Custom, Excise & Service Tax Tribunal
Messrs N J Devani Builders Pvt Ltd vs Service Tax - Ahmedabad on 3 June, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH -COURT NO. 03
Service Tax Appeal No. 107 of 2009
[Arising out of OIA-49/2009/STC/LMR/COMMR-A-/AHD passed by Commissioner of
Service Tax-SERVICE TAX - AHMEDABAD]
M/s N J Devani Builders Pvt. Ltd ......Appellant
Behind Ishwar Bhuvan, Navrangpura,
AHMEDABAD, GUJARAT-380009.
VERSUS
C.S.T. & S.T.-Ahmedabad .....Respondent
7 Th Floor, Central Excise Bhawan, Nr. Polytechnic Central Excise Bhavan, Ambawadi, Ahmedabad, Gujarat-380015 APPEARANCE:
Sh. P.M. Dave & Sh. S. Bissa, Advocate for the for the Appellant Sh. G. Jha, Authorized Representative for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) FINAL ORDER NO. A/ 10973 /2019 DATE OF HEARING: 11.02.2019 DATE OF DECISION: 03.06.2019 PER: RAMESH NAIR The Appellant is engaged in construction of buildings and registered under the category of "Commercial and Industrial Construction services". They were not paying Service tax on GTA services availed by them under reverse charge mechanism. On being informed by the department they applied for registration and deposited service tax along with interest. They however claimed credit of the said service tax. During the impugned period they were availing exemption under Notification No. 15/2004 - ST under which there was exemption from service tax in excess of 33% of the value of the services and subsequent analogous Notification No. 1/ 2006 - ST subject to the condition that cenvat credit of duty paid on inputs and capital goods or cenvat credit of service tax on input service used for providing such service shall not be availed. Whereas the Appellant while availing said exemption paid service tax by utilising credit of tax paid on GTA Services. For paying service tax in March‟2006 on Industrial construction service, the appellant had utilised cenvat credit of GTA Services
2|Page ST/107/2009-DB involving period from 01.01.2005 to 28.02.2006. The details of credit availed and utilised were reflecting in service tax return. The Appellant were issued show cause notice dated 12.03.2007 denying the benefit of exemption notification no. 1/2006 - ST for March‟2006 on the ground that they have utilised cenvat credit of GTA services for payment of Service tax on Commercial and Industrial Construction Service for March‟2006. Resultantly a demand of Rs. 8,67,144/- was made against the Appellant. The Appellant replied to the show cause notice that the cenvat credit availed by them did not pertain services utilised for taxable service rendered in March 2006. The service tax credit of GTA service pertained to the services availed during Jan‟2005 to Feb‟2006 and hence the credit did not pertain March‟2006. The adjudicating authority confirmed the demand of service tax against the Appellant by denying the benefit of exemption notification. The appellant filed appeal before Commissioner (Appeals). They added a new ground in their appeal that since the works contract activity became taxable only w.e.f 01.06.2007 hence their activity being accepted by the department under said category was not liable to taxed before said date. The Commissioner (Appeals) however upheld the adjudication order. Hence the present appeal by the Appellant.
2. Ld. Counsel Sh. Paresh Dave appearing for the Appellant submits that the Appellant‟s activities has remained same and are classified under "Works Contract Service " from 1.06.2007 and therefore the same activity were not covered nor taxable under any other category prior to 01.06.2007. He relies upon the judgments in case of Larsen & Toubro Ltd. 2015 (39) STR 913 (SC), Wexco Homes Pvt. Ltd. 2017 (48) STR 457 (Ker.), B.R. Kohli Construction Pvt. Ltd. 2017 (5) GSTL 182 (TRI) and Sugandha Construction Pvt. Ltd. 2018 (9) GSTL 399 (TRI), Vistar Construction Pvt. Ltd. 2016 (44) STR 675, Zee Telefilms Ltd. He submits that the credit of service tax of input service availed by them was for the period Jan‟2005 to Feb‟2006. The credit was availed in March‟2006 as the service tax was paid in March‟2006. The availment of credit was not debarred in exemption notification. There is no condition in the notification that the service tax on taxable service has to be paid in cash and cenvat credit cannot be utilised. That in any case the cenvat credit could have been denied. He relies upon the decisions in case of Maize Products 2007 (79) RLT 662 (TRI), MAIZE Products 2009 (234) 431 (Guj.), Hello Mineral Water Pvt. Ltd. 2004 (174) ELT 422 (All), Mecedez
3|Page ST/107/2009-DB Benz India Ltd. 2015 (40) STR 381. He submits that penalties imposed upon them under Sections 75A, 76. 77. AND 78 are not imposable as transactions were carried out by informing the officers and section 80 is applicable for non imposition of penalty.
3. Ld. AR Sh. G. Jha appearing for the revenue submits that the Appellant were registered with the department under the category of "Construction Services" since 01.11.2004 and registration of GTA Services was obtained on 23.08.2006. The Appellant vide application dated 29.01.2008 applied for addition of service of "Works Contract Services" in their registration which was issued on 17.03.2008.
Therefore the Appellant‟s plea that their service falls under „Works Contract" is not acceptable as said service came into effect from 01.06.2007 and since the Appellant was paying service tax under construction service tax under "Construction service" which has not been held to be ultra vires, appellant cannot say that they were covered under „ Works Contract". He relies upon the Tribunal judgment in case of Pooja Marbles Vs. CST, New Delhi 2017 (3) GSTL 415 (TRI) wherein it was held that from 01.06.2007 appellant can classify services under "Works Contract" and not prior to that. He thus supports the findings of the Appellate and adjudication authority.
4. The Ld. Counsel for Appellant later also filed submission that the CESTAT, Mumbai had allowed their appeal to the effect that the construction activities of the Appellant were not liable for service tax prior to 01.06.2007.
5. Heard both the sides and perused the records. Admittedly the Appellant were registered under the category of construction service and no dispute was raised by them regarding classification of service. Even though the category of "Works Contract" came into effect from 01.06.2007, they applied for said category only in January,2008. They never contested their classification of services before authorities. They had paid service tax on GTA Services under reverse charge mechanism and also availed credit of same. The Appellant‟s first contention that the credit was of service tax on GTA pertained to the period till Feb‟2006 and the service tax was paid on "Construction Services" in March‟2006 hence both are not relatable is not correct. Whatever services of GTA were availed by them was in respect of Construction service and the exemption on value which is in excess of 33% was availed by them continuously. Obviously the tax on construction services paid by them
4|Page ST/107/2009-DB was in respect of continuous service of Construction activity. The construction activity was not initiated and completed in March‟2006, therefore the GTA services before March‟06 has clear linkage for the service tax paid on construction service in March ‟06. We also find that the Appellant did not contest the levy of service tax on construction services, but classified their services into "Works Contract" Service only w.e.f. Jan‟2008. Hence prior to such period the services would remain classified under "Construction Services". The order of Mumbai Tribunal in Appellant‟s case will have no bearing on the present issue as the Appellant has separate registration at Mumbai and is not related to present controversy. However we are in agreement with the Appellant‟s contention that in case of reversal of the credit utilised by them they are eligible for benefit of exemption Notification.
6. We thus, remand back the matter to the adjudicating authority to ensure that the credit is reversed along with interest within four weeks of the passing of this order subject to which the Appellant shall be eligible for the benefit of impugned subject notification. The appeal is allowed by way of remand to the adjudicating authority.
(Pronounced in the open court on 03.06.2019) (Ramesh Nair) Member (Judicial) (Raju) Member (Technical) Seema