SPML Infra Limited Vs Commissioner of CGST (CESTAT Kolkata)
Held that the Service tax is paid on the basis of the revenue realized towards the provision of the taxable services and not on the basis of the revenue recognition.
Facts-
During the audit of the records of the appellant it was observed that appellants had not paid the service tax dues. Accordingly, the adjudicating authority issued a show cause notice and demanded the service tax amount including interest and penalty. It was also alleged that CENVAT credit of Rs. 10,43,77,114/- availed on/ or utilized should be disallowed and recovered u/r 14 read with section 73.
Conclusion-
The entire demand has been made on the basis of the entries recorded in the book of accounts toward the expected revenue and expense recognition and not on the basis of the actual amounts realized against the contracts undertaken by the appellant.
Held that the Service tax is paid on the basis of the revenue realized towards the provision of the taxable services and not on the basis of the revenue recognition. Impugned order do not point out a single case whereby the amounts realized by the appellant against any of the project undertaken by the appellant were not reflected in their ST-3 return. ST-3 return is based on the revenues realized by the appellant during the period of the return and not on the basis of revenue recognition. Accordingly, we do not find any merits in the impugned order.
FULL TEXT OF THE CESTAT KOLKATA ORDER
This appeal is directed against order in original 98/COMMR/ST-II/KOL/2016-17 dated 13.01.2017. By the impugned order Commissioner has held as follows:
“4.0 ORDER
4.1 I confirm the demand of Service Tax (including Cess) amounting to Rs. 58,14,51,192/- (Rupees Fifty-eight Crore Fourteen Lakh Fifty-one Thousand One Hundred Ninety Two) only in terms of Section 73(2) of the Finance Act.1994, as amended as discussed in para- 3.9 above;
4.2 I order to pay interest on the amount confirmed in para-4.1 above, at the appropriate rate and for the appropriate period in terms of Sec 75 of the Finance Act, 1994, as amended;
4.3 I impose penalty of Rs. 58,14,51,192/- (Rupees Fifty-eight Crore Fourteen Lakh Fifty-one Thousand One Hundred Ninety Two) only in terms of Section 78 of the Finance Act, 1994, as amended; if the demands confirmed above and the interest payable thereon are paid by the notice within thirty days of the date of communication of this order, the amount of penalty under Sec 78 shall be 25% of the Service Tax so determined. The benefit of reduced penalty shall be available only if the amount of penalty so determined has also been paid within the period of thirty days referred above;
4.4 I disallow the Cenvat Credit (including Cess) and confirm the demand amounting to Rs. 18,01,047/-(Rupees Eighteen Lakh One Thousand Forty-seven) only on availing of inadmissible Cenvat credit in terms of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(2) of the Finance Act, 1994 as amended, as discussed in para-3.7.5. I drop the demand for recovery of Cenvat credit (including Cess) of Rs.10,25,76,067/-( Rupees Ten Crore Twenty-five Lakh Seventy-six Thousand Sixty Seven) only for the reasons discussed in para-3.7.5 above;
4.5 I order to pay interest on the amount of Cenvat credit disallowed in paragraph in 4.4 above at the appropriate rate and for the appropriate period in terms of Section 75 of the Finance Act, 1994 read with sec.14 of the Cenvat Credit Rules, 2004;
4.6 I impose penalty of Rs. 18,01,047/-(Rupees Eighteen Lakh One Thousand Forty-seven) only in terms of Rule 15(3) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994 as amended: if the demands confirmed above and the interest payable thereon are paid by the notice within thirty days of the date of communication of this order, the amount of penalty under Sec 78 shall be 25% of the penalty of Rs. 18,01,047/-(Rupees Eighteen Lakh One Thousand Forty seven) only. The benefit of reduced penalty shall be available only if the amount of penalty so determined has also been within the period of thirty days referred above;
4.7 I drop the demand of Interest of Rs.7800/- (Rupees seven Thousand Eight Hundred) only, for the reasons discussed in para-3.8.2 above; I appropriate the amount of Rs. 35,64,560/-(Rupees Thirty-Five Lakh Sixty-Four Thousand Five Hundred Sixty) only as payment towards interest liability, as discussed at paragraph-3.8.3 above;
4.8 I direct the noticee to apply to the concerned Divisional Asst. Commissioner/ Deputy Commissioner immediately from communication of this order, to regularize the issue of quoting of wrong Codes in the challans for payment of interest, as discussed in para- 3.8.3 above.”
2.1 Appellant is providing services under the taxable category of Maintenance and Repair Services, Erection, Commissioning or Installation Services, Construction of Residential Complex Services, Work Contract Services etc.
2.2 During course of audit of the records of the appellant it was observed that appellants had not paid the service tax due on the amounts as indicated in the table below during the period
