The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Kolkata bench has observed that the notification applying the service tax on works contract services under the reverse charge mechanism (RCM) is not applicable to corporate-assessee.
The Appellant-assessee, M/s TDK India Pvt Ltd, is engaged in the manufacture of soft ferrite parts/components under the Central Excise Tariff Act, 1985. The central excise department has issued a notice to the Appellant alleging wrong availment and utilization of cenvat credit on Air Travel Agency Service, Works Contract Service and Construction Service etc.
Rejecting the contentions of the appellant, the Adjudicating Authority has confirmed the demand as proposed in the Show-cause notice and appropriated a sum of Rs.35,536/-, which was paid/reversed by the Appellant. An amount of Rs.6090/- was also paid towards the interest liability.
On appeal, the first appellate authority has rejected the appeal and upheld the adjudication order. Hence, the present appeal before the Tribunal.
Shri P. K. Choudhary, Judicial Member observed that in the impugned order that w.e.f 01.07.2012, vide Notification No.30/2012- ST, the reverse charge mechanism for Works Contract Service was introduced.
“I find that this Notification is applicable to individual/partnership firm and Hindu Undivided Family (HUF). It is not applicable to corporate assessee. The Appellant herein is a Private Limited Company and the services are supplied by Private Limited Company. Accordingly, this Notification is not applicable to the present case. Further, the Ld. Commissioner (Appeals) has also referred to Notification No.26/2012-ST dated 01.07.2012 for valuation of service and abatement. This Notification is also not applicable to the facts of the present case. Therefore, the credit disallowed under the “Works Contract Service” cannot be sustained and the same is set aside,” the Tribunal said.
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