2019 (4) TMI 129 - AT - Service Tax

CENVAT Credit - delayed payment of service tax - service tax was paid on being pointed out - suppression of facts or not - Rule 9(1)(bb) of Cenvat Credit Rules, 2004 - Held that - This is a case of only delayed payment of service tax for the period November-December 2011 - Even though the same was pointed out by the department, the appellant was very much aware of the liability and the transaction for which the service tax was due, was recorded in the books and service tax was paid during scrutiny of three months. Therefore, it cannot be alleged that there is suppression of facts on the part of the appellant - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Liability for service tax under reverse charge mechanism
- Entitlement to Cenvat credit under Rule 9(1)(bb) of Cenvat Credit Rules, 2004
- Allegation of suppression of facts regarding delayed payment of service tax

Liability for service tax under reverse charge mechanism:
The appellant, as a recipient of services from abroad, was found liable for payment of service tax under the reverse charge mechanism per Section 66A of the Finance Act, 1994. The appellant failed to pay the service tax for the period of November-December 2011 in a timely manner, leading to a detection of short payment by departmental officers in February 2012.

Entitlement to Cenvat credit under Rule 9(1)(bb) of Cenvat Credit Rules, 2004:
The crux of the issue revolved around the appellant's entitlement to Cenvat credit despite paying the service tax after being pointed out by the department. The department contended that Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 precluded the appellant from availing Cenvat credit due to the delayed payment of service tax.

Allegation of suppression of facts regarding delayed payment of service tax:
The appellant argued that there was no suppression of facts as the service tax was paid within one year from the due date, along with interest. It was highlighted that the transaction in question was duly recorded in the books of accounts, negating any allegation of suppression. The appellant also emphasized their entitlement to Cenvat credit for the service tax not paid in time, citing relevant judgments to support their position.

The presiding Member, after considering the submissions from both sides and examining the records, concluded that the case only involved a delayed payment of service tax for the specified period. Despite the department pointing out the discrepancy, the appellant had promptly discharged the service tax liability within three months of scrutiny. It was determined that there was no suppression of facts on the part of the appellant, and the judgments cited by the appellant's counsel further bolstered their case.

Consequently, the impugned order was set aside, and the appeal was allowed, affirming the legality and correctness of the Cenvat credit availed by the appellant. The judgment exemplified a meticulous analysis of the issues surrounding liability for service tax, entitlement to Cenvat credit, and the absence of suppression of facts in the context of delayed payment of service tax.