Applied Solar Technologies (India) Pvt. Ltd. Vs Commissioner, Central Goods & Service Tax (Audit-II) (CESTAT Delhi)
The third issue that arises for consideration is regarding the invocation of the extended period of limitation in the show cause notice. The relevant portion of the show cause notice invoking the extended period of limitation is reproduced below:
“8. Whereas, from the facts discussed above, it further appears that the assessee, by doing so, had intentionally and willfully suppressed the details of providing/receiving that impugned taxable services and did not file prescribed ST-3 Returns containing the details correctly therein with the intention to short payment/non-payment of the applicable Service Tax on such services. Agreements were never shared by the assessee with the Department so that the nature of these advances could be ascertained from the agreements. Thus there is a clear case of suppression on the part of the assesssee. The assessee was aware about the nature of such advances as he had entered into different types of agreements for different kinds of advances/ security deposits but he has shown under a single heading in his Balance Sheet which reflects his intention to evade the Service Tax. These acts of omission and commission on the part of the assessee resulted in short payment/ non-payment of Service Tax as discussed under aforesaid paras.”
The Commissioner has recorded a finding that though the Agreement referred to the amount as advance but still the appellant made an attempt to treat it as a security deposit, which clearly shows that there was suppression of facts with an intent to evade payment of tax.
There is no error in the finding recorded by the Commissioner in this regard, as indeed the appellant did try to evade payment of service tax by treating the amount as a security deposit when in fact it was clearly an advance, which fact was very specifically mentioned in the Agreement. The intention to evade payment of service tax by suppression of material facts is writ large.
In view of the aforesaid discussion, the denial of CENVAT credit by the impugned order is set aside but the rest of the order of the Commissioner is maintained.
FULL TEXT OF THE CESTAT DELHI ORDER
Applied Solar Technologies (India) Pvt. Ltd1 has filed this appeal to assail the order dated 28.12.2018 passed by the Commissioner of Central Goods and Service Tax (Audit-II), New Delhi2, by which the demand proposed in the show cause notice has been confirmed.
2. The appellant is engaged in the business of providing Hybrid Power Solutions to the towers of various telecom service operators.
The appellant provides uninterrupted power supply through solar/diesel systems for the operation and maintenances of such sites in case power supplied by the Electricity Board is not available for some reason.
3. A show cause notice dated 18.04.2016 was issued to the appellant for the period 2010-11 to 2014-15 regarding non-payment of service tax of Rs. 69,23,985/- on the advances received from clients in relation to the services to be provided and regarding irregular availment of CENVAT credit of Rs.2,28,64,576/- in respect of capital goods and utilization thereof. The relevant portions of the show cause notice is reproduced below:
“1. Non payment of service tax on the advances received from clients in relation to the services to the provided.
4. Whereas, during the course of audit, it was noticed that the assessee had received advance from M/s Indus Towers Limited during the years 2010-11 & 2011-12 amounting to Rs.6,72,23,160/- for the services to be provided but the Service Tax was not paid on receipt of such advances. The scrutiny of the agreement namely “Master Hybrid Solar Solution Installation Operation & Maintenance Agreement” (RUD-II) between the assessee and M/s Indus Towers Ltd. (ITL) revealed that the assessee was to be paid advances for the services as per Para 6.7 of the agreement, which were to be adjusted towards the payment for the assessee’s services in the last two months of service availment period. The conditions of the agreement reflected that these amounts recorded as “Advance” were not a refundable deposit. Further as per Clause 3.1 of the said agreement, the contract period was 10 years from the contractual takeover date of each of the Telecom Sites of M/s Indus Tower Ltd. and therefore the advance receipt has not been adjusted so far as the due date to adjust the advance received towards payment for services is yet to come.
4.1 Whereas, the said Para 6.7 of the assessee’s agreement with M/s Indus Towers Ltd. whichrefers to M/s Applied Solar Technology (India) Pvt. Ltd., as “AST” and M/s Indus Towers Ltd., as “Indus” reads as follows:-
xxxxxxxxxx
4.6. Whereas it appears from the above that the assessee was aware about the nature of their aforesaid transactions as evident from the different agreements entered into by the assessee with M/s Indus Towers Limited and other Customers. However the assessee still did not pay the Service Tax amounting to Rs. 69,23,985/- on such advances @ 10.3%, including Cess and the same is liable to be demanded and recovered from them under Section 73(1) of the Act ibid along with applicable Interest under Section 75 of the Act ibid.
II. IRREGULAR AVAILMENT OF CENVAT CREDIT IN RESPECT OF CAPITAL GOODS AND UTILISATION THEREOF:
5. Whereas, during the scrutiny of CENVAT Credit record of the assessee pertaining to capital goods, it was found that the assessee had been availing CENVAT credit on goods such as MS angles, GI Sheets, Bolts, Shelter Cabins, Structures of iron & steel, MS huts, fabricated and galvanized structures by treating such goods as capital goods. From the scrutiny of purchase invoices and the Cenvat records presented by the assessee during the audit, it was observed that during 2010-11 to 2014-15, the assessee had availed CENVAT Credit to the tune of Rs. 2,28,64,576/- on such goods which appeared to be not covered under the definition of Capital Goods as provided in CENVAT Credit Rules, 2004, as amended. Item-wise bifurcation of availment of such Cenvat Credit as Capital Goods has been provided by the assessee for the said period (RUD-V).
xxxxxxxxxxx
5.2 xxxxxxxxxxx Thus, the credit amounting to Rs. 2,28,64,576/- availed by the assessee on such goods appears to be inadmissible, and is thus, liable to be reversed under Rule 14 of the Cenvat Credit Rules, 2004 read with section 73 & 75 of the Finance Act, 1994.
5.3 Whereas, on being pointed out regarding such wrong availment of CENVAT Credit, the assessee reversed an amount of Rs. 1,41,00,814/- on 31.03.2015, 05.04.2015, 31.10.2015 and 30.11.2015 through CENVAT Credit out of total inadmissible Cenvat Credit of Rs.2,28,64,576/-, albeit
Under Protest on all items other than Shelter Cabin. However the assessee neither reversed the remaining Cenvat Credit availed on Shelter Cabin amounting to Rs.87,63,762/- nor paid any interest. In terms of Section 75 readwith Rule 14 of Cenvat Credit Rule, 2004.
5.4 Whereas from the above it appears that the Cenvat Credit amounting to Rs. 2,28,64,576/-claimed as Cenvat Credit as Capital Goods is not admissible to the assessee. Therefore, the assessee is required to reverse the same alongwith interest in terms of Rule 14 readwith Section 73 & 75 of Finance Act, 1994.
6. Thus, in the light of the discussions in the paras above, the total Service Tax liability of the assessee for the period 2010-11 to 2014-15 is tabulated as under:-
Table 1 (Service Tax)
