2016 (4) TMI 450 - AT - Service Tax

Admissibility of Cenvat Credit - on the basis of invoices issued by M/s.ABMCPL to the appellant - where quantum of Service tax paid is determined as per the performance of each company of the appellant and not based on value of services provided - period involved is from April 2007 to September 2011 during which six periodical show cause notices were issued - Held that - Prima facie Service tax credit of actual Service tax paid by the service provider is only admissible under CCR. Extended period of limitation - Held that - even if extended period is held to be inapplicable then also the entire demand of Service tax will not be completely time barred. Waiver of pre-deposit - Held that - Appellant has not been able to make out a prima facie case for complete waiver of the confirmed demands and penalties and is required to be put to some conditions. - Appeal disposed of

Summary

Issues:
1. Admissibility of Cenvat Credit based on invoices from a separate legal entity.
2. Determination of Service tax on the basis of company performance.
3. Applicability of extended period of limitation and imposition of penalties.

Analysis:
1. The appellant, M/s. Hindalco Industries Ltd., filed a stay application regarding an Order-in-Original confirming a demand of Rs. 1,40,70,374/- along with interest and penalty. The appellant argued that the demand period from April 2007 to September 2011 involved show cause notices denying Cenvat Credit based on invoices from M/s. Aditya Birla Management Corporation Pvt. Ltd. The appellant cited a previous order granting complete waiver for a similar issue at another unit. The appellant contended that Service tax credit cannot be denied due to unknown service quantum, relying on relevant case laws.

2. The Revenue argued that the determination of Service tax on invoices from M/s. ABMCPL was based on certain ratios linked to the performance of each company of the appellant, as per consolidated accounts. The Revenue highlighted that only actual Service tax paid by the service provider should be credited to the appellant, not an arbitrary amount based on the appellant's performance in previous years. The Revenue contended that even if M/s. ABMCPL was not required to register under Cenvat Credit Rules, the Rule spirit limits Cenvat credit to the actual Service tax paid for services provided to the appellant.

3. The Tribunal observed that the issue revolved around the admissibility of Cenvat Credit based on invoices from M/s. ABMCPL, where Service tax was determined according to company performance, not service value. It was noted that the Service tax credit should be based on actual tax paid by the service provider. Regarding time limitations and penalties, the Tribunal held that even without the extended period, the demand would not be entirely time-barred. The Tribunal found that the appellant failed to establish a prima facie case for complete waiver of demands and penalties, requiring a deposit of Rs. 10.50 Lakhs within eight weeks. A stay was granted on the remaining amounts and penalties pending appeal disposal.