2017 (10) TMI 752 - AT - Service Tax

Refund claim - time limitation - Rule 5 of CCR, 2004 - rejection of refund on the ground that the claim have been filed beyond the period of one year from the date of issuance of the export invoice - Held that - the issue is no more res integra and stand settled by Larger Bench decision of the Tribunal in the case of Commissioner of Service Tax, Goa Vs Ratio Pharma India Pvt Ltd. Vs 2015 (4) TMI 462 - CESTAT MUMBAI , where it was held that the relevant date for determining of limitation period is the date of receipt of foreign exchange - in the present case, the refund claims has been filed within a period of one year from the date of receipt of the foreign exchange, refund remains allowed. Whether the appellant is entitled to avail the credit of service tax which was not paid to the service providers within the time-limit of three months from the date of the invoices in terms of provisions of Rule 4 (7) of CCR, 2004? - Held that - Rule 4(7) of Cenvat Credit Rules provides that if payments are not made within a period of three months, the credit availed by the recipient of the input services is to be paid back. The Tribunal has no powers to relax or extend the said period of three months provided under the law, being a creature of the Statute - the denial of the credit on the said count by the lower authorities is upheld. Penalty - Held that - the issue involved is bonafide interpretation of the provisions of law and as the appellants had reflected the taking of the credit, in the statutory records, no malafide can be attributed to them - penalty set aside in toto. Appeal allowed in part.

Summary

Issues:
1. Limitation aspect of refund claims under Rule 5 of Cenvat Credit Rules, 2004.
2. Entitlement to avail credit of service tax not paid to service providers within the time-limit under Rule 4(7) of Cenvat Credit Rules, 2004.
3. Penalty imposition based on demand confirmation.

Analysis:

Issue 1: Limitation aspect of refund claims under Rule 5 of Cenvat Credit Rules, 2004
The dispute revolves around the limitation period for refund claims filed by the appellant. The lower authorities rejected the claims as being beyond one year from the issuance of export invoices. However, the appellant argues that the relevant date for limitation consideration should be the date of receiving foreign exchange for exports. The judgment cites a Larger Bench decision that establishes the date of receipt of foreign exchange as the relevant date for determining the limitation period. Since the refund claims were filed within one year from the receipt of foreign exchange, the judgment favors the appellant on this issue.

Issue 2: Entitlement to avail credit of service tax not paid to service providers within the time-limit under Rule 4(7) of Cenvat Credit Rules, 2004
The second issue pertains to whether the appellant can avail credit for service tax not paid to service providers within the stipulated three-month period as per Rule 4(7) of Cenvat Credit Rules, 2004. The rule mandates that if payments are not made within three months from the invoice date, the recipient must pay back the availed credit. The appellant admits non-payment within the specified period due to accounting issues but argues for relaxation of the three-month period. The judgment emphasizes that the Tribunal lacks authority to extend or relax statutory time limits, as they are substantive aspects of the law. Consequently, the denial of credit by the lower authorities is upheld based on non-compliance with the time limit specified in the law.

Issue 3: Penalty imposition based on demand confirmation
Regarding penalties, the judgment sets aside a part of the demand, leading to no penalty imposition. For the remaining confirmed demand, the issue revolves around the bona fide interpretation of legal provisions. Since the appellants recorded the credit in statutory records and no malafide intent was found, the penalty is entirely set aside. The judgment concludes by disposing of the appeal accordingly, with the pronouncement made in open court on a specified date.