2018 (10) TMI 1066 - AT - Service Tax

CENVAT Credit - time limit for taking credit - denial of credit on the ground that such credit was not taken within the prescribed period of six months from the date of issue of invoice - Rule 4(7) of Cenvat Credit Rules, 2004 - Held that - It is an admitted fact that the invoices were issued by the service provider to the appellant during the month of February/ March 2013 and June 2014 and that the appellant had availed Cenvat Credit in November 2014 and January 2015. Since the invoices were issued by the service providers prior to the date of amendment of Rule 4(7) of the Rules, the provisions of unamended Rule 4(7) will be applicable for consideration of the dispute. Under the rule (effective upto 31.08.2014), there were no restrictions/stipulations contained that the assessee should avail the Credit within six months from the date of invoice / payment of service tax. Such embargo brought out in the statute at later date will not snatch away the statutory right of the assessee to avail Cenvat Credit. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Disputed Cenvat Credit availed by the appellant.
- Interpretation of Rule 4(7) of Cenvat Credit Rules, 2004.
- Applicability of Rule 4(7) to invoices issued before the amendment.
- Legal precedence regarding retrospective application of restrictions.

Analysis:
The appeal pertains to disputed Cenvat Credit availed by the appellant, engaged in works contract services, based on invoices issued prior to the amendment of Rule 4(7) of the Cenvat Credit Rules, 2004. The appellant availed credit in November 2014/January 2015 on invoices from February/March 2013 and June 2014. The Department contested the credit claiming non-compliance with the amended rule's timeline. The Commissioner (Appeals) upheld the denial, leading to the appeal. The appellant argued that since the invoices predated the rule change, the credit should be allowed, citing a Tribunal decision. The revenue contended that post-amendment credit availed did not meet the rule's requirements. The Tribunal analyzed the issue considering the timing of invoice issuance, credit availed, and the rule's amendment date.

The Tribunal acknowledged that the invoices were issued before the rule amendment, making the unamended Rule 4(7) applicable. The rule, pre-amendment, did not impose time restrictions on credit availing. The Tribunal emphasized that post-amendment restrictions cannot retroactively affect the statutory right to credit under the prior rule if conditions like receiving taxable service and paying service tax were met. Citing a precedent under the MODVAT regime, the Tribunal held that restrictions impacting valuable rights apply prospectively, not retrospectively. Consequently, the Tribunal found the denial of credit unjustified in the present case, setting aside the impugned order and ruling in favor of the appellant.

In conclusion, the Tribunal's decision centered on the retrospective application of Rule 4(7) of the Cenvat Credit Rules, 2004, emphasizing the statutory right to credit under the unamended rule when invoices were issued before the rule change. The judgment highlighted the importance of upholding statutory rights and ensuring that subsequent amendments do not unjustly deprive taxpayers of legitimate benefits accrued under prior provisions.