2013 (11) TMI 1067 - AT - Service Tax

Stay application - Waiver of pre deposit - Availment of ineligible cenvat credit of the service tax distributed by head office under Input Service Distributor invoices - Held that - Cenvat credit is availed of the service tax distributed by the appellant s head office as an ISD. The amount of service tax paid by the appellant s head office is in respect of sale of properties of the assessee, which, in my view, on merits is a question which is debatable, as it would not fall under the definition of input services as defined under Rule 2(l) of the Central Excise Rules, 2004. At the same time, the appellant s counsel raised question of limitation which merits some consideration as, this so called ineligible Cenvat credit was pointed out by the audit party in June 2009, for which the appellant replied in detail in July 2009. Despite such correspondence, I find that the show cause notice was issued in February 2011. Appellant has point on limitation. Accordingly, prima facie, the appellant has made out a case on limitation - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of an amount due to availing ineligible cenvat credit.
2. Debatability of the availed cenvat credit in relation to the definition of input services.
3. Consideration of the limitation period for issuing the show cause notice.

Analysis:
The judgment by Mr. M.V. Ravindran of the Appellate Tribunal CESTAT AHMEDABAD pertains to a stay petition filed for the waiver of pre-deposit of an amount, interest, and penalty due to availing ineligible cenvat credit of service tax distributed by the appellant's head office under Input Service Distributor invoices. Upon hearing both sides and examining the record, it was noted that the cenvat credit in question was indeed availed by the appellant's head office as an ISD, specifically related to the sale of properties. The judge found this matter to be debatable as it may not fall under the definition of input services as per Rule 2(l) of the Central Excise Rules, 2004. Additionally, the judge acknowledged the appellant's argument regarding the limitation period, highlighting that the audit party had identified the ineligible credit in June 2009, with the appellant responding in detail the following month. Despite this, the show cause notice was issued in February 2011, indicating a potential limitation issue. Consequently, the judge concluded that the appellant had raised a valid point on limitation, allowing the application for the waiver of pre-deposit based on the limitation aspect and staying the recovery until the appeal's disposal. The decision was dictated and pronounced in court, granting relief to the appellant on the grounds of limitation.