2019 (2) TMI 1562 - AT - Service Tax

CENVAT Credit - utilization of credit in excess of said 20% of service tax payable - appellant were providing two stream of services, one taxable and other covered by Rule 2(e) of Cenvat Credit Rules, 2004 related to Interconnect Usage Charges - Interconnected Usage Charges were not chargeable to service tax and such charges were collected by the appellant - Rule 6(3)(c) of Cenvat Credit Rules, 2004 - extended period of limitation - Held that - The issue is squarely covered by this Tribunal s decision in the case of Idea Cellular Ltd. (supra), we note that the period covered in the show cause notice in respect of Interconnected Usages Charges is upto May, 2007 and in respect of demand of service tax on account of error of accounting the period involved is April, 2007 to September, 2007 and the show cause notice was issued on 20.10.2008 by extending the larger period. In view of precedent decision of this Tribunal under similar circumstances extended period of limitation is not invokable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Recovery of Cenvat Credit exceeding 20% of service tax payable, demand of service tax on accounting error, invocation of extended period of limitation for demand, applicability of precedent decisions on similar circumstances.

Analysis:
The appeal challenged an Order-in-Original regarding the recovery of Cenvat Credit exceeding 20% of service tax payable and a demand of service tax due to an accounting error. The appellant, a telecommunication service provider, was accused of not maintaining separate accounts for taxable and exempt services, particularly Interconnect Usage Charges. The Revenue contended that the appellant utilized Cenvat Credit in excess of the permissible 20% for non-taxable services, resulting in the demand for recovery. The impugned order confirmed a substantial service tax demand and imposed penalties. The appellant argued that the demand was time-barred as the Revenue had all necessary information, invoking a precedent case to support their claim. The Revenue supported the impugned order.

Upon considering the arguments, the Tribunal found that the issue of Cenvat Credit utilization and non-taxable Interconnect Usage Charges was previously addressed in a precedent case involving similar circumstances. The Tribunal cited the precedent case's decision, emphasizing that the extended period of limitation was not applicable due to the absence of willful misstatement, fraud, or suppression of facts by the appellant. The Tribunal highlighted that the Revenue was aware of the nature of services provided by the appellant, including non-taxable services like interconnectivity. Based on the precedent case's ruling and the lack of deliberate suppression of facts, the Tribunal concluded that the extended period of limitation was not justifiable. Consequently, the impugned order was set aside, and the appeal was allowed.

In summary, the Tribunal's decision centered on the inapplicability of the extended period of limitation due to the lack of deliberate suppression of facts by the appellant. By referencing a precedent case, the Tribunal established that the demand for recovery and penalties were not sustainable under the circumstances presented. The appeal was allowed, overturning the impugned order.