"(1) CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court – I Service Tax Appeal No. 468 of 2012 (Arising out of Order-in-Original No. 52/2011 (S.Tax) dt.14.11.2011 passed by Commissioner of Customs, Central Excise & Service Tax, Visakhapatnam-I) RKEC Projects Ltd D.No.10-12-1, Rednam Alcazar, Opp. SBI Main Branch, Rednam Gardens, Visakhapatnam, AP – 530 020 ......Appellant VERSUS Commissioner of Central Tax Visakhapatnam-I Port Area, Visakhapatnam, Andhra Pradesh – 530 035 ……Respondent Appearance Shri Y. Sreenivasa Reddy, Advocate for the Appellant. Shri Sandeep Kumar Payal, AR for the Respondent. Coram: HON'BLE MR. R. MURALIDHAR (JUDICIAL) HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30359/2024 Date of Hearing: 23.08.2024 Date of Decision: 23.08.2024 [Order per: BENCH] The Appellant is providing various services to 11 projects at Public Sector Enterprises. They were issued SCN on 13.04.2010 demanding Service Tax under various heads for the period 2005-06 to 2008-09. After due process, the Adjudicating Authority has dropped certain demands and confirmed majority of demands. Being aggrieved, the Appellant is before the Tribunal. The details of confirmed demands are as per the following table:- (2) Statement with details of liability of service tax as calculated by the appellant vis-à-vis the show cause notice dt.13.4.2010 issued to RKEC Projects Pvt Ltd in Appeal No.ST/468/2012 S. No. Year Client Scope of the work executed Period Category of demand ST as per Revenue (Rs) Whether taxable, if not why? (As per the Appellant) 1 2 3 4 5 6 7 8 1 2005- 06 Director General of Naval Projects, Ministry of Defence, GOI Repair of Jetty and renovation of Weapon Repair facility at Naval Dockyard 2005- 06 MMRS 2785620 No. (a)They are works contracts not liable to ST prior to 1.6.2007 and even thereafter as excluded from the defintion of the term 'CICS' and 'WC' (b) Repairs of government buildings are exempted granted retrospectively vide Section 98 of the Finance Act (c) Repair of immovable property prior to 01.05.2006 not taxable 2 2006- 07 2006- 07 220320 3 2007- 08 2006- 07 55166 4 2008- 09 2008- 09 6521136 Sub Total-A 95,82,242 5 2004- 05 IOCL, Trichy Construction of buildings as works contract 2004- 05 to 2005- 06 CICS 665772 No. Works contract not taxable till 1.6.2007. 6 2005- 06 IOCL, Trichy 2004- 05 to 2005- 06 CICS 1096942 7 2005- 06 Kakinada Sea Ports Ltd Construction of Port as WCS 2005- 06 CICS 1550094 DEMAND DROPPED 8 2006- 07 Essar Projects Ltd Supply of Piling Rig 2006- 07 CICS 91800 No. (a) It is a WCS not liable to tax and (b) SOTG service was not liable to ST during the relevant period w.e.f. 16.5.2008 (SCN- p.27) 9 Sub Total-B 34,04,608 10 A+B 1,29,86,850 (3) 11 Essar & Kakinada Sea Ports Short payments during normal course 2005- 06 to 2008- 09 Short Payments 30,63,237 Demand of Rs.6,36,381/- (6,13,837+22544) up to 1.6.2007 is not payable since it is related to WCS which is not taxable 12 GTA 2006- 07 to 2008- 09 GTA 9,77,011 No evidence that services are from GTA 13 Sub-Total (C) 40,40,248 14 D Cenvat credit on Capital goods 2006- 07 & 2007- 08 Credit on capital goods 20,84,616 Credit is not allowed since the same were received at other places and for provision of exempted service. This is factually not correct. Rule 4(1) is not applicable to capital goods and Credit is not recoverable if used both for provision of exempted and taxable services under erstwhile Rule 6(4) of CCR. CA certificate produced now. 15 E Cenvat credit on inputs 2005- 06 to 2008- 09 cenvat credit on inputs 70,41,501 Copies of invoices including some originals were furnished after PH with the permission of adjudicating authority are not taken into account. Reversed credit availed on exempted services on exempted services prior to issue of notice (p.78) 16 Grand Total (A+B+C+D+E) 2,61,53,215 Paid Rs.79,87,299/- along with interest 2. Learned Counsel submits that in case of S.No.1 to 4 above, demand has been made under ‘Management, Maintenance & Repair Service’ (MMRS), whereas they have provided composite contracts service involving goods and services. Hence, the same is liable to be treated as Works Contract. In case of composite Works Contract, it has been consistently held that no (4) Service Tax is payable till 31.05.2007. In respect of S.No.5, 6 & 8, the demand has been made under the category of ‘Construction of Industrial Complex service’ (CICS). He submits that the service is in the nature of Works Contract. The entire demand pertains to the period 2004-05 to 31.05.2007. Hence, no Service Tax is required to be paid. 3. In respect of S.No.11, he submits that on account of certain short payments, demand has been raised for an amount of Rs.30,63,237/-. Out of this, the Appellant has admitted the short payment and paid an amount of Rs.24,26,857/- along with interest of Rs.9,34,164/- before the SCN was issued. He submits that this amount was also appropriated in the OIO. He submits that the balance amount of Rs.6,36,381/- is not payable since the service provided was that of Works Contract service, which was provided prior to 01.06.2007. 4. In respect of S.No.14, he submits that Cenvat Credit of Rs.20,84,616/- was not allowed on the ground that the capital goods in question were received in other places for provision of exempted services. He submits that this is factually not correct. The capital goods in question were being used for provision of both taxable and exempted services. Learned Counsel submits that they have provided documentary evidence towards this to the Adjudicating Authority. Now he produces copy of CA Certificate certifying the usage of such capital goods. Hence, he submits that denial of Cenvat Credit to the extent of Rs.20,84,616/- is erroneous. 5. In respect of denial of Cenvat Credit of Rs.39,47,390/-, he submits that the Adjudicating Authority has denied Cenvat Credit on the ground that the Appellants were not in a position to produce the original copies of the Cenvat availing invoices. He fairly submits that in respect of Cenvat Credit of Rs.9,16,391/-, the Appellants were not in a position to produce even photo copy of the invoices. Therefore, he submits that they are not contesting this demand amount and they have already paid Rs.9,16,391/- along with interest. In respect of balance amount, he submits that the Appellant has got photo copies of the relevant invoices and they can also produce corroborative evidence in the form of ledger and other documents to the effect that goods in question were received by the Appellant and were also used for provision of taxable services. (5) 6. In respect of GTA services, he submits that they have already paid Rs.8,06,767/-. The Appellant is willing to pay interest on this amount and also provide evidence as to why the balance amount is not payable. 7. In view of the above submissions, learned Counsel prays that the Appeal may be allowed. 8. Learned AR reiterates the findings of the Adjudicating Authority. He submits that the Appellant has not effectively proved that the services in respect of S.No.1 to 4 would get classified under Works Contract service. Even in respect of S.No.5, 6 & 8, he submits that no proper documentary evidence was placed to the effect that the Appellant was providing Works Contract service. Therefore, he justifies the demands confirmed. In respect of Cenvat Credit denied, he submits that the Appellant has not brought in any proper evidence to the effect that goods in question were being used for providing both taxable and exempted services. He also submits that the CA certificate produced now was not placed before the Adjudicating Authority. In respect of denial of Cenvat Credit of Rs.39,47,390/-, he submits that the Appellant had produced only photo copies of the invoices which are not proper documents in terms of Rule 9 of Cenvat Credit Rules, 2004. In some cases even the photocopies were not produced. Therefore, he justifies the demands confirmed by the Adjudicating Authority. Hence, he prays that the Appeal may be dismissed. 9. Heard both sides and perused Appeal papers and documentary evidence placed before us. 10. We find that the Appellant is mainly taking the pleading that they were providing services and were also using their own goods, because of which the services should be classified under Works Contract service. Both in the cases where demands have been raised under MMRS & CICS, Appellant’s pleading is that they have supplied goods as well as provided services. Appellant also has submitted that they were paying VAT to the local authorities treating the same as Works Contract under the VAT statutory provisions also. In such a case, we take the view that Appellant should be given an opportunity to prove these facts before the Adjudicating Authority. We also find force in the Appellant’s argument that no Service Tax was payable for the period till 31.05.2007 as held in catena of decisions. The (6) Adjudicating Authority is required to verify the documentary evidence to the effect that the services would fall under the category of Works Contract service and once he is satisfied, the demands till 31.05.2007 should be dropped. In case of MMRS, the Appellant has also pleaded that even under this category, they would be eligible for tax exemption if the service is provided to Government. The Adjudicating Authority should give opportunity to the Appellant to make their submissions on this count also. 11. In respect of short payment pointed out to the extent of Rs.30,63,237/-, the Appellant submits that Rs.24,26,857/- along with interest of Rs.9,34,164/- has already been paid by them and appropriated by the Adjudicating Authority while passing the impugned order. In respect of the balance Rs.6,36,381/-, their pleading towards services being provided under Works Contract service for the period till 31.05.2007 is to be verified by the Adjudicating Authority and if it is found so, the demand has to be dropped. 12. In respect of the denial of Cenvat Credit on the ground that capital goods were used for provision of exempted services, the documentary evidence placed by the Appellant to the effect that capital goods were used for provision of both taxable and exempted services should be verified along with the CA Certificate which has now been produced. The Adjudicating Authority should consider all these documents together and pass his Order accordingly. In respect of denial of Cenvat Credit of Rs.39,47,390/-, the Appellant has admitted that they are not in a position to provide any documentary evidence, whatsoever, for an amount of Rs.9,16,391/-. Therefore, the Appellant is directed to pay this amount along with interest thereon. The Appellant is directed to produce photo copies of the invoices in respect of the balance Cenvat Credit along with other corroborative evidence in the form of ledgers for having received the stocks and using the same for provision of taxable services. The Adjudicating Authority to pass considered decision after going through the documentary evidence placed before him. 13. In respect of GTA services, the Appellant’s pleading is that out of demand of Rs.9,77,011/-, they have already paid Rs.8,06,767/-. The Appellant is required to pay interest on this amount and also provide evidence as to why the balance amount is not payable. The Adjudicating Authority to consider these facts and if any further amount is required to be (7) paid for which the Appellant has not provided proper evidence, the balance amount towards GTA services should be recovered from the Appellant along with interest. 14. Coming to the penalties imposed on the Appellant, we feel that to a great extent, the Appellant has been able to prove that if the service happens to be falling under Works Contract service; that too prior to 31.05.2007, no Service Tax is required to be paid. Further, in many cases they have paid the Service Tax with or without interest. The Adjudicating Authority to consider the factual details and impose the penalty as per the statutory provisions. 15. Appeal is disposed of thus. (Dictated and pronounced in the Open Court) (R. MURALIDHAR) MEMBER (JUDICIAL) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda "