Rachna Gupta ORDER
Dr. Rachna Gupta, Member (J)
1. The appellant in the present case is the holder of Service Tax registration and is engaged in providing construction of residential complex services, construction of other than residential complex services, Sponsorship, Business Auxiliary Service, etc. During Audit, it was observed that appellant was engaged in construction of residential complex service. They had entered into an agreement dated 19.4.2014 with M/s. Ramavat Energy Pvt. Ltd. Jaipur for construction of 'Trimurty's Ariana" Group Housing Project at Ramnagaria, Jagatpura, Jaipur. Vide the said agreement, the following building material was agreed to be provided to the appellant on free issue basis by M/s. Ramavat Energy Pvt. Ltd. for construction of Trimurty's Ariana'.
1. Cement,
2. TMT Rebars (Reinforcement Steel)
3. Tiles, Granite, Marble, Kota stone, etc.
4. Electrical material
5. Sanitary & water supply material
6. Anti-termite wood paints for chakhats
7. 3" thick heat insulation materials
8. Any other material as per contract.
The Audit Team observed that the appellant have wrongly availed Cenvat credit of service tax charged on the invoice for free supply of aforesaid material as an input service. From the details of the availed Cenvat credit given by the appellant, Department observed that the appellant has availed the Cenvat Credit on VAT as well. Accordingly, vide Show Cause Notice No. 1030 dated 26.9.2019, the Cenvat Credit amounting to Rs. 726,010/- was alleged to have been availed in violation of Rule 2A of Service Tax (Determination of Value) Rules, 2006, and accordingly was proposed to be recovered along with the interest and the proportionate penalties. The said proposal was initially confirmed vide the Order No. 45/2000 dated 27.7.2020. The appeal filed against the said order has been rejected vide Order-in-Appeal No. 205/2021 dated 10.06.2021. Still being aggrieved, the appellant is before this Tribunal.
2. Learned Counsel has mentioned that show cause notice was issued with absolutely wrong allegations of irregular availment of Cenvat Credit of Rs. 726,010/-. It is submitted that none of the invoices during the period in question i.e. from April, 2014 to June, 2017 issued by the Contractor mentions the amount of VAT. One of the relied upon documents in the form of invoices has been impressed upon, being issued by the Contractor M/s. Ramavat Energy Pvt. Ltd. in favour of the appellant, to show that it is the amount of Service tax which is mentioned in the said invoices to be includible in the gross value therein. It is on the said amount that the credit has been availed by the appellant, no question of said amount to include VAT at all arises. The allegations were therefore, absolutely wrong. There is no dispute that the appellant has paid tax hence, cannot be denied availment of Cenvat Credit. Confirmation of demand based on said allegations is therefore, liable to be set aside. In addition, it is submitted that the Commissioner (Appeals) otherwise has gone beyond the show cause notice. The question framed by him in para 5 of the order under challenge is absolutely out of the scope of impugned show cause notice. His findings about the impugned transaction to have been covered under section 67D of Finance Act, i.e. the negative list is absolutely beyond the scope of show cause notice. Even the violation of Rule 3 of Cenvat Credit Rules, 2004 as has been held by Commissioner (Appeals) was never the allegation in the show cause notice. With these submissions the order under challenge is prayed to be set aside and appeal prayed to be allowed.
3. While rebutting the submissions, learned Departmental Representative submits that apparently and admittedly the credit has been taken on the gross value mentioned in the invoices. The said gross value admittedly included VAT. Hence, there is nothing wrong in the allegations that the credit has been availed by the appellan........