2019 (2) TMI 689 - AT - Service Tax

Non-payment of service tax on 40% value - abatement under notification availed - restaurant service - restriction imposed by provisions of Sub-rule (7) of Rule 4 of Cenvat Credit Rules, 2004 - Held that - The issue covered by the decision in the case of COLLECTOR OF C. EX., ALLAHABAD VERSUS RAM SWARUP ELECTRICALS LTD. 2007 (5) TMI 116 - HIGH COURT , ALLAHABAD , where it was held that in respect of the availment of modvat credit there is no restriction during the impugned period - Since during the period from 01.07.2012 to 31.03.2013 there was no such restriction to avail Cenvat credit within 6 months from the date of receipt of services, by following the ruling of Hon ble High Court, the appellant were eligible for Cenvat credit of ₹ 4,06,292/- - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of Cenvat credit provisions retrospectively or prospectively.

Analysis:
The appeal was against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs. The appellant, a restaurant service provider, paid service tax on 30% value as per abatement notification without availing Cenvat credit. Amendments in provisions on 01.07.2012 allowed Cenvat credit on input services with service tax payable on 40% value. The appellant failed to notice this amendment, leading to a demand of &8377; 4,92,632 raised via show cause notice. The Original Authority rejected Cenvat credit eligibility based on Rule 4 of Cenvat Credit Rules, 2004, introduced on 01.09.2014, which required credit to be availed within 6 months from input service receipt. The Original Authority confirmed the demand, imposed a penalty, and appropriated the amount already paid. The Commissioner (Appeals) upheld this decision, prompting the appellant to appeal to the Tribunal.

The appellant argued that the restriction on availing Cenvat credit within 6 months should apply prospectively. Citing a ruling by the Hon'ble Allahabad High Court in Collector of Central Excise, Allahabad Vs M/s Ram Swarup Electricals Ltd., the appellant contended that the amendment introducing the 6-month limit had prospective effect. The revenue's representative agreed with this interpretation, acknowledging the settled issue by the High Court.

Considering the submissions and the precedent set by the High Court, the Tribunal noted that during the relevant period (01.07.2012 to 31.03.2013), there was no limitation on availing Cenvat credit within 6 months. Referring to the High Court's ruling in the case of Ram Swarup Electricals Ltd., which stated that amendments prescribing time limits had prospective effect, the Tribunal held that the appellant was entitled to Cenvat credit of &8377; 4,06,292. Consequently, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant.