Custom, Excise & Service Tax Tribunal
M/S. Bovis Lend Lease India Pvt. Ltd vs Cst, Bangalore on 19 April, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 29/03/2011
Date of decision:..
Appeal No.ST/92/2006
(Arising out of Order-in-original No.6/2006 dt. 27/1/2006
passed by CST, Bangalore)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Bovis Lend Lease India Pvt. Ltd.
..Appellant(s)
Vs.
CST, Bangalore
..Respondent(s)
Appearance Mr. N. Anand, Advocate for the appellant.
Mr. Ganesh Haavanur, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per M.V.Ravindran This appeal is directed Order-in-original No.6/2006 dt. 27/1/2006.
2. The relevant facts that arise for consideration are that the appellant herein is a registered service tax payer under the category of Consulting Engineer. He has been providing services of consulting engineer and was also executing turn key projects etc. but it is alleged that he has not paid the service tax on the consultancy portion of the work, irregularly utilized service tax credit to the tune of Rs.1,04,875/- availed service tax credit to the tune of Rs.85,185/- wherein there were no documents and did not pay service tax to the tune of Rs.7,53,276/-on the services received from foreign service providers during the period 06/08/2003 to 30/04/04. Coming to such conclusion, show-cause notice dt. 30/06/2005 was issued to the appellant. Appellant agitated the show-cause notice before the adjudicating authority. The adjudicating authority after considering the submissions made, came to the conclusion that the demands raised in the show-cause notice need to be confirmed and he confirmed the same and also imposed penalty under Section 76, 77 and 78 of the Finance Act, 1994 (the Act) and also demanded interest under Section 75 of the Act. Aggrieved by such an order, the appellant is before us.
3. Ld. Counsel appearing on behalf of the appellant would draw our attention to the demand of Rs.7,53,276/- and submit that this demand was prior to the period 18/04/2006. He would submit that the demand has been confirmed against the appellant only on the ground that the appellant being recipient of consulting engineering service, by virtue of reverse charge mechanism, appellant is liable to pay the service tax. He would submit that the issue is now squarely settled by the judgment of the Honble High Court of Bombay in the case of Indian National Shipowners Association Vs. UOI [2009(13) STR 235 (Bom.)] and the ratio of the same has been reiterated by the Honble High Court of Karnataka in the case of CST, Bangalore Vs. Bharat Electronics Ltd. [2010(20) STR 307 (Kar.)]. It is also his submission that the SLP filed against the judgment of the Indian National Shipowners Association has been dismissed by the Honble Supreme Court. As regards the denial of cenvat credit to the tune of Rs.1,04,875/- and Rs.85,185/-, it is his submission that the amount of Rs.1,04,875/- has been denied only on the ground that common input service has been used and the same has been availed for rendering the services which are taxable as well as exempted. It is his submission that the appellant has been taking a stand right from the audit objection, that the services which were availed are not utilized for the purpose of rendering services of exempted or non-taxable services. It is his submission that the adjudicating authority has not gone into detail and has not recorded any finding. As regards the credit of Rs.85,185/-, it is his submission that they have documentary evidences to show that the service tax liability has been discharged by the architect and interior designers. It is his submission that the amounts which have been paid by the appellant to the architect and interior designers were on a running bill account and on the completion of the contract, the architect and / interior designers have discharged the service tax liability which has been collected from the appellant to the authorities. He would draw our attention to the certificate issued by the said service provider which is at page No. 95 of the appeal memorandum.
4. Ld. SDR on the other hand submits that, as regards the issue of service tax liability on the reverse charge mechanism, he leaves to the Bench. As regards the reversal of cenvat credit to the tune of Rs.1,04,875/- and Rs.85,185/-, it his submission that the appellant has not produced any evidence before the adjudicating authority to consider their submission.
5. We have carefully considered the submissions made by both sides and perused the records.
6. As regards the first issue of discharge of service tax liability of Rs.7,53,276/- on account of reverse charge mechanism for the services received from foreign nationals, we find that the services rendered in this case is prior to 18/4/2006. This factual position is not disputed by the lower authorities. If that be so, the liability to discharge service tax by reverse charge mechanism was brought into statute from 18/04/2006 only. This issue is now settled in favour of the assessee as correctly pointed out by the ld. Counsel. The judgments of Honble High Court of Bombay in the case of Indian National Shipowners Association(supra) and the Honble High Court of Karnataka in the case of Bharat Electronics Ltd. (supra) would squarely cover the issue in favour of the appellant. In view of the foregoing judicial pronouncements, we are of the considered view that the impugned order to the extent it confirmed the demand, iposed penalties and sought interest as the tax confirmed on the appellant on this count is liable to be set aside and we do so.
7. As regards the confirmation of demand of Rs.1,04,875/- and Rs.85,185/-, we find that the appellant has been taking a consistent stand before the adjudicating authority that the input stage service tax credit availed of Rs.1,04,875/- is for only providing taxable output services. The relevant portion of the reply to the show-cause notice clearly indicates that the said stand has been taken by the assessee. Unfortunately, the adjudicating authority has not given any findings on such categorical stand taken except recording that there is no evidence or corroboration for the contention of the assessee. As regards the confirmation of demand of irregular availment of cenvat credit of Rs.85,185/-, we find that assessee is able to produce before us the certificate issued by the service provider that they have discharged the service tax liability on the entire contract executed by them for the assessee. If that be so, the credit of service tax paid by service provider cannot be denied. Since the adjudicating authority has also not recorded any finding on these two issues, we are constrained to set aside the impugned order and remit these two issues back to the adjudicating authority for re-consideration after appreciating the evidences that may be produced by the appellant before him.
8. In view of the foregoing, we set aside the impugned order to the extent it confirms the demand of Rs.7,53,276/- and penal consequences thereon and remit the matter back to the adjudicating authority as regards the irregular availment of service credit by the assessee. Since, we are remitting back these two issues to the adjudicating authority, we also set aside the penalties imposed on the assessee on this count in the impugned order. The adjudicating authority shall follow the principles of natural justice before coming to any conclusion. The appeal is disposed of as indicated herein above.
(Pronounced in court on ..) (P. KARTHIKEYAN) MEMBER (TECHNICAL) (M.V. RAVINDRAN) MEMBER (JUDICIAL) Nr 6