INFOSYS LIMITED Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THIS application filed by the appellant seeks waiver of pre -deposit and stay of recovery in respect of Service Tax of Rs. 11,14,13,495/ - for the period April 2006 to March 2009. The impugned demand arises out of denial of Cenvat credit on Employees Group Health Insurance Service and Construction Service. On the first count, Cenvat credit of over Rs. 1.67 crores was denied to the appellant and, on the second, Cenvat credit of over Rs. 9.47 crores was denied to them. The relevant show -cause notice was issued on 9 -4 -2010 invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994. Learned counsel for the appellant has submitted that the appellant was entitled to avail Cenvat credit on Employees Group Insurance as an 'input service' during the period of dispute. In this connection, he has relied on the Tribunal's decision in the case of Stamen Toyotetsu India Pvt. Ltd. v. Commissioner - : 2009 (14) S.T.R. 316 (Tri -Bang.) as affirmed by the Hon'ble High Court in the case of Commissioner v. Stanzen Toyotetsu India (P) Ltd. - : 2011 (23) S.T.R. 444 (Kar.). With regard to Construction service, it is submitted that the infrastructure for Commercial Training and Coaching Centre was constructed by availing the said service and that the service was utilized in relation to rendering of Commercial Training and Coaching Services, for which the appellant was duly registered with the department. With reference to the definition of 'input service' given under Rule 2(1) of the Cenvat Credit Rules, 2004, learned counsel has argued that the Construction service used by the appellant for setting up of Commercial Training and Coaching Centre fitted very well in the said definition. In this connection, he has particularly referred to the inclusive part of the said definition.

(2.) WITHOUT prejudice to the above submissions, learned counsel further submits that, in any case, the extended period of limitation was not invocable in this case. In the worst case, the appellant may be liable to pay Service Tax to the extent of Rs. 24,40,687/ - coming within the normal period of limitation. In this connection, learned counsel has particularly referred to certain findings recorded by the Commissioner in the context of deciding whether the assessee should be directed to pay penalty under Section 78 of the Finance Act, 1994. It is submitted that it was categorically found by the learned Commissioner that any of the ingredients for such a penalty did not exist in this case. It is pointed out that the ingredients of the proviso to Section 73(1) of the Act for invoking the extended period of limitation are no different and hence the proviso is also not invocable in this case.

(3.) AFTER giving careful consideration to the submissions, we are of the view that the appellant has made out a case against the demand of Service Tax which arises out of the denial of Cenvat credit on Group Insurance Service. The case law cited by the learned counsel seems to be working in favour of the appellant. However, insofar as the Construction service is concerned, the appellant is yet to make out a prima facie case on merit. In this context, it is pertinent to note that, admittedly, the Commercial Coaching and Training Centre was not exclusively used for rendering 'output services' during the material period. It was as well used as in -house mechanism for training the new recruits of the company. However, on the limitation issue, learned counsel has been able to make out a prima facie case. On a perusal of the impugned order, we have found ourselves that, in the context of determining penal liability of the appellant under Section 78 of the Finance Act, 1994, the adjudicating authority recorded a finding to the effect that the ingredients for such a penalty under Section 78 did not exist in the case. There is no independent finding in the impugned order with reference to the proviso to the Section 73(1) of the Act. Prima facie, ingredients for a penalty under Section 78 and for invoking the extended period of limitation under the proviso to Section 73(1) being identical, the learned counsel has made out a case against the demand of duty for the extended period. A stay order passed by this Bench is also apparently in favour of the appellant viz., Stay Order No. 602/2011 dated 25 -7 -2011 in Appeal No. ST/2569/2010 in the case of M/s. Altair Engineering India Pvt. Ltd. [ : 2012 (25) S.T.R. 99 (Tri. - Bang.)] In an overall view of all aspects we have already discussed, we direct the appellant to pre -deposit an amount of Rs. 24,00,000/ - (Rupees Twenty -four Lakhs only) within a period of six weeks and Assistant Registrar to report to the Bench on 31st January 2012. In the event of due compliance, there will be waiver of pre -deposit and stay of recovery in respect of the balance amount.