Service Tax – Cestat New Delhi: As the agreement specifically refers to the amount as an advance which would be adjusted with the fees payable, hence the advance cannot be treated as security deposit and is liable to Service tax - Appellant did try to evade payment of service tax by treating the advance amount as a security deposit, the case is suppression of material facts [Order attached]
Order Date – 20 January 2023
Parties: Applied Solar Technologies (India) Pvt. Ltd. Vs The Commissioner, Central Goods & Service Tax (Audit-II)
- The appellant, Applied Solar Technologies (India) Pvt. Ltd. is engaged in the business of providing Hybrid Power Solutions to the towers of various telecom service operators.
- The appellant provides uninterrupted power supply through solar/diesel systems for the operation and maintenances of such sites in case power supplied by the Electricity Board is not available for some reason.
- A show cause notice dated 18.04.2016 was issued to the appellant for the period 2010-11 to 2014-15 regarding non-payment of service tax of Rs. 69,23,985/- on the advances received from clients in relation to the services to be provided and regarding irregular availing of CENVAT credit of Rs.2,28,64,576/- in respect of capital goods and utilization thereof.
- Whether the amount received by the appellant from M/s. Indus Towers Ltd. should be treated as an advance, on which service tax is to be levied ?
- Whether CENVAT credit availed by the appellant on goods namely MS angles, GI sheets, Bolts, Shelter Cabins, Structures of iron & steel, MS huts, fabricated and galvanized structures is allowed?
- The Tribunal observed that the appellant, has rightly availed CENVAT credit on MS angles GI sheets, Bolts, Shelter Cabins, Structures of iron & steel, MS nuts, fabricated and galvanized structures, through which the appellant rendered taxable output service. The appellant, therefore, has rightly availed CENVAT credit.
- The Commissioner further observed that agreement provides that the appellant shall, at its own cost, install, operate and maintain the Hybrid Solar Solution for a period of 10 years for which M/s Indus Tower Ltd. shall pay an advance in respect of each of the sites which amount shall be calculated as equivalent of two months estimated fee and such advance shall be liable for adjustment with the fees payable for the last two months of the term. The Agreement, therefore, specifically refers to the amount as an advance which would be adjusted with the fees payable for the last two months.
- Thus, there is, therefore, no error in the finding recorded by the Commissioner on this issue.
- The appeal is partly allowed.