RNS INFRASTRUCTURE LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THIS appeal is directed against the Order -in -original No. 07/2008 -(Commr.) date 8 -9 -2008.

(2.) The relevant facts that arise for consideration are that the Appellants herein are registered with the authorities for rendering various taxable services viz. 'commercial or industrial construction service', 'consulting engineer's service', 'business auxiliary service', 'manpower recruitment agency service' and 'transport of goods by road under Goods Transport Agency' service. The officers of the Central Excise HQ Preventive (Service Tax), Belgaum visited the premises of the Appellants, on an intelligence, that they are not discharging the service tax liability on services of 'commercial or industrial construction' rendered to Bellary Thermal Power Station (BTPS for short) plant despite receiving consideration. On verification of the records, it was noticed that the Appellants had received an amount from Karnataka Power Corporation Ltd. (KPCL for short) for construction of raw water pond inside the BTPS plant and also received other amounts pertaining to various receipts and that the Appellants had not discharged service tax to the tune of Rs. 9,24,430/ - in respect of various services rendered during 1 -4 -2006 to 31 -1 -2007. A show -cause notice was issued to the Appellants to show cause as to why unpaid service tax and which escaped the assessment be not demanded from them and along with interest and penalty be not imposed. The Appellants resisted the show -cause notice on various grounds. The Adjudicating Authority after considering the submissions made by the Appellants, came to the conclusion that the Appellants are liable to pay the service tax in respect of the receipt of construction of raw water pond for BTPS plant and are ineligible for availment of abatement of 67% under Notification No. 1/2006 as regards other receipts to various other construction activities undertaken by them during the period 1 -4 -2006 to 31 -1 -2007 and are liable to pay the amount which they are collected for the various services rendered but did not deposited with the Department. Coming to such conclusion, he confirmed the demand along with interest and imposed penalties under Section 76 and 78 of the Finance Act, 1994. Hence, this appeal.

(3.) LD . Counsel appearing on behalf of the Appellants would submit that as regards the issue of non -depositing of an amount of Rs. 9,24,430/ - with the Department, it is his submission that the entire amount was paid on 31 -3 -2007. He submitted that the service taxes which were collected by them could not be deposited with the Department due to financial difficulties. It is his submission that they are challenging only the penalties as they had already paid the amount along with interest before issuance of show -cause notice and hence, penalties imposed under Section 76 & 78 should be set aside. As regards the other two demands raised by the Department, he would submit that in respect of construction of raw water pond to the BTPS plant this would fall under the category of 'works contract'. He would fairly concede, that this point was not taken by them before the Adjudicating Authority in reply to the show -cause notice during the personal hearing. He would submit that an identical issue was decided by this Bench in the case of Soma Enterprise Ltd. v. CC, CE & ST, Hyderabad : 2009 (15) S.T.R. 559 ) and in the case of Nagarjuna Construction Co. Ltd. v. CCE, Hyderabad, 2010 (19) S.T.R. 259) .. He would submit that this issue may be remanded back for re -consideration by the Adjudicating Authority. As regards the demand of differential service tax on abatement availed by them, it is his submission that they had never taken the benefit of MODVAT credit and hence they are eligible for the benefit of Notification No. 1/2006, dated 1 -3 -2006. He would submit that they produced various evidences regarding the reversal of the CENVAT Credit availed on the common input services and also contended that the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 will be applicable and the entire amount of credit need not be reversed, but the Adjudicating Authority had not discussed this issue.