2016 (1) TMI 24 - AT - Service Tax

Cenvat Credit - Capital goods installed in the state of Jammu & Kashmir - services availed in the state of Jammu & Kashmir - imporper duty paying document in respect to managerial services availed - Held that - all the branch offices of the appellant remain separate service providers even if a centralized registration for discharging service tax liability is obtained by the appellant. Accordingly it is held that when branch office (service provider) in Jammu & Kashmir was not required to discharge service tax then all the capital goods installed in the state of Jammu & Kashmir have to be considered ineligible for taking credit. - Credit dened. Regarding input services - As per the above proviso to Rule 6(2) of CCR the Cenvat Credit Rules do not apply to taking of Cenvat Credit of Service Tax. Therefore, Cenvat Credit taken with respect to services availed in the state of Jammu & Kashmir, has been correctly denied to the appellant. - Credit dened. Regarding duty paying documents - managerial services received - Held that - The words invoice , bill and challan have not been defined in the Service Tax Rules, 1994 but the details contained in such documents have been prescribed in Rule 4A(1) of these rules. Further provisos under Rule 4A(1) any document, whether or not serially numbered with respect to banking services, GTA Services, and Aircraft Operator Services; has been prescribed. From a collective reading of these provisions we are of the opinion that if details prescribed in Rule 4A(1) of the Service Tax Rules, 1994 are available in a document then the same can be considered as an invoice, bill or challan and will be a proper document for availing Cenvat credit under CCR. - Credit allowed. Extended period of limitation - Held that - an assessee of the stature of the present appellant, having the best legal advise at their command, can not be considered to be ignorant of law. No where in the statutory returns/intimations, submitted to the department and brought on record, that Cenvat Credit of capital goods and services installed/availed in the state of Jammu & Kashmir has been depicted. Appellant never approached the department at any stage that any ambiguity or confusion exists in taking of credit with respect to capital goods/services installed availed in the state of Jammu & Kashmir. - extended period is applicable and penalty, equivalent to the inadmissible credit, imposed upon the appellant is justified. Decided partly in favor of assessee.

Summary

Issues Involved:
1. Admissibility of Cenvat Credit on capital goods installed in Jammu & Kashmir.
2. Admissibility of Cenvat Credit on services availed in Jammu & Kashmir.
3. Eligibility of Cenvat Credit of Rs. 72,66,850/- availed on documents deemed improper by Revenue.
4. Invocation of the extended period for demanding duty and imposing penalty.

Issue-wise Detailed Analysis:

1. Admissibility of Cenvat Credit on Capital Goods Installed in Jammu & Kashmir:
The appellant argued that the capital goods installed in Jammu & Kashmir were used for providing taxable roaming services from Bhubaneswar, thus not violating Rule 6(4) of the Cenvat Credit Rules, 2004 (CCR). The Revenue contended that no taxable service was provided in Jammu & Kashmir, and centralized registration was merely for ease of accounting and service tax payment, not altering the service provider's location. The tribunal observed that centralized registration did not mean services were provided from Bhubaneswar and that the branch office in Jammu & Kashmir was not required to be included in the centralized registration as no taxable service was provided there. Thus, the capital goods installed in Jammu & Kashmir were ineligible for Cenvat Credit, upholding the Adjudicating authority's decision.

2. Admissibility of Cenvat Credit on Services Availed in Jammu & Kashmir:
The tribunal referred to Rule 1 of the CCR, which states that the rules do not apply to the state of Jammu & Kashmir. Therefore, the Cenvat Credit taken for services availed in Jammu & Kashmir was correctly denied, supporting the Adjudicating authority's decision.

3. Eligibility of Cenvat Credit of Rs. 72,66,850/- on Improper Documents:
The appellant argued that the documents contained all requisite particulars as per Rule 4A of the Service Tax Rules, 1994, and cited several case laws supporting their claim. The tribunal noted that if the details prescribed in Rule 4A(1) are available in a document, it can be considered proper for availing Cenvat Credit. Minor procedural irregularities should not deny Cenvat Credit if the utilization of taxable services is established. Thus, the tribunal held that the Cenvat Credit of Rs. 72,66,850/- was correctly availed by the appellant, allowing the appeal to this extent.

4. Invocation of Extended Period and Imposition of Penalty:
The Adjudicating authority found that the appellant had not disclosed the availed credit in Jammu & Kashmir, indicating willful suppression of facts. The appellant argued that there was no willful suppression or misstatement, citing case laws suggesting that penalties should not be imposed for bona fide beliefs. The tribunal agreed with the Adjudicating authority, noting that the appellant, being a corporate entity, should be well aware of the law. The inclusion of the Jammu & Kashmir premises in the centralized registration was a mis-statement, and no service tax credit could be taken for non-taxable services in Jammu & Kashmir. The tribunal upheld the extended period's applicability and the penalty's imposition, rejecting the appellant's plea for relief under Section 80 of the Finance Act, 1994.

Conclusion:
The appeal was dismissed regarding the admissibility of Cenvat Credit on capital goods and services in Jammu & Kashmir. However, the appeal was allowed concerning the eligibility of Cenvat Credit of Rs. 72,66,850/- availed on documents.