2019 (2) TMI 956 - AT - Service Tax

Time limitation - wrong availment of CENVAT credit - intent to evade or not - proviso to Section 73(1) of Finance Act read with Rule 14 of CENVAT Credit Rules, 200 - Held that - The basis for issuing show-cause notice was a mismatch between the ST-3 returns and the worksheets annexed therewith. Further, the department has not examined as to whether the appellant took CENVAT credit on the basis of valid duty paying documents at the time of issuing show-cause notice. Also, the appellants have been regularly filing ST-3 returns along with the detailed worksheets enclosed with the said returns, which clearly shows the availment of credit by the appellant on different input services. Even if there was some mismatch in the ST-3 returns and the worksheets, it was incumbent on the Department to call for the reports while examining the ST-3 returns but the same was not done and it was only at the time of audit this was noticed and thereafter, show-cause notice was issued on 17.10.2012 for the period 2007-08 which is completely barred by limitation as the Department has not brought in any material on record to show that there was suppression of facts with intent to evade payment of duty by the appellant. The Department cannot allege suppression of facts with intent to evade payment of tax. Further, in the impugned order, the limitation aspect has not been discussed properly and they have simply invoked the extended period without discharging the burden of proof cast on the Revenue. The entire demand in the present case is barred by limitation and is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax, CENVAT credit availed on construction services, irregular availment of CENVAT credit, interest, and penalty imposition.

Analysis:
1. The appeal challenged the order confirming a demand of service tax and CENVAT credit availed on construction services and architectural services, along with interest and penalty. The audit revealed inadmissible CENVAT credit amounting to ?2,58,89,893 and excess credit availed of ?44,31,957. The Commissioner confirmed the demand, leading to the appeal.

2. The appellant contended that the demand was unsustainable as there was no irregular CENVAT credit availment. They argued that the figures in ST-3 returns did not conclusively prove irregularity, and there was no examination of valid duty paying documents. The appellant claimed no suppression of facts, citing timely filing of returns with detailed worksheets disclosing credit availed.

3. The appellant further argued that the demand was time-barred, relying on legal precedents and asserting no intent to evade taxes. They emphasized the absence of suppression of facts and the availability of all necessary details in filed returns and worksheets. The appellant challenged the imposition of interest and penalty due to the demand being beyond the limitation period.

4. In contrast, the respondent defended the order, alleging suppression of facts by the appellant regarding CENVAT credit availed. They highlighted discrepancies between ST-3 returns and attached worksheets, indicating irregularity. Legal precedents were cited to support the respondent's position.

5. Upon review, the Tribunal found the show-cause notice based on a mismatch between ST-3 returns and worksheets. The Department failed to verify the validity of duty paying documents during the notice issuance. The Tribunal noted the regular filing of detailed worksheets by the appellant, indicating proper credit availing despite discrepancies. The demand was deemed time-barred due to lack of evidence supporting suppression of facts.

6. Ultimately, the Tribunal set aside the demand, ruling it was barred by limitation. The decision was based on the lack of proof of suppression of facts and the availability of detailed information in filed documents. The appellant's appeal was allowed with consequential relief.