2015 (2) TMI 843 - AT - Service Tax

Practising Chartered Accountant and Management Consultancy Services - Exempted and Taxable services - Duty paid with out claiming benefit of Notifications No. 25/2006 & Notification No. 4/2006 - Cenvat credit of invoices raised in name of other office address - Held that - The first issue is whether the credit of input Service Tax is available on basis of invoices which were addressed to the Worli office but the credit thereof was availed in the Mafatlal House office. We find that in similar cases, credit has been allowed. In the case of DNH Spinners 2009 (7) TMI 130 - CESTAT, AHMEDABAD , the Tribunal held that credit cannot be denied on technical grounds that the documents were not in the name of assessee s factor at Silvassa but the same were issued in the name of the Head office of the assessee situated at Mumbai. In the case of Modern Petrofils 2010 (7) TMI 319 - CESTAT, AHMEDABAD , it was held that credit may not be denied because the invoices were in the name of the Head office instead of factory, as long as there is no allegation that the inputs services are not relatable to the factory and were consumed in the factory. Following these decisions, we hold that credit cannot be denied for the procedural infraction that the addressee in the invoices was another office of the appellant. It is not the case of Revenue that the input services have not been used to provide the output services. It is also not the case of Revenue that the input services were consumed both in the Mafatlal House office and in the Worli office. The appellant s claim is that the invoices are normally addressed to the Worli office which is also their Financial Accounting office. Therefore we see no reason to disallow the credit. It was submitted by the learned Counsel during the hearing that he would not mind if this part of the matter is remitted to the Commissioner for factual verification. Accordingly we allow the CENVAT credit on principle, but remand the case to the Commissioner for verifying that the inputs services in respect of these invoices were actually used in the Mafatlal House office and not in the Worli office. The second matter to determined in this case is whether the appellant had provided taxable and exempted services so as to fall under the restrictive clause of Rule 6(3)(c) which allows credit only to the extent of 20% of the Service Tax payable on output services. Conditionality in Notification No. 4/2004 has not been discussed at all by the Commissioner in the impugned order. The Commissioner simply states that the appellant devised his own way of defeating the provisions of Rule 6 (3)(c) by paying Service Tax on their own volition in respect of exempted services. We cannot appreciate this finding of the Commissioner in view of the legal frame work in which the Notification NO. 25/2006 and 04/2004 operate. We reject this finding. Rather we do agree with the argument of the learned C.A. about the lack of provisions in Service Tax law which are akin to Section 5(A)(1A) of the Central Excise Act. It was held in the case of Crown Products Pvt. Ltd. 2012 (8) TMI 373 - CESTAT, MUMBAI that there is no law barring an assessee from paying tax on exempted services and claiming refund thereafter. Thus it is clear that under Service Tax law, the assessee is not prohibited from paying tax on goods exempted under a notification. Having held so, we find that the appellant had not provided exempted and taxable services in terms of Rule 6(2) of the CENVAT Credit Rules and therefore the restriction of availment of CENVAT Credit up to 20% of the value of taxable services provided would not apply. Decided in favour of appellant.

Issues Involved:
1. Availment of CENVAT credit in excess of the 20% limit.
2. Wrong availment of CENVAT credit on invoices addressed to a different registered unit.
3. Applicability of extended period of limitation and penalties.

Issue-wise Detailed Analysis:

1. Availment of CENVAT Credit in Excess of the 20% Limit:
The appellant argued that they did not provide any exempted services during the disputed period. They claimed that the exempted services shown in the ST-3 returns pertained to services provided before 01.03.2006, when Notification No. 59/1998-ST was in force. The billing for these services was done subsequently, and there was no appropriate column in the ST-3 returns to reflect this income. The Commissioner, however, confirmed the demand based on the allegation that the appellant provided both exempted and taxable services, invoking the restriction under Rule 6(3)(e) of the CENVAT Credit Rules, 2004. The appellant relied on various Supreme Court judgments to argue that confirmation of demand beyond the scope of the show-cause notice is not sustainable in law.

The Tribunal found that the appellant's claim regarding the exempted services being from a period before 01.03.2006 was not disputed by the Revenue. Additionally, the Tribunal agreed with the appellant's contention that Notification No. 25/2006 and Notification No. 4/2004 are conditional notifications, and the appellant chose to pay tax on the entire amount due to the composite nature of the services provided.

2. Wrong Availment of CENVAT Credit on Invoices Addressed to a Different Registered Unit:
The appellant contended that the wrong availment of CENVAT credit was merely a procedural defect, as the input services were received and consumed by the unit at Mafatlal House, although the invoices were addressed to the Worli unit. The Tribunal noted that similar cases had allowed credit despite such procedural infractions, provided the input services were indeed used for providing output services. The Tribunal allowed the CENVAT credit on principle but remanded the case to the Commissioner for factual verification that the input services were used in the Mafatlal House office and not in the Worli office.

3. Applicability of Extended Period of Limitation and Penalties:
The appellant argued that the extended period of limitation could not be invoked as the issue involved interpretation of statutory provisions and procedural infractions. They also contended that suppression of information was not established in the show-cause notice, making the imposition of penalties unsustainable. The Revenue, however, argued that the fact of wrongly addressed invoices was not evident from the ST-3 returns and that the appellant had not revealed they were availing credit on inputs used for both taxable and exempted services.

The Tribunal found that the demand of Service Tax duty did not sustain, making it unnecessary to delve into the aspects of the extended time period and penalties.

Judgment:
The Tribunal set aside the impugned orders, including the demands of Rs. 1,92,10,120 and Rs. 2,78,23,485. The demands of Rs. 31,25,737 and Rs. 5,65,600 on account of wrongly addressed invoices were also set aside, with the matter remanded to the adjudicating authority for verification that the input services were used in the Mafatlal House office. The confirmation of interest and penalty in respect of these demands was also set aside. The appeals were allowed in these terms.

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