE IS NO SUPPRESSION OF INFORMATION BY THE NOTICEE. THUS, DENIAL OF CENVAT CREDIT IS PARTLY TIME BARRED AS EXTENDED PERIOD OF LIMITATION IS NOT INVOCABLE. Without prejudice to the submissions made in the foregoing paragraphs, it is submitted that even assuming without admitting that the Noticee has wrongly taken the CENVAT credit on the aforesaid services, the extended period of limitation cannot be invoked and therefore, the demand is partly time barred. In the present case, the period covered by the SCN dated 22.09.2016 is from April, 2013 to March 2014. Therefore, the SCN is barred for the period prior to October, 2013. Therefore, for the period April, 2011-March, 2014 the denial of credit is beyond eighteen (18) months and thus the denial of credit under the SCN is liable to be dropped to this extent. 3.14. Facts already in knowledge of the Department as refund claims under R....
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....Court held that the expression "suppression" has been used in the proviso to Section 11A of the Central Excise Act, 1944 accompanied by very strong word as "fraud" or "Collusion" and therefore, has to be construed strictly. Similarly, the Hon'ble Supreme Court in the case of Commissioner of C. Ex., Bangalore v. Kamataka Agro Chemicals reported in 2008 (227) E.L.T. 12 (S.C.) held that it is well settled that mere non-declaration is not sufficient to invoke the larger period. Some positive act of suppression is required for invoking larger period of limitation under Section 11A. 3.15. Suppression cannot be alleged as show cause notices for prior period have been issued by the Department As stated above, the Noticee has filed various refund clairns for claiming refund of unutilized CENVAT credit (pertaining to various input services) for the period upto December, 2013. On receipt of these refund claims, six show cause notices were issued to oticee which, inter alia, sought to disallow CENVAT credit relating to service tax paid for 'renting of immovable property service because the rent was paid for the premises which were not included in the registration of t....
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....ilable on such services with no specific conditions regarding registered premises. That the bona fide belief of the Noticee was pased on various judicial pronouncements which were in favour of the Noticee and the grounds discussed above." 4.5.2 The said submissions were not accepted by the adjudicating authority and it was held that extended period has been rightly invoked for making this demand observing as follows: 5.4. Invoking of Extended period - 5.4.1. Another contention of the party against the demand raised is that the extended period of limitation as invoked under proviso to Section 73(1) of the Finance Act, 1994 for raising the demand is not invokable in the case and the demand s partly time barred as the department was aware of the facts as refund claims under Rule 5 of the CENVAT Credit Rules, 2004 have been filed by them as six show cause notices with reference to refund claims filed by them have been issued by the department, they provided all 149 the information to the department during investigation, as they acted under a bona-fide belief, as all the details were filed in the Returns filed with the department and as they had no intention to avai....
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....1994 with the intent to avail to irregular credit resulting into evasion of tax. Accordingly, I find that the extended period of limitation has correctly been invoked in the present case and the demand in not hit by limitation clause Thus I hold that the party violated the provisions of CENVAT Credit Rules, 2004 so as to avail irregular credit with the intent to evade payment of due tax. Thus, in view of the discussion above I find that the party is liable to pay the irregular credit demanded under impugned show cause notice. 4.5.3 Invocation of extended period of limitation for making the demand is dependent on the existence of the various factors mentioned in the proviso to section 73 (1) of the Finance Act, 1994. Existence of this factors is a question of fact and needs to be examined on the basis of the available records and information. Appellant has taken specific stand before the Commissioner that all the facts were in the knowledge of the department as they had been regularly filing their ST-3 returns declaring the CENVAT Credit taken by them in their ST-3 returns. They had also submitted that they had filed refund claim in terms of the Rule 5 of the CENVAT Credit Rules,....
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....clarificatory amendment which states that interest is payable only when credit has been wrongly availed and utilized that in the present case they have not utilized the credit as refund thereof has been filed that once credit has not been utilized, interest cannot be demanded in the light of amended provisions and law settled in this regard that interest is compensatory in character and it is imposed on the actual amount of tax withheld, and to the extent tax is "due and payable that when the Government Exchequer has not suffered any loss and the principal amount has not been wrongfully taken/held/utilized, the charge of interest is erroneous. 5.5.2. In this regard, I find that the contention of the party with reference to non-availment of credit under dispute is not supported with facts and figures, and accordingly no relief can be granted on the basis of mere submissions not supported by facts and figures. On the other hand, the provisions of Rule 14 of CENVAT Credit Rules, 2004 mandate that the recovery of inadmissible CENVAT Credit has to be made along with interest. Accordingly I find that interest provisions are applicable in the case and the party is liable to pay t....
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....the interest on the assumption that find that he had the demand made is penalty. However, on going through the impugned order of the Additional Commissioner, waived penalty and the amount of Rs. 19,009/- demanded is only in the form of interest under Section 75, which is mandatory in nature. Learned counsel for the respondent submitted that the amount was also deposited prior to final orders issued by the Tribunal. Since we find that the Tribunal has cancelled the demand treating as penalty, we allow the appeal by cancelling the order of the Tribunal and restoring the demand of interest under Section 75 of the Act.." 4.6.3 Same view has been expressed by Hon'ble Supreme Court in case of SKF India Ltd [2009 (239) ELT 385 (SC)] observing as follows: "9. Section 11A puts the cases of non-levy or short levy, non-payment or short payment or erroneous refund of duty in two categories. One in which the non-payment or short payment etc. of duty is for a reason other than deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the non-payment or short payment etc. of duty is "by reason of fraud, collusion or any wilful mis-statement....
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....e appellant. 4.7.1 As we hold that extended period could not have been invoked, in the present case we are also not inclined to uphold the penalty imposed upon the appellant under Section 78 of the Finance Act, 1994, following the decision of Hon'ble Supreme Court in case of Rajasthan Spinning and Weaving Mills Ltd. [2009 (238) ELT 3 (SC)] wherein following has been held: "17. The main body of sub-section 1 lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to sub section 1 of section 11A and section 11AC use the same expressions: "....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...". In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under section 11A (1) states that the escaped duty wa....
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....sed. As the party failed to get the unregistered premises registered for more than three years in continuity I find that they are liable for penal action under Section 77 o the Finance Act, 1994. 4.7.3 From the perusal of the above findings we observe that penalty under Section 77 has been imposed upon the appellant for the reason that they have contravened the provisions of Section 69 of the Finance Act, 1994, by not getting certain premises from where they were providing taxable services registered. We further observe that appellant was having centralized registration. Thus they were registered with the department for providing taxable services. They were also filing the ST-3 returns, showing the receipts in respect of the services provided from the premises indicated for providing the taxable services in their ST-2 certificate and the premises not included therein. It is not the case of the revenue that ST-3 filed by the appellant did not include the turnover of the taxable services provided from this premises not included in the ST-2 certificate. Thus mere non inclusion of these premises in the ST-2 certificate by the appellant cannot be reason to hold that appellan....