Custom, Excise & Service Tax Tribunal
Nexus Engineers vs Ce & Cgst Lucknow on 8 February, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.71205 of 2018
(Arising out of Order-in-Appeal No.101/ST/Appeal/Audit/LKO/2018 dated
16/03/2018 passed by Commissioner (Audit) Central Goods, Central Excise &
Services Tax, Lucknow)
M/s Nexus Engineers, .....Appellant
(M-30, Paper Mill Colony, Nishatganj, Lucknow)
VERSUS
Commissioner of Central Excise &
CGST, Lucknow ....Respondent
(7A, Ashok Marg, Lucknow)
APPEARANCE:
Shri Dushyant Kumar, Consultant for the Appellant
Shri Manish Raj, Authorised Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70052/2024
DATE OF HEARING : 15 December, 2023
DATE OF PRONOUNCEMENT : 08 February, 2024
SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal
No.101/ST/Appeal/Audit/LKO/2018 dated 16/03/2018 passed by
Commissioner (Audit) Central Goods, Central Excise & Services
Tax, Lucknow. By the impugned order Commissioner (Appeals)
has upheld the Order-in-Original No.197/AC/Nexus
Engineers/ST/LKO-I/16-17 dated 09/03/2017, by which
following has been held:-
ORDER
(i) I confirm the demand of Service Tax amounting to Rs.4,44,939/- (Rs. Four Lakh Forty Four Thousand Nine Hundred Thirty Nine only) inclusive of Education Cess & Service Tax Appeal No.71205 of 2018 2 Higher Edu. Cess upon M/s Nexus Engineers, M-30. Paper Mill. Mahanagar, Lucknow under proviso to Section 73(1) of the Finance Act. 1994 along with appropriate interest as leviable under Section 75 of the Finance Act, 1994 (as alleged in the show cause notice dated 24.9.2015)
(ii) I confirm demand of Service Tax amounting to Rs.1.20.094/- (Rs. One Lakh Twenty Thousand and Ninety Four only) on the abated portion of value of services upon M/s Nexus Engineers, M-30, Paper Mill, Mahanagar, Lucknow under proviso to Section 73(1) of the Finance Act. 1994, alongwith appropriate interest as provided under Section 75 ibid.
(iii) I impose a penalty of Rs 5.65.033 (Rs 4.44.939+Rs1.20.094) (Rupees Five lakhs Sixty Five thousand and thirty three only) upon M/s Nexus Engineers. M-30. Paper Mill. Mahanagar, Lucknow under Section 78 of the Finance Act 1994, for suppressing the material facts and willful misstatement, with intent to evade payment of service tax.
(iv) I confirm the demand of wrongly taken Cenvat Credit of Rs.69.864/- (Rs. Sixty Nine Thousand Eight Hundred and Sixty Four only) upon M/s Nexus Engineers. M-30. Paper Mill, Mahanagar. Lucknow availed on the basis of improper invoices under Rule 14 of the Cenvat Credit Rule 2004 along-with applicable interest under Section 75 of the Finance Act 1994. (as alleged in the show cause notice dated 24.9.2015).
(v) I impose a penalty of Rs.69.864/- (Rs. Sixty Nine Thousand Eight Hundred and Sixty Four only) upon M/s Nexus Engineers, M-30. Paper Mill, Mahanagar. Lucknow under Rule 15(2) of the CENVAT Credit Rules. 2004 read with Section 11AC of the Central Excise Act, 1944." 2.1 Appellant was engaged in providing taxable services and for which they hold appropriate registration under the law.
Service Tax Appeal No.71205 of 2018 3 2.2 During the course of audit, it was observed that on account of certain discrepancies, appellant has short paid service tax to the tune of Rs.6,34,897/- on the following grounds:-
I. Short payment of service tax to the tune of Rs.4,44,939/-
under the head of Maintenance or Repair Service and Erection, Commissioning & Installation Services. On reconciliation of ST-3 return with the income shown in the profit and loss account. It was observed that appellant had short paid the above referred tax.
II. Short payment of service tax to the tune of Rs.1,20,094/-
by way of wrong availment of abatement under the category of Erection, Commissioning and Installation Services and Construction Services in respect of Commercial or Industrial Buildings and Civil Structures. It was observed that appellant had availed Cenvat credit of various input services namely Telecommunication Service, Internet Service, Business Auxiliary Service, Construction Service etc. used in the provision of taxable services as above. They also availed benefit of 67% of abatement as per the Notification No.01/2006-ST dated 01.03.2006. The benefit of this exemption is admissible only if no Cenvat credit of input/capital goods on input services was availed, by doing so appellant had short paid the service tax as above.
III. Short payment of service tax to the tune of Rs.69,864/-
by way of wrong availment of Cenvat credit on improper invoices which were not addressed to their registered account.
2.3 Show cause notice dated 24.09.2015 was issued to the appellant asking them to show cause as to why-
the recovery of short paid Service Tax to the tune of Rs.4,44,939/- (on account of reconciliation) was proposed from the appellant under proviso to Section 73(1) of the Finance Act, 1994.
the recovery of short paid Service Tax to the tune of Rs.1,20,094/- (on account of wrong availment of Service Tax Appeal No.71205 of 2018 4 abatement) was proposed from the appellant under proviso to Section 73(1) of the Finance Act, 1994. the recovery of Interest on the aforesaid demands was proposed from the appellant under Section 75 of the Finance Act, 1994.
the imposition of penalty under Section 78 of the Finance Act, 1994 on the appellant was proposed for suppression of information from the department and contravention of the provisions of Finance Act, 1994 with intent to evade payment of Service Tax.
the recovery of inadmissible Cenvat Credit to the tune of Rs.69,864/- along with applicable interest was proposed from the appellant under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 73(1) of the Finance Act, 1994 and Section 75 of the Finance Act, 1994. the imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 on the appellant was proposed for suppression of information from the department and contravention of the provisions of Finance Act, 1994 with intent to evade payment of Service Tax."
2.4 This show cause notice was adjudicated as per the Order- in-Original referred in para-1 above and the appeal filed by the appellant has been dismissed as per the impugned order. Aggrieved appellant has filed the present appeal. 3.1 We have heard Shri Dushyant Kumar learned Consultant for the appellant and Shri Manish Raj learned Authorised Representative appearing for the revenue. 3.2 Arguing for the appellant learned Consultant submits that- The demand has been made in respect of certain amounts which were never received by them from their clients under the category of "Maintenance and Repair & Erection, Commissioning Service". Their client M/s Indus Tower had made deductions on account of various reasons from the invoice raised by them. These amounts were shown as bad debts in their book of accounts (Profit and Loss Account).
Service Tax Appeal No.71205 of 2018 5 Department has while making this demand totally ignored these amounts shown as bad debts in their book of accounts. They had computed and paid the service tax after taking into account these bad debts. As per Rule 6
91) of the Service tax Rules, 1994 they were required to apy service tax only on the amounts received from their clients and not on the invoice value. For this preposition they rely on the following decisions:
o Synergy Audio Visual Workshop (P ) Ltd. [2008 (14) STR 321 (T-Bang)] o Group Advertising Consultant [2006-TIOL-834- CESTAT-Del} o Tempest Advertisement 9P) Ltd [2007 (9) STR 168 (T-Bang)] o Alpa management Consultants (P) Ltd [2008 (17) STR 98 (T-bang)] o Turret Industrial Security (P) Ltd [2008 (14) STR 206 (T-Kol)] The abatement has been sought to be denied as the appellant has availed the benefit of CENVAT Credit of input services.
They are eligible simultaneously for the abatement and the Cenvat Credit on the input services, as per 3 (2) of the Works Contract (Composition Scheme for payment of Service tax) Rules, 2007 read with Explanation 2 to Rule 2 (B) of the Service tax (determination of Value) Rules, 2007.
The CENVAT Credit has been sought to be denied for the reason that the invoices against which they had taken the CENVAT Credit which were addressed to the premises which were not the registered premises. They had in fact informed the department about the change in address vide letter dated 28.06.2013. However the department had not updated their records on the basis of the intimation given. The credit should not be denied to them for this reason as they had already intimated the change of address.
Service Tax Appeal No.71205 of 2018 6 3.3 Arguing for the revenue learned Authorized representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 For holding against the appellant, impugned order records as follows:-
10.1 Issue No.1 10.1.1 In view of the facts of the case (discussed in para 3 to 5 supra), the grounds of appeal (discussed in Para 6 supra) and oral submissions made during the course of personal hearing (discussed in para 7 supra), it can be observed that this issue relates to the payment of Service Tax on the value which has not been received by the Service Provider.
10.1.2 In this regard, I find that prior to 01.04.2011, the Rule 6(1) of the Service Tax Rules, 1994 read as under:-
"6(1) The Service Tax shall be paid to the credit of the Central Government -
(i) by the 6th day of the month, if the duty is deposited electronically through Internet banking and
(ii) by the 5th day of the month, in any other case, Immediately following the calendar month in which the payments are received, towards the value of taxable services."
Provided that where the assessee is an Individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, In any other case, the 5th day of the month, as Service Tax Appeal No.71205 of 2018 7 the case may be, immediately following the quarter in which the payments are received, towards the value of taxable services."
Whereas w.e.f.01.04.2011, the said rule read as follows:-
"6(1) The Service Tax shall be paid to the credit of the Central Government -
(i) by the 6th day of the month, if the duty is deposited electronically through Internet banking and
(ii) by the 5th day of the month, in any other case, Immediately following the calendar month in which the service is deemed to be provided as per the rules framed in this regard."
Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, immediately following the quarter in which service is deemed to be provided as per the rules framed in this regard.
10.1.3 Further, I find that prior to 01.04.2011, the Rule 6(3) of the Service Tax Rules, 1994 read as under:-
"6(3) Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess Service Tax so paid by him (calculated on pro-rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service Service Tax Appeal No.71205 of 2018 8 and the service tax thereon to the person from whom it was received."
Whereas w.e.f.01.04.2011, the said rule read as follows:-
6(3) Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract the assessee may take the credit of such excess service tax paid by him, if the assessee,
(a) has refunded the payment or part thereof, so received along with the service tax payable thereon for the service to be provided by him to the person from whom it was received:
(b) has issued a credit note for the value of the service tax not so provided to the person to whom such an invoice had been issued."
10.1.4 In view of the provisions reproduced in Para 10.1.2 and 10.1.3 above, I find that prior to 01.04.2011, the Service Tax was liable to be paid when the payments were received towards the taxable services whereas w.e.f.01.04.2011, the service tax was liable to be paid when the invoice was issued (or service was provided). From the facts of the case, I find that year-wise bifurcation of the demand of Rs.4,44,939/- is as under:-
F.Y.2010-11:- Rs.3,65,224/-
F.Y.2011-12:- Rs.73,033/-
F. Y.2012-13:-Rs.6,682/-
The department has raised the said demand on the basis of reconciliation chart already reproduced in Para 3.2(i) supra.
Per-contra, the appellant has contended that since the value on which the demand has been raised was not Service Tax Appeal No.71205 of 2018 9 received by them and accordingly, the Service Tax is not liable to be paid by them. The appellant also claimed that they are submitting the relevant debit notes issued by the Service Receivers, Ledger of Bad Debts, Reconciliation chart etc. with the appeal memorandum which will corroborate their claim.
At the outset, I find that no such documents were found to be enclosed with the appeal memorandum in absence of which the claim of the appellant could not be appreciated. Further, even if the claim of the appellant is found to be true, then also the appellant has not put forth any reason for non-payment of Service Tax in the F.Y.2011-12 and F.Y.2012-13. Moreover, I also find that the appellant has failed to produce the credit notes raised by them to their Service Receivers depicting the Service Tax to be reversed by the service recipients if the same has been availed as Cenvat Credit by them.
The Central Government from the very beginning has placed full trust on the service providers so far as service tax is concerned and accordingly measures like self-assessment etc., based on mutual trust and confidence are in place. Further, a taxable service provider is not required to maintain any statutory or separate records under the provisions of Service Tax Rules as considerable amount of trust is placed on the service provider and records maintained by him for normal business purposes are generally accepted for all the purpose of Service Tax. All these operates on the basis of honesty of the service provider; therefore, the governing statutory provisions create an absolute liability on the Service Provider to come clean before the department.
The non-submission of the proper details and documents (mentioned above) despite of being given numerous opportunities reflect that the appellant has deliberately not submitted all the details to the department in order to avoid the scrutiny of the department in absence Service Tax Appeal No.71205 of 2018 10 of which the benefits which they seek to claim could not be extended to them.
In view of the lack of documentary evidences, I am inclined to hold that the contentions of the appellant do not hold ground.
10.1.5 Accordingly, I hold that the appellant is liable to pay the Service Tax to the tune of Rs.4,44,939/-. 10.2 Issue No.2 10.2.1 In view of the facts of the case (discussed in para 3 to 5 supra), the grounds of appeal (discussed in Para 6 supra) and oral submissions made during the course of personal hearing (discussed in Para 7 supra), it can be observed that this issue relates to eligibility of abatement provided under Notification No.01/2006-ST dated 01.03.2006 (as amended from time to time) (hereinafter referred to as the said Exemption Notification). 10.2.2 I find that the said exemption notification granted abatement of 67% (on the gross receipts) to the person providing the taxable services under the category of 'Erection, Commissioning & Installation Service' and 'Commercial and Industrial Construction Service The said abatement from gross taxable value was interalia subject to certain conditions in light of following proviso to the said exemption notification:-
"Provided that this notification shall not apply in cases where -
the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing such faxable service, has been taken under the provisions of the CENVAT Credit Rules, 2004, or the service provider has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2003- Service Tax, dated the 20th Service Tax Appeal No.71205 of 2018 11 June, 2003 [G.S.R. 503 (E), dated the 20th June, 2003."
10.2.3 I find that the original adjudicating authority has denied the benefit of exemption Notification on the basis of the fact since the appellant was availing the benefit of Cenvat Credit on various input services such as Telecommunication Service, Internet Service, Business Auxiliary Service, Construction Service etc. hence they have rendered themselves ineligible for the abatement of 67% provided vide the said exemption notification. 10.2.4 Per contra, I find that the appellant has contended that they have availed Cenvat Credit in respect of only those input services which were related to 'Maintenance and Repair Service only and were not related to 'Erection, Commissioning and Installation Services' and 'Commercial and Industrial Construction Service'. The appellant also claimed that they are submitting Annexure-03 to the appeal memorandum which are self- Explanatory. 10.2.5 Since the decision of the appeal requires the interpretation of an exemption notification hence it would be proper to discuss some relevant judgments regarding the Interpretation of exemption notification. Few judgments are as below:-
(a) In case of Saraswati Sugar Mills Versus Commissioner of C. Ex., Delhi-III reported in 2011 (270) E.L.T. 465 (S.C.), it was held that an exemption notification has to be construed strictly.
The relevant part of the judgment is reproduced as below:-
"7. .......................An exemption notification has to be strictly construed The conditions for taking, benefit under the notification are also to be strictly interpreted. When the wordings of notification is clear, then the plain language of the notification must be given effect to. By way of an interpretation or construction, the Court cannot add or substitute any word while construing the notification Service Tax Appeal No.71205 of 2018 12 either to grant or deny exemption. The Courts are also not expected to stretch the words of notification or add or subtract words in order to grant or deny the benefit of exemption notification. In Bombay Chemicals (P) Ltd. v. CCE (1995) Supp (2) SCC 64 1995 (17) ELT 3 (SC), a three Judge Bench of this Court held that an exemption notification should be construed strictly, but once an article is found to satisfy the test by which it falls in the notification, then it cannot be excluded from it by construing such notification narrowly."
(b) In case of Orient Traders Versus Commercial Tax Officer, Tirupati reported in 2009 (237) E.L.T. 447 (S.C.) it was held that an exemption notification has to be construed strictly. The relevant part of the judgment is reproduced as below:-
18. It is well established principle that the exemption notifications are to be construed strictly, reference may be made to State of Jharkhand & Others v. Tata Cummins Ltd and another, 2006 (4) SCC 57 and Kartar Rolling Mills v.
Commissioner of Central Excise, New Delhi 2006 (4) SCC 772. If the intention of the legislature is clear and unambiguous, then it is not open to the courts to add words in the exemption notification to extend the benefit to other items which do not find mention in the notification......
In view of the above pronouncements of the apex court, I find that on various occasions it has been observed by the courts of law that an exemption notification has to be construed strictly. There is no scope of any extension / restriction in the scope of the exemption Notification.
10.2.6 In light of the above-mentioned judgments, I find that the said exemption notification is clear in its wording that the benefit of abatement would not be available only If Cenvat Credit on Inputs / Capital Goods / Input Services used in providing such services has not been availed.
In the present case, I find that the appellant was availing Cenvat Credit in respect of Input services such as Telecommunication Service, Internet Service, Business Auxiliary Service, Construction Service etc. which in my Service Tax Appeal No.71205 of 2018 13 view were common to all of their 3 output taxable services. The input services such as Telecommunication Services, Internet Services etc. are such whose usage cannot be bifurcated between their 3 taxable services. The appellant in the appeal memorandum claimed to submit some Annexure-03 which will corroborate their contention but I could not find any such Annexure-03 enclosed with the appeal memorandum.
In view of the above, I find that the appellant has failed to fulfil the primary conditions of an exemption notification.
10.2.7 Accordingly, I find that the benefit of abatement of 67% (on gross receipts) provided under Notification No.01 1/2006 * ST dated 01.03.2006 would not be available to the appellant and Service Tax to the tune of Rs. 1,20,094/- is required to be paid by them. 10.3. Issue No.3 10.3.1 In view of the facts of the case (discussed in para 3 to 5 supra), the grounds of appeal (discussed in Para 6 supra) and oral submissions made during the course of personal hearing (discussed in Para 7 supra), it can be observed that this issue relates to parameters which are to be fulfilled by a document if Cenvat Credit is to be availed on strength of it.
10.3.2 In this regard, I find that Rule 9(2) of the Cenvat Credit Rules, 2004, lays down the criterion which are required to be met by the documents on the strength of which Cenvat Credit is to be availed. The said Rule can be reproduced as under:-
(2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service tax Service Tax Appeal No.71205 of 2018 14 registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit.
Rule 4A of the Service Tax Rules, 1994, provides for the details which are to be mentioned on a service invoice. The said rule can be reproduced as under:-
"Rule 4A. Taxable service to be provided or credit to be distributed on invoice, bill or challan-
(1) Every person providing taxable service shall not later than fourteen days from the date of provision of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, shall issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him in respect of taxable service provided or to be provided and such invoice, bill or as the case may be challan shall be serially numbered and shall contain the following, namely:-
(i) the name, address and the registration number of such person;
(ii) the name and address of the person receiving taxable service;
(iii) description, classification and value of taxable service provided or to be provided, and
(iv) the service tax payable thereon."
10.3.4 From the above mentioned rules, I find that the in any service invoice the name and address of the person receiving the service is liable to mentioned compulsorily. The mention of said details provides relevant information regarding the place at which such services have been consumed.
Service Tax Appeal No.71205 of 2018 15 In the present case, the Cenvat Credit to the tune of Rs.69,864/- is sought to be appellant and accordingly it could not be ascertained that whether the same were utilised in red address of the denied on a ground that the invoices are not addressed to the registered address of the appellant and accordingly it could not be ascertained that whether the same were utilized in the activity of the output taxable services or not. Per-contra, the appellant has claimed that such services were in-fact used in providing the taxable output services and accordingly, Cervat Credit needs to be allowed.
I find that in the scheme of Cenvat Credit, the onus to prove that the credit availed is admissible or otherwise rests on the claimant and said onus needs to be discharged by the claimant along with proper documentary evidences.
In the present case, I find that the appellant did not put forth any corroborative evidence, document etc. which could substantiate their claim. Moreover, the fact that the Impugned invoices were addressed to an address other than the registered address was also not contested by the appellant. Accordingly, I am unable to allow the Cenvat Credit to the tune of Rs.69,864/- availed by the appellant. 10.3.5 Accordingly, I find that the inadmissible Cenvat Credit to the tune of Rs.69,864/- is required to be paid by the appellant."
4.3 On all the three issues, we observe as under:-
On issue No.1- We find that the value of taxable service is to be determined as per the Section 67 of the Finance Act, 1994 read with the Valuation Rules made under the said section just by comparison of the receipts under profit and loss account with ST-3 returns. It cannot be inferred that the receipt was in respect of the service provided for computing this demand. Further the actual amounts received should have been the basis of the demand, and Service Tax Appeal No.71205 of 2018 16 any amounts shown as bad debts should have been excluded while determining the taxable value. The similar observations have been made by the tribunal in the various decisions relied by the appellant. Show cause notice computed the demand on the basis of following table:-
S.No. Financial Year 2010-11 2011-12 2012-13 2013-14 MAINTENANCE & REPAIR SERVICE Income from O&M (Maintenance 1 & Repair) as shown in Balance 50012660 39970991 38176755 46659314 Sheet (excluding Service Tax) Last Year Debtors (Including 2 17534354 N.A. N.A. N.A. Service Tax) Last Year Debtors (Including 3 15896966 N.A. N.A. N.A. Service Tax) 4 TOTAL (1+3) 65909626 39970991 38176755 46659314 Current Year Debtors (Including 5 6581011 N.A. N.A. N.A. Service Tax) Current Year Debtors (Including 6 5966464 N.A. N.A. N.A. Service Tax) 7 Total Taxable Value (4-6) 59943162 39970991 38176755 46659314 Taxable Value as shown in ST-3 8 56397302 39276309 38122691 48891267 Return Value on which Service Tax not 9 3545860 694642 54064 -
paid (7-8) 10 Service Tax Short Paid 3,65,224 71,552 6,682 Rs.4,43,458/-(Rs.3,65,224/-+Rs.71,552/- 11 Total Service Tax Short Paid +Rs.6,682/-) ERECTION, COMMISSIONING AND INSTALLATION SERVICE Income from Erection, Commissioning and Installation 12 - 198372 - -
as per Balance Sheet (excluding Service Tax) Taxable Value as shown in ST-3 13 - 183994 - -
Return Value on which Service Tax not 14 - 14378 - -
paid (12-13)) 15 Service Tax Short Paid - 1481 - -
Grand Total of Service Tax short paid Rs.4,44,939( Rs.4,43,458/-plus Rs.1,481/-) (11+15) Appellants has claimed that the amount against which this demand has been made, has never been received by them and for which they produced a copy of relevant debit notes issued by the service recipients, ledger of bank debits, reconciliation charges etc. Commissioner (Appeals) has in the impugned order observed that no such document has been made available to him.
Similar observations have been made by the Original Authority in his order. The issue involved in the present case is only vis-à-vis production of the documents showing Service Tax Appeal No.71205 of 2018 17 the receipt/non-receipt of the amount against which the demand of Rs.4,44,939/- has been made. We also do not find the said documents to be available in the appeal file. In the interest of justice, we allow one opportunity to the appellant to produce all these documents before the Original Authority for consideration and if satisfied that any part of the amount against which service tax has been demand, have not been received by the appellant to allow him the benefit of the same. In case appellant fail to produce the documents as above, before the Original Authority on the date on or before the date fixed for hearing, original authority is free to draw adverse conclusion and proceed against the appellant.
On the issue no.2- Appellant claim that they are entitled to claim the benefit of abatement under Rule 3 (2) of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 and also claim the benefit of the CENVAT Credit in respect of the input services. Rule 3 (2) of the said rules, and explanation 2 to Rule 2B of Service tax (Determination of Value) Rules, 2006 is reproduced below:
"Rule 3 (2) The provider of taxable service shall not take CENVAT Credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004."
"Explanation 2 to Rule 2(B):
"For the removal of doubts, it is clarified that the provider of taxable service shall not take CENVAT Credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004."
We reproduce the proviso appended to exemption Notification No.1/2006-ST dated 01.03.2006 as it existed during the relevant period:-
Service Tax Appeal No.71205 of 2018 18 Provided that this notification shall not apply in cases where, -
(i) the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing such taxable service, has been taken under the provisions of the CENVAT Credit Rules, 2004; or
(ii) the service provider has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2003-Service Tax, dated the 20th June, 2003[G.S.R. 503 (E), dated the 20th June, 2003] Appellant has not produced any evidence to show that they have not availed Cenvat credit in respect of the input services as alleged in the show cause notice. However the dispute is whether the appellants were providing the service under the category of "erection Commissioning and Installation Service & Construction Service in respect of Commercial or Industrial Building and Civil Structure Service" or the "work contract services". During the course of audit it was observed by the revenue authorities on scrutiny of the records of appellant that they were providing the "erection Commissioning and Installation Service & Construction Service in respect of Commercial or Industrial Building and Civil Structure Service" and not the work contract service. While providing the said services appellant had availed the benefit of abatement as provided by the notification No 1/2006-ST, which has been sought to be denied. Appellant has not produced any evidence to show that the services provided by them were "work contract services". Bothe the authorities have gone by the observations made by the audit after scrutiny of the records of appellant. Since both adjudicating authority and appellat authority have concluded similarly on the facts in hand we do not find any reason to differ from the same.
Service Tax Appeal No.71205 of 2018 19 It is settled principal in law that for claiming benefit of any exemption notification it is on the appellant to establish that claim. In the case of Shri Vile Parle Kelvani Mandal & Ors [Order dated January 07, 2022. in Civil Appeal No 7319 Of 2021] Hon'ble Supreme Court analyzing the earlier decisions on the issue has observed as follows:
"9. While answering the aforesaid question/issue, law on how to interpret and/or consider the statutory provisions in the taxing statute and the exemption notifications is required to be analysed first.
9.1 In the case of Dilip Kumar & Company (supra), five-judge bench of this Court has held that in every taxing statute -- the charging, the computation and exemption provisions at the threshold stage should be interpreted strictly. In case of ambiguity in case of charging provision, the benefit necessarily must go into favour of the subject/assessee. This means that the subject of tax, the person liable to pay tax and the rate at which the tax is to be levied have to be interpreted and construed strictly. If there is any ambiguity in any of these three components, no tax can be levied till the ambiguity or defect was removed by the legislature [See pages 53 to 55 in Dilip Kumar & Company]. However, in case of exemption notification or clause, same is to be allowed based wholly by the language of the notification, and exemption cannot be gathered by necessary implication, or on a construction different from the words used by reference to the object and purpose of granting exemption [See Hansraj Gordhandas Vs. H.H. Dave, Assistant Collector of Central Excise Customs, Surat & Ors., AIR 1970 SC 755]. Further it's for the assessee to show by construction of the exemption clause/notification that it comes within the purview of exemption. The assessee/citizen cannot rely on ambiguity or doubt to claim benefit of exemption. The rationale is not Service Tax Appeal No.71205 of 2018 20 to widen the ambit at the stage of applicability. However, once the hurdle is crossed, the notification is constructed liberally [See Collector of Central Excise, Bombay-I & Anr. vs. Parle Exports (P) Ltd., (1989) 1 SCC 345 and Union of India & Ors. vs. Wood Papers Ltd. & Anr., (1998) 4 SCC 256]. Thus, distinction can be made between the substantive requirements that require strict compliance - non-compliance of which would render the assessee ineligible to claim exemption, and the procedural or compliance provision which can be interpreted liberally [See paragraphs 64 to 65 in Dilip Kumar & Company].
9.2 Essar Steel India Ltd. & Anr. was a case relating to grant of exemption under Section 3(2)(vii)(a) from payment of electricity duty under the 1958 Act. The court relied on several decisions on interpretation of notification in nature of exemption, to hold that the statutory conditions for grant of exemption can neither be tinkered with nor diluted. The exemption notification must be interpreted by their own wordings, and where the wordings of notification with regard the construction is clear, it has to be given effect to. If on the wordings of the notification benefit is not available, then the court would not grant benefit by stretching the words of the notification or by adding words to the notification. To interpret the exemption notification one should go by the clear, unambiguous wordings thereof. These principles were applied in Essar Steel India Ltd. & Anr. to deny benefit of Section 3(2)(vii)(a) of the 1958 Act, as the condition of generating energy jointly with another undertaking was not fulfilled.
9.3 In case of Star Industries, it was held that the eligibility criteria laid down for exemption notification is required to be construed strictly, and once it is found that applicant satisfies the same, the exemption notification should be construed liberally. Reference was made to the Service Tax Appeal No.71205 of 2018 21 decision Novopan India Ltd. vs. CCE and Customs, 1994 Supp (3) SCC 606 and the Constitution Bench decision in Hansraj Gordhandas vs. H.H. Dave, Assistant Collector of Central Excise Customs, Surat & Ors. (supra), which decisions have been noted and elucidated by this Court in Dilip Kumar & Company. Therefore, in the context of exemption notification there is no new room for intendment. Regard must be to the clear meaning of the words. Claim to exemption is governed wholly by the language of the notification, which means by plain terms of the exemption clause. An assessee cannot claim benefit of exemption, on the principle that in case of ambiguity a taxing statue must be construed in his favour, for an exception or exemption provision must be construed strictly.
9.4 In the case of Giridhar G. Yadalam (supra), it is observed and held that in taxing statute, it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. It is further observed that the strict interpretation to the exemption provision is to be accorded. It is observed that the purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results. In paragraph 16, it is observed and held as under:-
"16. We have already pointed out that on the plain language of the provision in question, the benefit of the said clause would be applicable only in respect of the building "which has been constructed". The expression "has been constructed" obviously cannot include within its sweep a building which is not fully constructed or in the process of construction. The opening words of clause (ii) also become important in this behalf, where it is stated that "the land occupied by any building". The land cannot be treated to be occupied by a building where it is still under construction. If the contention of Mr Jain is Service Tax Appeal No.71205 of 2018 22 accepted, an assessee would become entitled to the benefit of the said clause, at that very moment, the commencement of construction even with construction the moment one brick is laid. It would be too far-fetched, in such a situation, to say that the land stands occupied by a building that has been constructed thereon. Even Mr Jain was candid in accepting that when the construction of building is still going on and is not completed, literally speaking, it cannot be said that the building "has been constructed". It is for this reason that he wanted us to give the benefit of this provision even in such cases by reading the expression to mean the same as "is being constructed". His submission was that the moment construction starts the urban land is put to "productive use" and that entitles the land from exemption of wealth tax. This argument of giving so-called purposive interpretation has to be rejected for more than one reasons. These are:
(i) In taxing statute, it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning.
(ii) Strict interpretation to the exemption provision is to be accorded, which is the case at hand.
(iii) The purposive interpretation can be
given only when there is some
ambiguity in the language of the statutory
provision or it leads to absurd results. We do not find it to be so in the present case."
9.5 In the case of Godrej & Boyce Mfg. Co. Ltd. (supra), it is observed and held by this Court that where the words of the statute are clear and unambiguous, recourse cannot be had to principles of interpretation other than the literal view. It is further observed that it is the bounden duty and obligation of the court to interpret the statute as it is. It is Service Tax Appeal No.71205 of 2018 23 25 further observed that it is contrary to all rules of construction to read words into a statute which the legislature in its wisdom has deliberately not incorporated."
As the appellant failed to establish that claim for exemption under the notification no 1/2006-ST, the demand made by denying abatement for determination of taxable value for the levy of service cannot be faulted with. Hence in our view the demand on this count needs to be confirmed.
On the issue no.3- The credit has been sought to be denied for the reason that the invoices against which the appellant has taken the credit was not addressed to the registered premises of the appellant.
We find that the issue in this regard is no longer res integra and the Tribunal/Courts have decided that for claiming the benefit of input services, it is not necessary that invoices be addressed to the registered premises of the appellant. Reliance is placed on the following decisions:-
o Manipal Advertising Services Pvt. Ltd. [2009 (10) TMI 434 - CESTAT, BANGALORE];
o mPortal India Wireless Solutions P. Ltd. [2012 (27) S.T.R. 134 (Kar.)];
o Allspheres Entertainment Pvt. Ltd. [2015 (8) TMI 953 -
(CESTAT DELHI)].
o Well Known Polyesters Ltd. [2011 (1) TMI 664 -
CESTAT, AHMEDABAD] o Gail India Ltd. [2016 (1) TMI 299 - CESTAT NEW DELHI] o Atrenta India Pvt. Ltd [2017 (48) S.T.R. 361 (All.)] In view of the decisions as above we do not find any merits in the impugned order seeking to deny the Cenvat credit on this ground.
Service Tax Appeal No.71205 of 2018 24 4.4 Penalties imposed on the appellant need to be re- determined by the Original Authority on the basis of his findings on the issues for which the matter is remanded back to the Original Authority.
4.5 Accordingly, we find as follows:-
The issue in respect of demand of service tax on the basis of the comparison of income as per profit and loss account with ST-3 returns is remanded back to the Original Authority for consideration of the documents that may be produced by the appellant.
Demand of service tax by denying the benefit of abatement as per notification no.01/2006-ST is confirmed against the appellant.
Demand for denial of Cenvat credit for the reason that the invoices were addressed to premises other than the registered premises of the appellant is hereby dropped.
5.1 Appeal is partly allowed as indicated in para-4.4 & 4.5.
(Pronounced in open court on-08 February, 2024) Sd/-
(P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp