2015 (9) TMI 781 - AT - Service Tax

Cenvat Credit - duty paying documents - credit taken on the basis of debit notes - Rule 9(1) of Cenvat Credit Rules, 2004 - the debit notes do not contain the information which is required to be mentioned in the invoices issued by the service providers under Rule 4A of the Service Tax Rules, 1994 - Held that - there is no dispute that these persons are dealers. On going through some of these debit notes placed on record, it is seen that all the debit notes mention the Service Tax registration number of the persons issuing the debit notes, which had been issued in respect of the Business Auxiliary Service. These debit notes also mention the full address of the service providers and have been issued to the appellant company. The debit notes mentioned the description of the service as project commission on various projects and the amount of the commission and also the Service Tax paid on the same. On perusal of the sample debit notes, it is clear that these debit notes are in respect of the Business Auxiliary Service for procuring orders provided by the dealers. The nature of the service is also clear from the Service Tax registration number, which is clearly for Business Auxiliary Service. In any case, when the appellant were paying the Service Tax and filing ST-3 Returns, such points could always have been clarified by the assessing officers. - Decided in favor of assessee. Jurisdiction - Held that - since the appellants are a manufacturer of bathroom fittings chargeable to Central Excise duty and are registered with Commissionerate of Central Excise, Delhi-I, the Commissioner of Service Tax, Delhi, could not go into the question of Cenvat credit. - Decided in favor of assessee.

Issues Involved:
1. Eligibility of Cenvat credit based on debit notes.
2. Eligibility of Cenvat credit based on invoices issued by an individual alleged to be an employee.
3. Jurisdiction of the Commissioner, Service Tax, Delhi.
4. Invocation of the extended period of limitation.

Detailed Analysis:

1. Eligibility of Cenvat Credit Based on Debit Notes:
The appellant availed Cenvat credit of Rs. 30,16,390/- on the basis of debit notes issued by commission agents for procuring sales orders. The department contended that debit notes are not valid documents for Cenvat credit under Rule 9(1) of the Cenvat Credit Rules, 2004, as they do not contain all required information per Rule 4A of the Service Tax Rules, 1994. The appellant argued that the debit notes included all necessary details such as Service Tax registration number, full name and address of the service providers, nature of the service, value of the service, and Service Tax paid. The Tribunal referenced cases like Pharmalab Process Equipments Pvt. Ltd. v. CCE, Ahmedabad and others, concluding that debit notes with all required information should be treated as valid documents for Cenvat credit. The Tribunal found that the debit notes in question did contain the necessary details and thus, the denial of Cenvat credit was not justified.

2. Eligibility of Cenvat Credit Based on Invoices Issued by an Individual Alleged to be an Employee:
The appellant took Cenvat credit of Rs. 1,09,410/- based on invoices issued by Shri Pradeep Chopra for procuring sales orders on commission. The department denied this credit, claiming that Chopra was an employee of the appellant, making the service provided a service to self, which is not eligible for Cenvat credit. The appellant countered that Chopra was an independent service provider with a Service Tax registration. The Tribunal, upon reviewing the invoices and the absence of evidence proving Chopra's employment with the appellant, concluded that the denial of credit was unfounded and that Chopra was indeed an independent service provider.

3. Jurisdiction of the Commissioner, Service Tax, Delhi:
The appellant argued that the Commissioner, Service Tax, Delhi, lacked jurisdiction to issue the show cause notice and adjudicate on the eligibility of Cenvat credit, as the appellant was a manufacturer registered with the Central Excise Commissionerate, Delhi-I. The Tribunal agreed, stating that matters related to Cenvat credit should be handled by the Central Excise authorities of Delhi-I, not the Service Tax Commissionerate. Thus, the show cause notice and subsequent adjudication by the Commissioner, Service Tax, Delhi, were deemed beyond jurisdiction.

4. Invocation of the Extended Period of Limitation:
The show cause notice dated 23-9-2010 invoked the extended period for recovery of Cenvat credit for the period March 2006 to March 2007. The appellant contended that they were under a bona fide belief regarding their eligibility for Cenvat credit and had not suppressed any facts. The Tribunal found merit in this argument, noting the lack of evidence for deliberate suppression or misrepresentation by the appellant. Consequently, the invocation of the extended period was not justified.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant on all issues. The denial of Cenvat credit based on debit notes and invoices issued by Shri Pradeep Chopra was found to be unsustainable, and the jurisdictional challenge was upheld. The extended period of limitation was also deemed inapplicable.

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