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2017 (8) TMI 592 - HC - Service TaxCENVAT credit - duty paying documents - Rule 9(1)(b) of the 2004 CCR - Whether the Tribunal was right in holding that the service tax credit taken by M/s.JSW Steel Ltd., Salem on the basis of supplementary invoices/bills/challans issued by the service provider? - Whether in view of the suppression, detection of evasion of service tax and registration of offence case against the respondent, the Tribunal was right in law to allow the availment of credit under CENVAT Credit Rules 2004? - Held that - on a plain reading of Rule 9(1) of 2004 CCR, that the Explanation appended to Clause (b) of Sub-Rule (1) of Rule 9 only seeks to clarify that supplementary invoice would also include a challan or any other similar document, which evidences payment of additional amount of additional duty leviable under Section 3 of the Customs Tariff Act, issued by a manufacturer, importer of inputs or capital goods - the documents included in Clauses (e), (f) and (g) of Sub-Rule (1) of Rule 9 of 2004 CC Rules, would not be governed by the Explanation, as it is sought to be argued by the Revenue - the documents included in Clauses (e), (f) and (g) of Sub-Rule (1) of Rule 9 of 2004 CC Rules, would not be governed by the Explanation - the Assessee has correctly availed the CENVAT credit, based on the invoice / TR 6 challan - decided in favor of assessee. Whether the violation of Rule 4A of Service Tax Rules, 1994 entitles the respondent to avail credit under CCR, 2004? - Held that - A bare perusal of the Rule would show that the obligation, in that behalf, essentially rests on the service provider. The Rule does not advert to any consequences, in case issuance of invoice, bill or challan is delayed. The period provided appears to be directory and not mandatory. Nothing to the contrary has been articulated by the Revenue - Rule 4A of the Service Tax Rules, 1994, inter alia, at the relevant time, required the provider of taxable service, to issue, not later than fourteen days from the date of provisioning of taxable service, an invoice, bill or challan. The details, which were to be provided in such an invoice, bill or challan, are also set out in the Rule - decided in favor of assessee. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Interpretation of Rule 9(1)(b) of the CENVAT Credit Rules, 2004. 2. Eligibility of CENVAT credit based on supplementary invoices/bills/challans. 3. Impact of suppression, detection of evasion of service tax, and registration of offence cases on the availment of CENVAT credit. 4. Alleged violation of Rule 4A of the Service Tax Rules, 1994. Detailed Analysis: 1. Interpretation of Rule 9(1)(b) of the CENVAT Credit Rules, 2004: The principal objection of the Revenue centered around the interpretation of Rule 9(1)(b) of the 2004 CC Rules. The Revenue argued that the Assessee availed of CENVAT credit based on ineligible documents and after offence cases were registered by the Department. The Revenue emphasized Rule 9(1)(b) read with the Explanation appended thereto, suggesting that it applies to the Assessee's situation. 2. Eligibility of CENVAT Credit Based on Supplementary Invoices/Bills/Challans: The Assessee contended that Rule 9(1)(b) was applicable only to supplementary invoices issued by the manufacturer or importer of inputs or capital goods and not to the provider of input services. The Assessee argued that the denial of credit pertained only to additional duty recoverable due to fraud, collusion, or willful misstatement, which did not apply to their case. The Court found that Rule 9(1)(b) did not apply to invoices or challans issued by a service provider and that the Assessee correctly availed the CENVAT credit based on the invoice/TR-6 challan. 3. Impact of Suppression, Detection of Evasion of Service Tax, and Registration of Offence Cases: The Revenue highlighted that the Assessee took credit after offence cases were registered against the service provider and the Assessee itself. However, the Court concluded that since Rule 9(1)(b) did not apply to the Assessee's case, the exception prohibiting credit due to fraud, collusion, or willful misstatement was not applicable. Thus, the Tribunal's conclusion in favor of the Assessee was upheld. 4. Alleged Violation of Rule 4A of the Service Tax Rules, 1994: The Court noted that there was no discussion regarding the alleged violation of Rule 4A of the Service Tax Rules, 1994, in the Orders-in-Original or the Tribunal's order. At the hearing stage, no arguments were advanced based on Rule 4A. The Court observed that Rule 4A required the service provider to issue an invoice, bill, or challan within fourteen days of providing the taxable service. The Rule did not specify consequences for delayed issuance, and the period appeared directory, not mandatory. The Court found that the delay in the Assessee's claim was broadly explained and not inordinate. Therefore, Question No. (iii) was answered in favor of the Assessee. Conclusion: The Court dismissed both appeals filed by the Revenue, sustaining the Tribunal's judgment. The Assessee's availment of CENVAT credit based on the invoice/TR-6 challan was deemed correct, and Rule 9(1)(b) was found inapplicable to the Assessee's case. The alleged violation of Rule 4A of the Service Tax Rules, 1994, was not substantiated, and no inordinate delay in the Assessee's claim was found. There was no order as to costs.
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