2013 (9) TMI 923 - AT - Service Tax

CENVAT credit - Input Service Distributor - 4 years delay in availing cenvat credit - Held that - there is inordinate delay of about 4 years in claiming Cenvat credit which would make it almost impossible for Revenue to verify whether these credits have been taken in any other offices of the applicant. Moreover, the decisions of the Tribunal s Larger Bench and the Madras High Court are to the effect that a reasonable time has to be adopted. The order relied upon by the counsel for applicant the facts are not quite clear. It appears to be in a situation where the delay was marginally higher than six months and in a situation where time limit of six months was prescribed just before taking credit. Having regard to various decisions in the matter, I direct the applicant to make a pre-deposit of Rs.1,50,000 within 6 weeks and report compliance on 8.11.2013. Subject to such deposit, pre-deposit of balance dues arising from the impugned order is waived and there shall be stay on collection of such dues during pendency of the appeal - stay granted partly.

Summary

Issues:
1. Time limit for taking credit on input services under Cenvat Credit Rules, 2004.
2. Admissibility of credits taken after a significant delay.
3. Maintainability of appeal without pre-deposit.

Analysis:
1. The case involves a commercial bank registered as an Input Service Distributor under Cenvat Credit Rules, 2004, facing objections from Revenue regarding credits taken on services received during a specific period. The Revenue contended that the credits were based on invoices predating registration and were significantly delayed compared to service receipt dates, leading to a demand confirmation of Rs.3,09,571.

2. The appellant argued that since the rules do not specify a time limit for taking credit on input services, the delay of about 4 years should not invalidate the credits. Citing a judgment from the Madras High Court, the appellant sought admission of the appeal without pre-deposit, emphasizing the absence of a prescribed time limit in the rules.

3. The Revenue opposed the appellant's prayer, asserting that while Rule 4(7) of the Cenvat Credit Rules does not set a specific time limit for input services, a reasonable time frame must be adhered to for credit claims. Referring to relevant decisions, the Revenue argued against the maintainability of the appeal without pre-deposit, highlighting cases where reasonable time limits were upheld for credit claims.

4. Upon considering the arguments, the Tribunal acknowledged the significant delay in claiming Cenvat credit and the challenges it posed for Revenue verification. Relying on precedents emphasizing the adoption of a reasonable time frame, the Tribunal directed the appellant to make a pre-deposit of Rs.1,50,000 within six weeks, with a stay on the collection of the remaining dues pending the appeal. The decision balanced the need for compliance with the rules and the practical challenges posed by the delay in credit claims.