2018 (12) TMI 727 - AT - Service Tax

CENVAT Credit - credit to be availed after payment of amount under Rule 4(7) - extended period of limitation - absence of allegation of suppression of facts - Held that - Rule 4(7) of the Cenvat Credit Rules, 2004, states that the Cenvat Credit in respect of input service shall be allowed, on or after the day that which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in Rule 9. Rule 6(2A) of the Service Tax Rules, 1994 specifies that the date of payment in case of service tax shall be the date of presentation of cheque subject to realization of cheque - it is also found from the records that none of the cheque issued by the appellant were dishonored. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Appeal, Alleged violation of Cenvat Credit Rules, 2004, Demand of payment, Imposition of penalty, Maintenance of proper records, Allegation of suppression, Extended period of limitation, Barred by limitation, Interpretation of Rule 4(7) of Cenvat Credit Rules, 2004, Date of payment in case of service tax, Realization of cheque, Precedent from India Cement Limited case.

Analysis:

1. Appeal against Order-in-Appeal:
The appeal was filed against Order-in-Appeal No.189/ST-I/KOL/2017 dated 17.08.2017 passed by the Commissioner of CGST & Central Excise (Appeals-I), Kolkata. The appellant, a provider of "Forwarding Contract Service" and Maintenance or Repair Service, received a show-cause notice for alleged violation of Rule 3(4) of Cenvat Credit Rules, 2004. The Adjudicating Authority confirmed a demand of ?61,716/- along with interest and imposed a penalty under Rule 15 of Cenvat Credit Rules, 2004. The appeal to the Commissioner (Appeals) was rejected, leading to the present appeal before the Tribunal.

2. Maintenance of Proper Records and Allegation of Suppression:
The Appellant Company claimed to have maintained proper records of all receipts and consumption of input services under Rule 9(6) of the Cenvat Credit Rules, 2004. The appellant argued that all facts and figures were disclosed in the ST-3 Returns, and proper records were kept, negating any suppression allegations. The appellant contended that the extended period of limitation of five years was not applicable and that the demand was time-barred.

3. Interpretation of Rule 4(7) of Cenvat Credit Rules, 2004:
The Tribunal analyzed Rule 4(7) of the Cenvat Credit Rules, 2004, which states that credit for input services is allowed after payment is made for the value of the service and service tax as indicated in the invoice. The Revenue claimed that the credit was irregularly availed as it was taken on the date of cheque issuance, not realization. However, Rule 6(2A) of the Service Tax Rules, 1994, deems the date of presentation of a cheque for service tax payment as the date of payment, subject to realization. The Tribunal referred to a precedent from the India Cement Limited case to support this interpretation.

4. Decision and Precedent from India Cement Limited Case:
The Tribunal found that none of the cheques issued by the appellant were dishonored, aligning with the rule that the date of presentation of the cheque should be considered the payment date. Citing the India Cement Limited case, where penalties were set aside due to no intention to evade payment, the Tribunal set aside the impugned orders and allowed the appeal filed by the appellant. The operative part of the order was pronounced in open court, granting relief to the appellant.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations made, and the final decision rendered by the Tribunal in the case.