2016 (4) TMI 1246 - AT - Service Tax

CENVAT credit - capital goods - input services - Held that - The credit availed on motor cars is per se not admissible as the services rendered do not fall within the category mentioned in clause (B) of Rule 2(a) of the definition of capital goods given in the Cenvat Credit Rules, 2004 - The credit on certain other capital goods (Rs. 49,065/-) has been denied for the reason that appellant has not mentioned the classification of goods in their invoices. Time limitation - Held that - The appellant failed to file ST-3 returns. Only on filing such service tax return would the availment of credit on motor car and capital goods be disclosed to the Service Tax Department. Filing of income-tax returns would not suffice the requirement to file ST-3 returns - extended period invoked. Appeal dismissed - decided against appellant.

Summary

Issues:
Challenge to disallowance of credit on capital goods and input services.

Analysis:
1. The appellant challenged the disallowance of credit on capital goods and input services. The appellant, engaged in providing taxable services as an authorized service station, availed irregular credit on motor cars and certain capital goods, along with input services. The disallowed amounts were Rs. 4,35,442/- on motor cars, Rs. 74,036/- on unspecified capital goods, and Rs. 92,760/- on input services due to various reasons such as non-admissibility under Cenvat Credit Rules and lack of proper documentation.

2. A show cause notice was issued demanding a total of &8377; 6,02,238/- along with interest and proposing an equal amount of penalty. The original authority confirmed the demand and imposed penalties. The appellant then filed an appeal, leading to the Commissioner (Appeals) partially allowing the credit but disallowing a significant portion, resulting in a revised penalty.

3. The Commissioner (Appeals) considered the delay in issuing a centralized registration certificate to the appellant and allowed credit availed on input services post a specific date, while disallowing credit availed before that date. The Commissioner allowed an amount of &8377; 1,17,731/- and disallowed &8377; 4,84,507/-, revising the penalty accordingly. The appellant appealed against the disallowance of credit and the revised penalty.

4. Upon review, the Tribunal found that the disallowed credit on motor cars and certain capital goods was justified as they did not meet the criteria for admissibility under the Cenvat Credit Rules. The appellant's failure to specify the classification of goods in invoices further supported the denial of credit on certain capital goods.

5. The appellant raised a contention on the limitation period, arguing that the demand was time-barred due to the delay in issuing the show cause notice. However, the Tribunal held that the appellant's failure to file ST-3 returns, which would disclose the credit availed, constituted wilful suppression of facts, justifying the extended period for the demand.

6. Ultimately, the Tribunal dismissed the appeal on the grounds of limitation and merits, upholding the decision of the Commissioner (Appeals) regarding the disallowed credit and penalties, emphasizing the importance of proper documentation, adherence to rules, and timely compliance with tax return requirements.

Conclusion:
The Tribunal upheld the disallowance of credit on capital goods and input services, emphasizing compliance with Cenvat Credit Rules, proper documentation, and timely filing of tax returns to avoid penalties and limitations on credit availment.