Custom, Excise & Service Tax Tribunal
Abhilasha Enterprises vs Ce & Cgst Meerut-I on 13 November, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT No.II
(E-Hearing)
Service Tax Appeal No.71249 of 2018
(Arising out of Order-in-Original No.127-Commr./MRT/2018 dated
12/06/2018 passed by Commissioner of Central Goods & Services Tax,
Meerut)
M/s Abhilasha Enterprises, .....Appellant
(D-32, Ajeetpur Industrial Estate, Rampur)
VERSUS
Commissioner of Central Excise &
CGST, Meerut ....Respondent
(Opposite-CCS University, Mangal Pandey Nagar, Meerut-25004) APPEARANCE:
Shri S.K. Mathur, Advocate for the Appellant Smt Chitra Srivastava, Authorised Representative for the Respondent CORAM: HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70800/2025 DATE OF HEARING : 21 August, 2025 DATE OF PRONOUNCEMENT : 13 November, 2025 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Original No.127- Commr./MRT/2018 dated 12/06/2018 passed by Commissioner of Central Goods & Services Tax, Meerut. By the impugned order following has been held:-
"I drop the demand of service tax amounting to Rs.1,53,67,303/- (Rs.One Crore Fifty Three Lacs Sixty Seven Thousand Three Hundred Three only) for the period 2013-14 to 2015-16 as per Annexure-I to the show cause notice. I, however, order that service tax amounting to Service Tax Appeal No.71249 of 2018 2 Rs.31,04,191/- deposited by the party for the period April to September 2016 is liable to be adjusted against the liability for the said period.
2. I disallow the cenvat credit of Rs.93,41,381/- (Rs. Ninety Three Lacs Forty One Thousand Three Hundred Eighty One only) and order for recovery of same along with interem at appropriate rate under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 of the Act.
3. I drop the demand of Rs. 1,06,59,734/- (Rs.One Crore Six Lakhs Fifty Nine Thousand Seven Hundred Thirty Four only) in respect of service provided to UPRNNL.
4. I confirm the demand of service tax Rs. 30,34,350/-(Ra. Thirty La Thirty Four Thousand Three Hundred Fifty only) on earth excavation service provided by the party, under Section 73 of the Finance Act, 1994 alongwith interest at appropriate rate under Section 75 ibid.
5. I impose a penalty of Rs. Rs. 30,34,350/ (Rs. Thirty Lacs Thirty Four Three Hundred Fifty only) under Section 78 of the Finance Act'1994.
6. I also impose penalty of Rs. 93,41,381/ [Rs: Ninety Three Lacs Forty One Thousand Three Hundred Eighty One only) under Rule 15 of CENVAT Credit Rules 2004 read with Section 78/ of the Finance Act, 1994." 2.1 Appellant is registered with the department under registration No.AWJPS7676RSD002 for its two business premises, as provider of "Construction services other than residential complex, including commercial buildings of rival structures" and "Works Contract Service since 09.05.2012. 2.2 Acting upon the intelligence that the appellant was not depositing service tax properly and was availing and utilizing inadmissible cenvat credit on inputs, as per the condition stipulated under Notification 26/2012 dated 20.06.2012 officers of the concern Commissionerate simultaneously searched on 06.10.2016 the head office as well as one of the two business premises of appellant.
Service Tax Appeal No.71249 of 2018 3 2.3 After completion of investigation, a show cause notice dated 20.04.2017 was issued to the appellant, asking them to show cause as to why:-
"i) Service tax amounting to Rs. Rs 3,23,25,578/- (Rupees Three crore twenty three lakhs twenty five thousand five hundred & seventy eight only) (Inclusive of cess), not paid/evaded by them during the period 2013-14 to 2016-
17 (Upto September 2016) for rendering services to their clients should not be demanded and recovered from them under the provisions of proviso to Section 73 (1) of the Finance Act 1994 and the service tax of Rs 32,64,191/- already deposited, be not appropriated against this demand;
ii) Inadmissible Input service credit of Rs. 93,41,381/- (Ninety three lakh forty one thousand three hundred eighty one only), taken and utilised by them during the period 2013-14 to 2016-17 (Upto September 2016) should not be demanded and recovered from them under the provisions of Rule 14 of CENVAT Credit Rules-2004 read with the provisions of proviso to Section 73 (1) of the Finance Act 1994.
iii) Interest at appropriate rate should not be charged/recovered from them under Section 75 of the Finance Act'1994;
iv.) Penalty should not be imposed on them under Section 78 of the Finance Act, 1994 for non-payment of service tax which they were required to pay;
v.) Penalty should not be imposed on them under rule 15 of CENVAT Credit Rules 2004 read with section 78 of the Act for availing and utilising Cenvat credit in irregular manner."
2.4 The said show cause notice was adjudicated as per the impugned Order-in-Original dated 12.06.2018 referred in para 1 above.
2.5 Aggrieved appellant have filed this appeal.
Service Tax Appeal No.71249 of 2018 4 3.1 We have heard Shri S.K. Mathur learned Counsel appearing for the appellant and Smt Chitra Srivastava learned Authorised Representative appearing for the revenue.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 From the impugned order, it is evident that only two demands have been confirmed against the appellant-
(i) Demand of Rs.30,34,350/- in respect of Earth Excavation Services provided by the appellant;
(ii) Cenvat Credit of Rs.93,41,381/- which is in admissible to the appellant.
4.3 For confirming the above demands, impugned order records the findings as follows:-
"14. ADMISSIBILITY OF CENVAT CREDIT (Rs.93,41,381/- as per Annexure-II of SCN) ON INPUT SERVICES 14.1 It has been alleged in the show cause that party had taken und utilized credit on Capital Goods and Input service in terms of notifications No. 26/2012 ST dated 20.06.2012. The party had sub-contracted its civil construction works to various contractors and have availed credit of service tax amount as input service credit on the basis of invoices, issued by there contractors. The details of input service credit taken by the party were given vide their letter dated 23.11.2016. It has been alleged in the show enume notice that the credit of Rs 93,41,381/- availed and utilized by the party during 2013-14 to 2016- 17 (upto Sept.) is not admissible in view of exclusion clause (A) of Rule 2(1) of the Cenvat Credit Rules, 2004 which excludes certain services from the purview of input service.
Rule2 (l) exclusion clause (A) 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 Service Tax Appeal No.71249 of 2018 5 Act (hereinafter referred as specified services) in so far as they are used for -
(a) Construction or execution of works contract of a bushing on a civil structure or part thereof; or
(b) Laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services."
14.2 From perusal of Annexure-II to SCN it is noticed that during 2013-14 to 2016-17 (upto Seept.'16) the party had taken credit of Rs.20,23,973/ оп capital goods and Rs. 1,43,46,678/- on input services, out of which credit of Rs. 93,41,381/-, being credit of service portion in works contract, has been proposed to be denied, being specifically excluded from the definition of 'input service' by exclusion clause (A) of the Rule 2(l) ibid. 14.3 The party in their defence vide letter dated 13.11.2017 has relied on Explanation-2 of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, which lays down that-
Explanation 2. 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]"
14.4 Quoting the above explanation the party has taken in view that barring input credit, they are eligible for all other credit. From the provisions of exclusion clause (A) quoted above, it is clear that service portion in execution of works contract and construction services including servi listed under clause(b) of section 66E of the Finance Act in so far as they are used for construction or execution of works contract of a building or a civil structure or part thereof is excluded from the definition of input service except when Service Tax Appeal No.71249 of 2018 6 used for the provision of one or more of the specified service under 66E clause (b). The party has failed to substantiate that the credit in their case is not barred by the said exclusion clause and prima facie it is clear that the party has wrongly taken credit of service portion in works contract in, contravention of provision of Rule 2(l) amounting to Rs.93,41,381/-which is not admissible to them and the same is recoverable alongwith interest from them under Rule 14 of CENVAT Credit Rules 2004."
15. --------------------------
16. DEMAND OF SERVICE TAX ON SITE FORMATION SERVICES:-(Re 30,34,350/-as per Annexure-IV) 16.1 Show cause notice has alleged that the party has received an amount of Rs. 2,45,45,758/- for Earth excavation during the year 2014-15, which indicates that party had also performed Earth excavation activity. This activity has been specifically covered under the Site formations and clearance excavation and earthmoving, and demolition services hi the Section of the Finance Act, 1004. 16.2 It is alleged that this amount was not declared in the service tax returns filed by the party and they did not pay service tax on the same. The party in their defence has not disputed liability on this service but contended that this value has been included in the taxable value of service during 2014-15.
16.3 From perusal of balance sheet of the party for the year 2014-15 it is observed that sales/ receipts summary under schedule of the balance sheet contains following figures:
1. Sales against works contract Rs.634595620.00
2. Sales against cattle fodder Rs.31451910.32
3. Sales of Chemicals Rs.295627115.89
4. Sales of coresand Rs.19652880.00
5. Sales of Earth Excavation Rs.24549758.00 16.4 From the above it is clear that the receipts from earth excavation services are taken separately and this value is Service Tax Appeal No.71249 of 2018 7 not included in the receipts from works contract. So the contention of the party that this figure has been included in taxable value of works contract is not based on facts and not acceptable. The Earth Excavation activity has been specifically covered under the Site formation and clearance excavation and earthmoving, and demolition services in the Section 65(97a) of the Finance Act, 1994. Неnce, the contention of the party is not tenable and service tux Rs.30,40,350 is payable and recoverable from the party under the law.
17. The party in their defence has pleaded that since the demand is not maintainable no interest is payable and they have relied upon the decision of Hon'ble Supreme Court in the case of M/s Pratibha Processor Vs. UOI [1996(88) ELT-
12(SC). I find that the ratio of the said judgement is su applicable to the instant case. In terms of provision under Section 75 of the Act, the amount of the demand confirmed is required to be paid alongwith interest at appropriate rate. Similarly cenvat credit wrongly taken and utilized amounting to Rs.93,41,381/ is recoverable from the parts alongwith interest in terms of Rule 14 of the CENVAT Credit Rules, 200-4
18. Further I observe that the issue of non payment of service tax on income from "Earth Excavation amounting to Rs. 24549758/- came to notice during the investigation of the case and on scrutiny of balance sheet. The said amount was not disclosed to department in ST-3 return filed by the party. The issue of wrong availment of Cenvat credit also came to notice only during scrutiny of Cenvatable invoices during investigation. The invoices fon availing Cenvat credit are neither uploaded alongwith ST-3 returns not submitted to department. So the issue of wrong availment of credit was unearthed only during the inquiry / investigation in the instant case. Hence the above facts were suppressed from the department to evade payment of service tax in contravention provisions of law Service Tax Appeal No.71249 of 2018 8 in force. As such the extended period under Section 73 (1) of the Finance Act 1994 and Rule 14 of the CENVAT Credit Rules 2004 read with Section 11A of the Central Excise Act'1944 is applicable to the instant case.
19. The party has not declared the value of Taxable services in ST-A returns and have not assessed and paid the proper service tax, therefore they have contravened the provisions of Section of the Act rend with Rita Service tax Rules 1994, section 70 read with Rule 7 ibid. Further by availing and utilizing inadmissible credit on inadmissible input services of CENVAT Credit they have contravened the provisions of Rule 3 Rules, 2004 read with Rule 2(1) ibid. I observe that in the instant case ingredients of wilful suppression of facts with intent to evade payment of service tax alongwith contravention of provisions of Finance Act and Rules made thereunder with intent to evade payment of service tax exists Therefore they are liable for penal action under Section 78 of Finance Act 1994 and Rule 15 of the CENVAT Credit Rules 2004." 4.4 Appellant has in their appeal and during the course of arguments challenged only these demands. Challenging the demand made in respect of Earth Excavation Services, appellant submits that they have paid the service tax in respect of these services and have wrongly included the value of these services under the category of Work Contract Services. Further, they produced a Chartered Accountant certificate to this effect, which is reproduced below:-
Service Tax Appeal No.71249 of 2018 9 Service Tax Appeal No.71249 of 2018 10 4.5 Taking note of the above Chartered Accountant certificate Bench vide Order Sheet dated 10.12.2024 have observed as follows:-
"Learned counsel appearing for the Appellant has filed a reconciliation statement prepared by the Chartered Accountant. A copy of the same has also been forwarded to the Learned Departmental Representative for necessary verification. Further, the learned Counsel has prayed for taking up the hearing of the appeal by virtual mode after verification.
2. Prayer made by the learned counsel for the appellant is accepted. Registry is directed to list the matter on 16.01.2025 for virtual hearing."
Service Tax Appeal No.71249 of 2018 11 4.6 In compliance of the above order, the jurisdictional officers conducted a verification of the same and after verification they send following report:-
Service Tax Appeal No.71249 of 2018 12 4.7 In view of the above verification report, we find that the jurisdictional officers are in agreement with the submissions made by the appellant in respect of this demand that the service tax towards Earth Excavation Services has been paid by the appellant. Accordingly, we do not find any merits in this demand and set aside the same.
4.8 Now, the only issue remains for our consideration with regards to admissibility of Cenvat credit claimed by the appellant. It is the contention of the appellant that the Cenvat credit sought to be denied is the credit of input services and Service Tax Appeal No.71249 of 2018 13 capital goods and not of any input. Appellant in fact have not availed any credit against inputs received by them. 4.9 Appellant contended that definition of 'input service' excludes "service portion of execution of work contract and "construction services including services listed in clause (b) of section 66E of Finance Act, in so far as they are used for (a) construction or execution of work contract of a building or a civil structure or a part thereof, or for (b) for laying of foundation or making of structure for support of capital goods, except for the provision of one or more of the specified service. The above exclusion is applicable except where assessee itself provides one or more of the specified services. Moreover, the credit taken relates to credit of input service and capital goods only, therefore is not covered by exclusion clause of Rule 2(l) of CENVAT credit Rules, 2004. They relied upon the decision of this Tribunal in the case of M/s Shanti Construction Co. Vs CCE & ST, Rajkot 2021 (54) GSTL 164 (Tribunal).
4.10 For ease of reference, we are reproducing the exclusion clause of the definition of input services as per Rule 2(l) of the Cenvat Credit Rules, 2004 below:-
"(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 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
(b) laying of foundation or making of structures for support of capital goods, SECTION 66E. Declared services.- The following shall constitute declared services, namely:-
(a) ......................................
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority.
Service Tax Appeal No.71249 of 2018 14 4.11 From perusal of the above definition of input services, it is evident that from the definition of input service, service portion in execution of works contract and construction services are excluded the definition of input services. Appellant is providing works contract services and availing the benefit of abatement while determining the taxable value. Thus, it is evident that the Cenvat credit would not be available to the appellant in respect of the input services which has been used for execution of such work contracts. From para 14.2 of the impugned order it is evident that entire credit availed by the appellant in respect of capital goods and input services is not sought to be denied. Out of total credit of Rs. 1,63,70,651/- [Rs 20,23,973/- (Capital Goods) + Rs 1,43,46,678/- (Input Services)] only an amount of Rs 93,41,381/- which is attributable to exclusion clause of Rule 2
(l) of Cenvat Credit Rules, 2004 is being be denied. Appellant has not been able to show as to how this credit availed by the appellant was not covered by the exclusion clause. 4.12 In the decision relied upon by the appellant the issue involved was not the same as in the present case. The issue involved in that case is with regards to the reversal of Cenvat credit in respect of the exempted services. Thus, we do not find any merits in the placing reliance on the decision referred above. 4.13 In case of JDSU India Pvt. Ltd. [2016 (42) S.T.R. 752 (Tri.
- Mumbai)], Mumbai Bench has held as follows:
"4. I have carefully considered the submissions made by both the sides. The limited issue to be decided is whether the services of renovation and modernization of the premises are input services for the purpose of availing the Cenvat credit. I find that the appellant have received the services under the cover of invoices of the service provider wherein the services were clearly classified under „works contract service‟ and the service tax was discharged under the classification of works contract. The individual services may be classifiable under various head but when the service provider has opted to classify the service under works contract service and discharged the service tax Service Tax Appeal No.71249 of 2018 15 liability as per the rate applicable to the works contract service, at the recipient and classification cannot be disputed. The works contract service is itself not a particular service but it covers bunch of various services. It is only in accordance with the classification and mode of payment the bunch of various services where the material is also involved, the services are classifiable as works contract service. No doubt if the service providers classify the individual service separately and discharged the service tax in accordance with the classification of individual service such as renovation and modernization, it will be covered under the inclusion clause under the definition of input services. However, if the similar services are provided by the service provider as „works contract service‟ and discharged the service tax liability under the said head, then it will be covered under the exclusion clause of the input service and in my view credit cannot be allowed. In the present case, on perusal of the invoices it is crystal clear that the service provider provided the services under the head of work contract service and discharged the service tax liability accordingly. Therefore, the service which is received by the appellant is of works contract service though it is for the purpose of renovation and modernization of the premises. The appellant is not entitled for Cenvat credit. There cannot be different yardstick for the purpose of classification of service at the service providers and classification of the same service in the recipient end. It is pertinent to note that if as per nature of service, Cenvat credit is decided then exclusion clause provided to „works contract service‟ in the definition of input service will become redundant for the reason that in „works contract service‟, the nature of service involved is like, renovation, repairs, construction, erection, installation and like. These individual service may be input service but if the same service is provided in the forum of „works contract service‟, the same will fall under exclusion clause.
Service Tax Appeal No.71249 of 2018 16 In the present case, since the services of renovation and modernization were provided by the service provider in the form of works contract which is excluded from the definition of input service, Cenvat credit was rightly denied."
4.14 In case of IVAX Paper Chemicals Ltd. [(2023) 8 Centax 272 (Tri.-Hyd)] Hyderabad Bench has held as follows:
19. As regard the credit on "construction service", it is clearly not admissible and so to that extent the amount of Rs. 1,05,424/- out of total demand of Rs. 13,01,140/- as confirmed by the Original Authority and also upheld by Commissioner (Appeals) needs to be upheld. Thus, the extent of demand on account of credit of ineligible service i.e. construction service, the Order of Original Authority and Commissioner (Appeals) is upheld ..... 4.15 From the above, it is evident that appellant have taken inadmissible Cenvat credit in respect of "construction services"
which is not admissible to them. Thus, we do not find any merits in the challenge made to this demand.
4.16 Impugned order rightly invoked the extended period of limitation for making this demand, as the appellant never disclosed the facts that they were taking the Cenvat credit which was inadmissible in view of the expressed provisions of Rule 2(l) of Cenvat Credit Rules, 2004. As we also hold that extended period has been rightly invoked penalties to this extent imposed under Rule 15 of Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 is also justified. 4.17 Summarizing the findings:-
(i) Demand of Rs.30,34,350/- in respect of Earth Excavation Services provided by the appellant along with the penalties of the same amount imposed under Section 78 of the Finance Act is set aside.
(ii) Demand of Rs.93,41,381/- in respect of inadmissible Cenvat credit availed by the appellant along with penalty of same amount imposed under Rule 15 of Cenvat Credit Service Tax Appeal No.71249 of 2018 17 Rules, 2004 read with Section 78 of the Finance Act, 1994 is upheld.
5.1 Appeal is partially allowed as indicated in para 4.17 above.
(Order pronounced in open court on-13 November, 2025) (S.K. MOHANTY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp