2017 (1) TMI 1082 - AT - Service Tax

CENVAT credit - prefabricated shelters - appellants are provider of telephone services - denial on the ground that appellants have wrongly availed credit - Time Bar - Held that - the department has failed to prove suppression of facts invoking extended period of limitation. Appellants have been filing the returns regularly and from the documents submitted by the appellant only the show-cause notice has been issued. It is a fact that the instant issue has been subject matter of various litigation before various judicial forum and till today the matter is pending before the Hon ble apex court for final determination - the appellant has bona fide reasons to believe that he is entitled to the CENVAT credit and he has disclosed the same in his ST-3 returns - entire demand is time barred - appeal allowed - decided in favor of assessee.

Summary

Issues:
Appeal against recovery of CENVAT credit, interest, and penalty.
1. Merit of the impugned order.
2. Limitation period for invoking CENVAT credit.

Analysis:
1. Merit of the impugned order:
The appellant, a provider of telephone services, availed CENVAT credit on prefabricated shelters, leading to a dispute with the Department. The appellant argued that they were entitled to the credit on capital goods and inputs. The appellant's counsel contended that while the issue was pending in the Supreme Court, the demand was time-barred. The Department alleged suppression of facts based on missing information in ST-3 returns. The appellant cited various decisions supporting their claim, while the Department relied on circulars and past judgments favoring revenue. Ultimately, the Tribunal acknowledged the merit against the appellant but ruled in their favor on the limitation issue due to the lack of proof of suppression.

2. Limitation period for invoking CENVAT credit:
The appellant maintained that the demand was time-barred as the Department failed to establish suppression of facts for invoking the extended limitation period. The appellant regularly filed returns, disclosing the credit availed. The Tribunal noted the ongoing disputes and pending matters at higher courts regarding the issue. Considering the appellant's good faith belief in entitlement to the credit and their disclosure in returns, the Tribunal concluded that the demand was indeed time-barred. As a result, the impugned order was set aside, and the appeal was allowed in favor of the appellant with any consequential relief.

In summary, the Tribunal's judgment favored the appellant on the limitation issue, finding the demand time-barred due to the lack of evidence of suppression. Despite acknowledging the merit against the appellant, the Tribunal ruled in their favor based on the procedural aspect of the case. The decision highlighted the importance of timely and accurate disclosure by taxpayers and the burden of proof on the Department in invoking extended limitation periods.