C.S.T.-Service Tax – Ahmedabad VERSUS Kirloskar  Brothers Limited

Customs, Excise & Service Tax 

Appellate Tribunal West Zonal

Bench At Ahmedabad

 

REGIONAL BENCH- COURT NO. 3

Service Tax Appeal No. 404 of 2012-DB

(Arising out of OIO-STC/27/COMMR/AHD/2012 dated 16/05/2012 passed by Commissioner of Service Tax-SERVICE TAX – AHMEDABAD)

 

C.S.T.-Service Tax – Ahmedabad

VERSUS

Kirloskar Brothers Limited

APPEARANCE:

Shri Prakash Kumar Singh, Superintendent (AR) for the Appellant Shri Anupam Dighe, Advocate (AR) for the Respondent

CORAM: HON’BLE MEMBER (TECHNICAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. C.L.MAHAR

 

 

Final Order No. A/ 11273 /2023

 

DATE OF HEARING: 18.04.2023 DATE OF DECISION: 14.06.2023

 

 

C.L. MAHAR

 

The brief facts of the matter are that the respondent assessee M/s. Kriloskar Brothers Limited is engaged in providing taxable services under the category of Commercial Construction Service(CCS), Business Auxiliary Service (BAS), Erection, Commissioning and Installation (CAI), Maintenance and Repair Service (MRS) and Consulting Engineers (CER) & Test, Inspection and Certification (TIC) and they are registered for providing these services with the service tax department. The officer of Indian Audit and Accounts Department audited the Financial Records of the Respondent for the period 2004 -2005 to 2007 – 2008 and it was noticed that the Respondent Assessee  had paid service tax under the

 

category of Commercial Construction Service after availing abatement of 67 %. As per the provision of Sr. No. 7 of Notification No. 1/2006 – ST dated 01.03.2006 in spite of the fact that they had availed and utilized cenvat credit on  input services during the above mentioned period of audit. The department was of the view that the benefit under the Notification No. 01/2006 – ST dated 01.03.2006 would only be available provided the assessee has not availed cenvat credit on inputs, input services or capital goods used for providing taxable service under the category of CCS.

• Onthe basis of above view the department issued a show cause notice dated 04.04.2011 demanding the service tax of RS. 1, 07,91,917/- The penal provisions under section 76, 77 and 78 of the Finance Act, 1994 were also    The adjudicating authority found  that the charges in the Show cause notice are not sustainable and therefore the demand of service tax was dropped vide  impugned original dated 16.05.2012.
• The departmentdid not find the Order-In-Original legally correct and reviewed the matter under the provision of 86 (2) of the Finance Act, 1994 and an appeal has been preferred before us wherein following the ground of appeal and prayers have been mentioned :-

“(i)  whether the Cenvat credit of Rs. 68,950/- shown to be availed on inputs, as per the ST-3 return under the category “Construction Service”, for the period October-2005 to March – 2006 and subsequently claimed by the assessee, to be the Cenvat credit on input service, was actually availed on inputs or input services and thereafter arrive at the conclusion as to whether the benefit under Notification No. 15/2004-Sr dated 09.04.2004 was available during the relevant period.

(ii)  Whether the assessee had availed Cenvat credit on any of the input services, which were ultimately used for providing output service under the category “Construction Service” / “Commercial and Industrial Construction Service” and thereafter arrive at the objective satisfaction as to whether the benefit of Notification No. 15/2004-ST dated 09.04.2004 and Notification No. 1/2006-ST dated 01.03.2006, as the case may be is available or otherwise.”

 

• Duringthe course of hearing the respondent assessee mentioned that the cenvat credit availed by the respondents under other services was availed and utilized for payment of service tax under the category of construction service. It has been contended by the Respondent that the allegation that cenvat credit with respect to other inputs, input services availed and utilized for payment of service tax under the category of construction service is correct and not deniable. However, it has further being contended that  the Commissioner order has wrongly been reviewed by the committee and request made in the appeal for remanding the case for fresh adjudication is without any application of

2. The Learned Advocate for the respondent has relied on the following judgments in this regard.

• Bharat Heavy Electricals Ltd. vs. Commissioner of C.Ex., Nagpur -2014 (34) S.T.R. 430 (Tri. – Mumbai)
• Ramadas vs. Joint Commr. of C. Ex., Puducherry – 2021 (44)

G.S.T.L. 258 (Mad.)

 

• Caliber Point Business Solutions Ltd. vs. Commr. of S.T., Mumbai – 2010 (18) S.T.R. 737 (Tri. – Mumbai)
• K.industries vs. Commissioner of Central Excise, Daman – 2013(31)

S.T.R. 59 (Tri – Ahmd.)

 

• It is further being argued that there is no evidencewhat so ever with the department to alleged that the assessee had taken cenvat credit of service tax on input services used for providing commercial or industrial construction service (CICS). It has been mentioned that the service tax paid by the respondent on input services used for providing Business Auxiliary Service (BAS), Erection, Commissioning and Installation (CAI), Maintenance and Repair Service (MRS) and Consulting Engineers (CER) & Test, Inspection and Certification (TIC)  have been taken and they have

 

not taken any input service credit for providing Commercial & Industrial Construction Service and have not followed any conditions of Notification No. 01/2006 – ST dated 01.03.2006.

• It is further being mentioned that the appellants are not sureand had adduced no evidence  in support of their argument that certain service like security service might have been used in Commercial and Industrial Construction Service 
• The Learned Advocate for the respondent have mentioned thatthe condition of Notification No. 01/2006 does not bar them from availing and utilizing cenvat credit availed on providing other services i.e. other than Commercial and Industrial Construction Service and therefore, the utilization of such accumulated cenvat credit for discharge of service tax liability of Commercial and Industrial Construction Service would not dis- entitle them from availing the abatement of 67 %

3. We have also heard in detail the Learned Departmental
4. Before proceeding further it will be appropriate to reproduce here how the learned adjudicating authority has dealt with the issue. The Relevant paragraph of Order-In-Original are reproduced here below:-

“27.3 I also find that the said notification restricts taking 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. The use of words ‘such taxable service’ clearly show that the restriction is meant for the said category of service which in the present case is “Commercial or Industrial Construction Service”. Therefore, the said assessee is not permitted to take cenvat credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing “Commercial or Industrial Construction Service” in order to avail abatement of 67% provided in the said notification. The said assessee is within its right of taking the cenvat credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services on services other than “Commercial or Industrial Construction Service”. Taking cenvat credit for any other taxable category apart from “Commercial or Industrial Construction Service” will not debar the said assessee from claiming abatement under the said notification. I also observe that once the assessee is eligible to avail the abatement

 

of 67% provided in the said notification, he is at liberty to make payment of service tax either in cash or from the accumulated balance of cenvat credit available with him by virtue of cenvat credit taken on other taxable services as both are lawfully accepted modes of service tax payment and there being no stipulation in Cenvat Credit Rules, 2004 for one to one corelation between the input service Cenvat Credit and the payment of service tax on output service. I find that utilisation of cenvat credit for payment of service tax by the said assessee is in accordance with Rule 3(4)(e) of Cenvat Credit Rules, 2004 which reads as ‘The Cenvat credit may be utilized for payment of service tax on any output service’. also find that there I no condition in the said notification which mandates payment of service tax through cash if abatement is claimed. I place reliance on the judgment of CCE V/s Lakshmi Technology & Engineering Industries Ltd reported at 2011

(23) STR 265 (Tribunal).

• It is alleged in the show cause notice that the said assessee has availed cenvat credit on input services. I find from Annexure-A to the show cause notice that the said assessee has availed and utilized cenvat creditof Rs.18,20,573/- in the month of December-2006 and of Rs.5,60,143/- in the month of January-2007. I also find from Annexure-B to the show cause notice that the said assessee has availed and utilized cenvat credit of Rs.2,18,650/- in the month of May-2008. I further find from the ‘Service Tax Credit Register as on 31.12.2006, 31.1.2007 and 31.5.2008’ submitted by the said assessee that during the said periods they had availed cenvat credit on input services of ‘bank charges’, ‘business auxiliary service’, ‘operation & maintenance service, ‘erection & commissioning service’ and ‘security service’. I also accept the certificate dated 4.2012 issued by M/s

P.G. Bhagwat Chartered Accountants who are also their statutory auditors, certifying that the expenses relating to these input services for the months of December-2006, January-2007 and May- 2008 have not been recorded as civil construction cost.

• I have also seen the copies of ST -3 return for the period from April-2006 to September-2008 under the category of “Commercial Construction Service” and the following picture emerges which is tabulated in the below given table:

 

 

Period Of ST-3 Return	Cenvat credit taken and utilized under the category of “ Commercial or Industrial Construction Service”	Service Tax paid through Cenvat Credit	Relevant para of the ST-3 return
April -06 to September- 06	Nil	Nil	4(A)

 

 

October-06 to March- 07	Nil	23,80,716/- (Dec 06 & Jan 07)	4 A (I) (a), (b) & (c)
April 07- to September –07	Nil		4A (I) (a), (b) & (c)
October-07 to March- 08	Nil		4A (I) (a), (b) & (c)
April- 08 to September –08	Nil	2,18,650/-	4A (I) (a), (b) & (c)

 

• Thus, it is amply clear that the said assessee has not taken any cenvatcredit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing “Commercial or Industrial Construction Service”. They have only utilized the cenvat credit taken for other taxable services for payment of service tax under the category of “Commercial or Industrial Construction Service”.
• There is sufficient evidence before me to conclude that the said assessee hasnot taken cenvat credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing “Commercial or Industrial Construction Service”. Thus, I find that there is no violation of the condition of the above notification and the said assessee is eligible to avail abatement of 67% on the gross amount charged by him. In view of this demand of Rs.53,02,937/- for the period from April’06 to March’08 as detailed in Annexure-A to the show cause notice and of Rs. 13,12,146/- for the period from April’08 to September’08 as detailed in Annexure-B to the show cause notice does not sustain. Consequently the proposal for interest and penalty also do not survive on the said amounts.”

 

 

• To check that whether the respondent assessee has availedcenvat credit on input or input services or capital goods used in providing Commercial Construction S

 

 

 

ervice, it is a matter of fact which needs to be verified from the statutory record of the service tax as well as the Financial Accounts of the respondent assessee. As reproduced above, the Adjudicating Authority has physically verified the ST-3 return for the relevant period. He has also taken

 

a chartered accountant certificate in lieu of the verification wherein whether the cenvat credit on the input and input service and capital goods is availed by the respondent assessee or not for basically making them enable to avail the benefit of abatement under Notification No. 01/2006 dated 01.03.2006. The department in its appeal memo has not mentioned anything to disprove the decision reached by the adjudicating authority of dropping the demand as the basic allegations in the show cause notice were not supported by any evidences. It is a matter of record that the adjudicating authority has verified statutory return like ST – 3 return as well as qualified Chartered Accountant has verified and given certificate to the Adjudicating Authority.

• We therefore find that the Adjudicating authority cannot be faultedon presumption by the reviewing authority.
• Duringthe court of hearing the relevant record have also been produced before us and we are convinced that the adjudicating authority has correctly reached at the conclusion that input or input services cenvat credit has not been availed by the respondent assessee while performing the Commercial and Industrial Construction Service.

5. Inview of the above, We do not find any fault in the impugned order in original . We hold that the appeal is without any merit and therefore, deserves to be  Accordingly, we dismiss the appeal.

(Pronounced in the open court on 14.06.2023 )

RAMESH NAIR MEMBER (JUDICIAL)

C.L.MAHAR MEMBER (TECHNICAL)