2016 (11) TMI 519 - AT - Service Tax

CENVAT credit - rent-a-cab service - suppression of facts - Held that - Suppression of facts with intent to evade tax/duty for invoking the extended provision to recover duty/tax cannot be straitjacketed into a particular set of circumstances. Each evaluation is dependent on the particular set of facts peculiar to the case in dispute - In essence, the claim is that the service tax authorities could not be presumed to be aware of every aspect of the functioning of the assessee. The denial of CENVAT credit is sought on the basis of interpretation of definitions in the CENVAT Credit Rules, 2004. The statutory provisions in section 73 of Finance Act, 1994 are amply clear in permitting the extension of period of limitation only in the event of fraud, collusion, willful misstatement, suppression of facts, or any other contravention with intent to evade tax. Interpretational disputes and these specifically enumerated situations are mutually exclusive. The provision for extending the period of limitation was originally enacted because suppression of fact, willful misstatement et al cannot be ruled out in discharge of duty/tax liability. That, in the present context, would entail application of that provision to the utilization of CENVAT credit towards discharge of tax liability which is not in dispute here. The applicability of section 73 to rule 14 of CENVAT Credit Rules, 2004 is qualified by the expression mutatis mutandis besides admitting to two mutually exclusive possibilities. In the context, it is more pertinent to note that suppression of fact is not the mirror image of lack of awareness by the tax authorities for, if that were to be so, the statutory provision of section 73 of Finance Act, 1994 relating to the normal period of limitation would be redundant as would the dichotomy specified in rule 14 of CENVAT Credit Rules, 2004. The appeal of assessee is allowed to the extent of setting aside the demands that, despite being barred by limitation, were held to have been due for discharge by default - appeal of Revenue rejected.

Issues Involved:
1. Incorrect availment of CENVAT credit.
2. Short payment of service tax.
3. Appropriation of amounts paid during investigations.
4. Extended period of limitation for demand recovery.
5. Validity of demands confirmed by the adjudicating Commissioner.

Detailed Analysis:

1. Incorrect Availment of CENVAT Credit:
The primary issue revolves around the alleged incorrect availment of CENVAT credit by the assessee, M/s ThyssenKrupp Industries India Pvt Ltd, for the period from October 2004 to March 2009, and April 2009 to September 2009. The assessee availed credit for services utilized at its Hyderabad facility, services rendered to its headquarters, and various other ineligible input services. The adjudicating Commissioner disallowed credits on several grounds including the inability to furnish documents, ineligible input services, and excess availment of credit during the earlier period. The Commissioner confirmed the recoverable amounts owing to short-payment on output services but scaled down the amounts for the earlier period.

2. Short Payment of Service Tax:
The Commissioner confirmed the short-payment of service tax amounting to ?12,98,515/- for the period from October 2004 to March 2009. The short-fall in tax payment of ?1,29,181/- through debit of CENVAT credit account was also noted. The assessee was found to have double utilized the tax deposited towards tax dues, leading to the short-payment of tax.

3. Appropriation of Amounts Paid During Investigations:
The notice dated 31st May 2010 proposed the appropriation of ?1,75,93,837/- already paid towards the amount due, as well as interest of ?54,05,156/- remitted during the investigations. The Commissioner held that the amounts confirmed, totaling ?66,91,644/-, were paid as self-assessed as per section 73(3) of Finance Act, 1994. The assessee appealed against the apparent appropriation of amounts towards the confirmed amounts, albeit held as time-barred.

4. Extended Period of Limitation for Demand Recovery:
The adjudicating Commissioner concluded that the extended period of limitation could not be invoked for the earlier period due to the periodic audits and scrutiny that the assessee was subject to. The Commissioner noted that the entire sets of demands were computed from the documents maintained and furnished by the assessee, and the entitlement of CENVAT credit was a dispute over interpretation of statutory provisions. The Tribunal concurred with the finding that the demands in the first show cause notice were barred for confirmation and recovery, emphasizing that suppression with deliberate intent could not be alleged with much credibility.

5. Validity of Demands Confirmed by the Adjudicating Commissioner:
The Tribunal examined the correctness of the action of the adjudicating Commissioner in holding that certain amounts were deemed to have been discharged voluntarily and hence vested with the public exchequer even if barred for recovery. The Tribunal found that without a specific order of reversal, such an order of recovery is unenforceable. The Tribunal set aside the orders relating to deemed discharge except to the extent that the assessee had already reversed the said amounts.

Separate Judgments:
The Tribunal rejected the appeal of Revenue, upholding the adjudicating Commissioner’s decision to set aside demands on grounds of limitation. The Tribunal allowed the appeal of the assessee to the extent of setting aside the demands that, despite being barred by limitation, were held to have been due for discharge by default. The Tribunal disposed of the MA(EH) as well.

Conclusion:
The Tribunal’s judgment primarily focused on the extended period of limitation and the correctness of demands confirmed by the adjudicating Commissioner. The Tribunal upheld the adjudicating Commissioner’s findings that the demands were barred by limitation and set aside the orders relating to deemed discharge. The appeals of both Revenue and the assessee were addressed comprehensively, with the Tribunal providing detailed reasoning for its decisions.

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