I. TRIBUNAL
12 Shanti Construction Co. vs. CCE&ST [2021 (54) GSTL 164 (Tri-Ahm)] Date of order: 18th June, 2021
Reversal of CENVAT credit availed when output service was taxable is not required to be reversed on grant of retrospective exemption subsequently
FACTS
The appellants provided works contract services to various Government departments. They availed credit on input service from various sub-contractors on which the sub-contractors had discharged service tax. The appellant availed and utilised the CENVAT credit for discharging the service tax liability for the period 1st April, 2015 to 29th February, 2016. The Central Government later inserted section 102 to the Finance Act, 1994 for giving retrospective exemption to works contract services provided to the Government, local authority or Governmental authority and allowing refund of service tax paid for such services. The appellant filed a refund claim for service tax paid which was partially rejected, to the extent payment was made through the utilisation of CENVAT credit, by the Commissioner (Appeals).
HELD
The appellant had discharged the service tax as per the legal provision prevailing at that time and hence was rightfully entitled to CENVAT credit. Section 102 was unambiguous with respect to the amount to be refunded retrospectively and had no distinction whether it was paid in cash or through the utilisation of CENVAT credit. Thus, the appellant’s claim falls within the purview of section 102 and hence is held eligible for the refund of the entire service tax
paid.
13 Neyveli Lignite Corporation Ltd. vs. CCE&ST [2021 (53) GSTL 401 (Tri-Chen)] Date of order: 26th July, 2021
Service tax is not applicable on liquidated damages recovered by appellant for not completing the task in the scheduled time as per the terms of the contract
FACTS
The appellant, formerly known as Neyveli Lignite Corporation India Limited, was engaged in the excavation from the captive mines of lignite that is principally consumed in the generation of electricity. The appellant executed a contract with Bharat Heavy Electricals Limited (BHEL). As per clause 4.7.1 of the said contract, BHEL was required to complete successful performance guarantee within 35 months and 39 months for Unit 1 and Unit 2, respectively. Further, there was a clause 4.9.1 in the contract which stated that liquidated damages would be levied on failure to adhere to the above time limit. As BHEL failed to do so, the appellant recovered liquidated damages from it. Consequently, the Department issued five show cause notices covering the periods from April, 2012 to June, 2017 for recovering service tax on liquidated damages. The appellant submitted a detailed reply stating that service tax was not payable on liquidated damages. However, these contentions were rejected and orders passed holding that liquidated damages were liable for service tax as ‘agreeing to an obligation to tolerate an act’ in terms of section 66E(e).
HELD
Following the decisions of M/s South Eastern Coalfields Ltd. 2020 (12) TMI 912 and Poorva Kshetra Vidyut Vitran Co. Ltd. 2021 (46) GSTL 409, it was held that the view of the Commissioner to charge service tax on liquidated damages recovered was unsustainable.
14 Chadriot International Pvt. Ltd. vs. CCT, Bengaluru East [2021 (54) GSTL 29 (Tri-Bang)] Date of order: 17th June, 2021
Delay in debiting credit is only a procedural delay that does not disentitle the appellant from claiming refund
FACTS
The appellant is engaged in the manufacture and export of granite tiles and is availing CENVAT credit of service tax paid on input services used in the manufacture and export of finished goods. It filed three applications for refund of CENVAT credit under Rule 5 of CCR, 2004 read with Notification No. 27/2012-CE (N.T.) dated 18th June, 2012. Thereafter, the appellant received a show cause notice proposing to reject the refund claim on the ground that the appellant has not debited the amount equivalent to refund claims from the CENVAT register as required under para 2(h) of Notification No. 27/2012 CE (N.T.) dated 18th June, 2012.
The appellant replied to the notice stating that the balance of CENVAT credit was carried forward in TRAN-1 under GST in December, 2017 and the amount equivalent to refund claims was debited from the electronic credit ledger at the time of filing GSTR3B for the period December, 2017. The Original Authority sanctioned the refund after following the due process. However, the Department filed an appeal before the Commissioner (Appeals) against the refund-sanctioning order. The Commissioner (Appeals) set aside the order-in-original sanctioning refund on the ground that credit reversal in GSTR3B pertains to GST credit and not CENVAT credit and disallowed the refund. Aggrieved, the appellant filed this appeal.
HELD
The Tribunal held that credit reversed without being utilised is as good as credit not taken. The delay in debiting credit is merely a procedural lapse which cannot debar the appellant from claiming the refund. Thus, the order rejecting the refund was not sustainable.
