2026-VIL-1029-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax on Ash Evacuation Service - Removal of ash from ash pond – Demand under the category of ‘site formation and clearance, excavation and earth moving and demolition service’ - The appellant undertook work of evacuation of settled ash from ash pond as a sub-contractor - Whether the activity of removal of ash from ash pond is subject to service tax levy – HELD - The activity of removal of ash from ash pond is not leviable to service tax as it constitutes an essential part of the production process and does not qualify as a service activity - The activities forming part of the production process cannot be subjected to service tax levy - The demand of service tax under the category of site formation and clearance, excavation and earth moving and demolition service is set aside.rnrnWorks Contract Service - Adjustment of Payments - The assessee had deposited service tax amounting to a specific sum during the relevant financial years under the works contract service category - Whether the service tax payments already made by the assessee can be adjusted against the tax demand confirmed by the revenue authority – HELD – From challan-wise details of service tax payments furnished by the assessee it is found that substantial payments were made during the relevant financial years for which no material discrepancy was brought on record by the revenue. When payments are substantiated by documentary evidence in the form of authenticated challans and the revenue authority fails to dispute either the factum of payment or the authenticity thereof, such amounts merit consideration for adjustment against actual liabilities - Differential amounts between confirmed demand and proven payments can be adjusted, and when deposits made during investigation are available, they can be appropriated against such differential amounts - The payments made by the assessee are appropriated against the confirmed demands and no further demand of service tax can be sustained under the works contract service category.rnrnManpower Supply Service - Partial Reverse Charge Eligibility - Whether the assessee is entitled to avail the benefit of partial reverse charge mechanism restricting its service tax liability to 25 percent of the service value – HELD - In terms of Notification No. 30/2012-ST dated 20.06.2012 issued under Section 68(2) of the Finance Act, 1994, the partial reverse charge mechanism in respect of manpower supply service was applicable only where such service was provided by an individual, Hindu Undivided Family, proprietary concern, partnership firm or association of persons, located in the taxable territory, to a business entity registered as a body corporate located in the taxable territory. No material was placed on record to establish the fulfillment of these essential statutory conditions. In the absence of evidence demonstrating eligibility for partial reverse charge, the assessee cannot restrict its service tax liability to 25 percent and must pay full service tax on the entire value. When the assessee had actually deposited service tax at the full rate, such payments can be adjusted against confirmed demands - The claim for partial reverse charge is rejected and the service tax payments made by the assessee at the full rate are appropriated against the confirmed demands.rnrnRevenue neutrality and extended period of limitation - Since the service tax liability would be available as CENVAT credit to the appellant upon payment, a revenue neutral situation arises, and in such circumstances, no demand of service tax can be sustained in view of settled judicial pronouncements. Furthermore, the Revenue failed to adduce evidence of suppression of facts or wilful mis-statement by the appellant to justify invocation of extended period of limitation. The demand raised under extended period of limitation is set aside on the grounds of revenue neutrality and absence of justification for extended period invocation.
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