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2019 (1) TMI 1245 - AT - Service TaxCENVAT Credit - input service distributor - credit on the strength of invoices which were neither issued in the name of the appellant nor addressed to the registered premises of the appellant nor even appearing the service tax registration of the appellant - Held that - Tribunal Mumbai in Pipavav Shipyard Limited Vs. CCE & ST Bhavnagar 2015 (8) TMI 58 - CESTAT AHMEDABAD has held that there is no reason to deny the credit on the ground that the address of ISD was not mentioned in the invoice - Once there is no dispute with regard to the service tax paid the insufficient particulars in the invoice cannot be the ground to deny the credit. Otherwise also, the law has been settled that a substantive benefit cannot be denied due to procedural/ technical infirmity - appellant is entitled to cenvat credit distributing it to the units as received on the basis of the invoices issued in the name of the appellant but addressed to the unit to which services were provided. Liability of service tax - leasing of manufacturing facilities etc. - Held that - It is apparent from record that panEra is an associate company and the payment transactions are made by the book adjustments. Commissioner(Appeals) has wrongly applied Rule 6(4A) as it is applicable only when the assessee for any reason is unable to correctly estimate on the date of deposit the actual amount payable for any particular month or quarter. This is not the fact for the present Appeal - Herein the appellant had received the payment (on books) however the services for the quarter Oct to Dec 2009 were not provided by the appellant. Thus, the findings of the Commissioner invoking Rule 6(4A) are apparently erroneous. Also the finding that Rule 6(3) would have been applicable had the agreement would be terminated is also patently wrong finding and as such is liable to be set aside - as per Rule 6(3) STR, the appellant was entitled for the impugned adjustment towards subsequent liability. Refund of CENVAT Credit - Reversal of the amount of cenvat credit in respect of trading activity - Held that - The statute did not have the definition of trading as service for the period before 01.04.2011. The period involved herein is also prior 2011. Since it was not an exempted service for the impugned period question of applicability of Rule 6 of Cenvat Credit Rules, 2004 i.e. about maintaining a separate accounts for providing taxable service alongwith the trading activity exempted service were not required nor was required any option to be exercised by the appellant for the said period. The reversal of cenvat credit as confirmed is therefore held to be a wrong decision and thus is liable to be set aside. Appellant has deposited the proportionate amount of cenvat credit - Appellant is entitled for refund. CENVAT Credit - outward freights - place of removal - goods of the appellant were removed from factory to Mandoli godown to be stored there for further being transported to the distributors or the dealers - Held that - Though the godown is the part of the definition of the place of removal but the place of distributor / dealer is not included in the said definition hence the GTA service only be to the Mandoli godown is now service eligible for credit GTA beyond godown is inadmissible for credit. Therefore, that Commissioner(Appeals) has rightly denied the cenvat credit in respect of outward freight - credit rightly denied. Sustainability of service tax paid through cenvat and not in cash in import of service - Held that - For the present issue admittedly the services received by the appellant are from a company based outside India which is not an associated company of the appellant. In the given set of legal provisions and the given circumstances, the appellant had to discharge his liability under reverse charge mechanism and Section 67(4)(c) of the Act equally applies. Thus, payment could be made by any other mode than cash as is mentioned in 67(4)(c) since payment is made from the amount credited. The same is acceptable - findings of the Commissioner qua this issue are therefore set aside. Short payment of service tax - intellectual property service - Held that - The Commissioner has ignored the documents, the compilations whereof is provided by the appellant at the stage of personal hearing itself - findings about lack of evidence are therefore not sustainable - the issue is set aside. Liability on the figure of Miscellaneous Income shown in the balance sheet - Held that - SCN dated 22.10.2009 and 29.09.2010 have been issued by the Department for an amount of ₹ 16,99,562/- and ₹ 9,73,807/- received under R&D income for the period 2008-09 and 2009-10. The demand as confirmed for ₹ 4,07,535/- includes both these amounts as is apparent from the acknowledgment in the SCN - the demand under this Head recoverable from the appellant is only ₹ 97,167/-. The findings of the Commissioner under this issue are therefore partially set aside. Time limitation - Held that - SCN has been issued after a normal period of one year. The entire decision of Commissioner is based on the finding either of lack of evidence or on the applicability of the provision other than the one relied upon by the appellant - Resultantly, there appears no such evidence of any positive act on part of the appellant to have an intention to evade the tax. Liability has been confirmed on the basis of mere omission to give correct information is not suppression facts unless it was deliberate to stop the payment of duty - the Department was not entitled to invoke the extended period of limitation. Resultantly, the SCN as such is held to be barred by time. Appeal disposed off.
Issues Involved:
1. Entitlement to avail cenvat credit on invoices addressed to appellant's units. 2. Adjustment of service tax paid on leasing of manufacturing facilities. 3. Reversal of cenvat credit for trading activity. 4. Cenvat credit on outward freight. 5. Payment of service tax under reverse charge through cenvat credit. 6. Short payment of service tax on intellectual property services. 7. Liability on miscellaneous income and R&D income. Issue-wise Detailed Analysis: Issue No. 1: Entitlement to Avail Cenvat Credit on Invoices Addressed to Appellant's Units The appellant argued that the cenvat credit is validly admissible as the invoices were received indirectly through their units. The Department contended that the invoices must be received by the ISD as per Rule 4 of Service Tax Rules. The Tribunal analyzed the relevant provisions, including Rule 2(m), Rule 4, Rule 4A(ii), Rule 7, and Rule 9 of CCR, 2004. It concluded that the appellant, being the head office and registered ISD, fulfilled all conditions to take cenvat credit despite the invoices being addressed to the units. The Tribunal cited Mahindra & Mahindra Limited and other relevant case laws, holding that procedural infirmities should not deny substantive benefits. Thus, the appellant was entitled to cenvat credit. Issue No. 2: Adjustment of Service Tax Paid on Leasing of Manufacturing Facilities The appellant adjusted service tax paid for a quarter when the premises were not used, invoking Rule 6(3) STR. The Department argued that Rule 6(4A) was applicable. The Tribunal observed that the agreement specified no charges for idle periods and the adjustment was permissible under Rule 6(3). The Commissioner’s reliance on Rule 6(4A) was found erroneous. The Tribunal held the appellant entitled to adjust the service tax under Rule 6(3). Issue No. 3: Reversal of Cenvat Credit for Trading Activity The appellant contended that trading was not an exempted service before 01.04.2011. The Department argued otherwise. The Tribunal noted that trading was not defined as an exempted service for the period in question, thus Rule 6 of CCR, 2004 did not apply. The Tribunal set aside the demand for reversal of cenvat credit and held the appellant entitled to a refund of the proportionate amount deposited. Issue No. 4: Cenvat Credit on Outward Freight The appellant claimed cenvat credit on transportation charges from their godown to distributors. The Tribunal referred to the Supreme Court’s decision in Ultratech Cement Ltd., which allowed cenvat credit only up to the place of removal. The Tribunal upheld the denial of cenvat credit for outward freight beyond the godown. Issue No. 5: Payment of Service Tax Under Reverse Charge Through Cenvat Credit The appellant paid service tax under reverse charge using cenvat credit. The Department contended it should be paid in cash. The Tribunal analyzed Sections 68, 66, 66A, and 67 of the Finance Act, 1994, and concluded that payment could be made by any mode including cenvat credit. The Tribunal set aside the Commissioner’s findings, allowing the appellant to discharge the liability through cenvat credit. Issue No. 6: Short Payment of Service Tax on Intellectual Property Services The Department alleged short payment based on discrepancies in ST-3 returns. The appellant provided evidence of payments made. The Tribunal found that the tax was fully paid and the Commissioner’s findings of lack of evidence were unsustainable. The Tribunal set aside the demand for short payment. Issue No. 7: Liability on Miscellaneous Income and R&D Income The appellant argued that demands for R&D income were already covered by other SCNs. The Tribunal noted that the demand included amounts already addressed in other SCNs and reduced the recoverable amount to ?97,167/-. The Tribunal partially set aside the Commissioner’s findings. Extended Period of Limitation: The Tribunal observed that the SCN was issued beyond the normal period and there was no evidence of deliberate suppression of facts by the appellant. Citing the Supreme Court’s decision in Continental Foundation Joint Venture Holding, the Tribunal held that the extended period of limitation was not applicable. Consequently, the SCN was barred by time, and no demand, interest, or penalty was sustainable. Conclusion: The Tribunal set aside the order under challenge, allowed the appeal, and pronounced the decision in favor of the appellant.
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