Pradeep Jain - Chartered Accountant

PJ/Case Law/2013-14/1692

Case:- PAHARPUR COOLING TOWERS LTD VERSUS COMMISSIONER OF C.EX., RAIPUR

Citation:-2013 (31) S.T.R. 227 (Tri.- Del.)

Brief Facts:-This appeal is two years old and rolling on the Board from 2-7-2012 for hearing while interim order was passed on 9-01-2009 waiving pre-deposit. Notice has been issued in sequence seeking presence of the assessee to contest its case. It appears that the assessee is abusing process of law to enjoy the benefit of interim order. Revenue being prejudiced the appeal is decided by this order ex-parte.
The following of the issues are in this case:
(i)            Whether the noticee was entitled to abatement of 67% from the value of commercial or industrial construction service under Notification No. 15/2004-S.T., dated 10-09-2004, even without including the value of free supplied materials in the gross amount of taxable service?
(ii)           Whether the advance received before providing the taxable service is chargeable to service tax;
(iii)          Whether the noticee are entitled to benefit of Cenvat credit;
(iv)          Whether there are calculation errors in the show case notice; and
(v)           Whether the demand is time-barred.

Reasoning of judgment:- We have considered the submission from both sides and we conclude that the principal issue of abatement was denied by the ld Adjudicating authority in terms of para 13.10 of the adjudication order. Upon examination of the Circular No. 80/10/2004-S.T, dated 10-09-2004 Revenue intended taxation by value addition, but the assessee refuted the same. Adjudicating authority appears to have rightly decided the issue against the assessee following taxation of incremental value rightly principle. In so far as taxing of the advance is concerned, there is no ambiguity in the law. Law prescribes that the consideration received before, during and after providing of taxable service should enter into the net of the service tax. Therefore, that issue also goes against the assessee.
The third issue of claim was examination by the ld. adjudicating authority in para-15 of the adjudication order. Appellant failed to support its claim when photocopies of the invoices were only adduced before the Adjudicating Authority. The Authority noted that when inclusion of the value of goods is not done, assessee failed to support its claim of abatement.
Law is well settled that Cenvat credit is allowable to avoid cascading effect. If taxability does not arise, admissibility of Cenvat credit does not arise. Therefore, adjudication has rightly been done on this count also denying benefit.
So far as the calculation error is concerned, authority considered appropriately in para 16 of the order. We do not intervene to that.
So far as time-bar is concerned it is clear that when the conduct of the appellant makes clear that abatement was claimed not in accordance with law and so the proceeding was not time-barred. Therefore, section 73 of the Finance Act, 1994 was rightly invoked and adjudication was done in accordance with law.

Decision:-Appeal is dismissed.
Comment:-The crux of this case is that appellant has taken benefit under the notification no. 15/2004 S.T. dt. 10/09/2014, whereby abatement of 67% in Commercial or Industrial Construction Services is availed without even including the value of materials in the gross amount of taxable service. Moreover, credit was also taken on the basis of photocopies of the invoices that is clearly prohibited in law. In nutshell, it was held that extended period was correctly invoked and the appeal was dismissed, being devoid of any merits.

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PJ/Case Law/2013-14/1692

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