2013 (12) TMI 156 - AT - Service Tax

Refund of accumulated Cenvat credit - Rule 5 of the Cenvat Credit Rules, 2004 - Notification No. 5/2006-CE - Restriction on availment of Cenvat credit - Availability of Cenvat credit of service tax paid by the service provider under supplementary invoices - Restrospective or prospective - Held that - Cenvat credit availed can be availed by a manufacturer or provider of output service on the basis of challans evidencing the payment of service tax by a person liable to pay the service tax or an invoice, bill or challan issued by the provider of input services or an invoice, bill or challan issued by input service distributor under Rule 4A of Service Tax Rules, 1994 - supplementary invoice evidencing payment of additional duty amount is not to be treated on a different footing vis-a-vis the original invoice evidencing original payment of duty as both these documents were issued under the same provisions of law. Moreover in the Service Tax Rules, 1994 there is provision only for issue of invoice by the service provider or input service distributor and, as such, the Service Tax Rules also do not mention the issue of supplementary invoices when additional service tax is required to be paid due to any reason. In view of this, the term invoice mentioned in Clause (f) and (g) of Rule 9 (1) of Cenvat Credit Rules, 2004 has to be treated including supplementary invoice, as during the period of dispute, with regard to service tax payment, the Rule 9 (1) did not make any distinction between invoice and supplementary invoice . Restriction during the period prior to 1/4/11 was only in respect of supply of inputs and capital goods as provided in clause (b) of Rule 9 (1) and such restriction in supply of services was introduced only w.e.f. 1/4/11 by inserting clause (bb) to Rule 9 (1). Since Rule 9 (1) (bb) does not has retrospective effect, the provisions of the same cannot be applied during the period prior to 1/4/11. I find that same view has been taken by the Division Bench in the cases of M/s JSW Steel Ltd. Salem Works vs. CCE, Salem reported in 2008 (9) TMI 74 - CESTAT, CHENNAI , Chaphekar Engg. Pvt. Ltd. vs. CCE, Pune-I 2013 (11) TMI 1362 - CESTAT MUMBAI and Secure Meters Ltd. vs. CCE, Jaipur -II reported in 2010 (1) TMI 284 - CESTAT, NEW DELHI . Moreover, when a restriction on availment of Cenvat credit in respect of input services has been introduced from a particular date by inserting a provision and that provision is not retrospective, the same cannot be applied with retrospective effect - Decided in favour of assessee.

Summary

Issues:
Availability of Cenvat credit for service tax paid under supplementary invoices prior to 1/4/11.

Analysis:
The case involved a dispute regarding the cash refunds for June 2008 and August 2008, where the appellant, a manufacturer of automobile parts, had accumulated Cenvat credit due to exporting goods without payment of duty under bond/LUT. The dispute arose from availing service tax Cenvat credit based on supplementary invoices issued by service providers, who had paid additional service tax due to a dispute with the Department. The Department rejected the cash refund, citing Rule 9(1)(b) of the Cenvat Credit Rules, which disallows credit if the short payment was due to wilful misstatement or suppression of facts by the supplier. The Assistant Commissioner rejected the refund, upheld by the Commissioner (Appeals), leading to the appeals.

The appellant argued that there was no such condition for availing service tax Cenvat credit on supplementary invoices, citing Tribunal cases. The Department contended that even prior to 1/4/11, Cenvat credit should not be allowed if the supplier deliberately evaded tax. The Tribunal analyzed the provisions of Rule 9(1)(b) and (bb) and relevant cases to determine the availability of Cenvat credit for service tax paid under supplementary invoices.

The Tribunal found that during the period in question, Rule 9(1) did not mention 'supplementary invoice' for service tax payments, unlike for inputs and capital goods. It noted that Rule 9(1)(bb) introducing restrictions for service tax was not retrospective. Relying on precedents, the Tribunal held that the term 'invoice' in Rule 9(1) encompassed supplementary invoices for service tax payments. It concluded that the restriction on availing Cenvat credit for service tax under supplementary invoices was introduced post the dispute period and could not be applied retrospectively. Thus, the impugned order denying the credit was set aside, and the appeals were allowed.

In summary, the judgment clarified the availability of Cenvat credit for service tax paid under supplementary invoices prior to 1/4/11, emphasizing that the restriction introduced later did not apply retrospectively. The Tribunal's analysis of Rule 9(1) and relevant cases provided a clear interpretation of the legal provisions governing Cenvat credit in this context, leading to the decision in favor of the appellant.