2019 (7) TMI 768 - AT - Service Tax

CENVAT Credit - input services - input transport/GTA paid by them for receiving motor vehicles and spare parts being motor vehicles manufactured by Tata Motors - extended period of limitation - HELD THAT - In view of the precedent decisions of this Tribunal which related prior to the period 1.4.2011 as in the case of CCE TIRUPATHI VERSUS SHARIFF MOTORS 2009 (3) TMI 155 - CESTAT BANGALORE and in view of the amendment in Rule 2(e) w.e.f. 1.4.2011 there was no malafide on the part of the appellant in taking cenvat credit of input transport service/GTA. The extended period of limitation is not available to Revenue. It is held that the demand is imposable for the normal period with interest - Penalty also set aside - appeal allowed in part.

Summary

Issues:
1. Whether the appellant rightly took cenvat credit for input transport/GTA.
2. Whether the extended period of limitation was rightly invoked.

Analysis:

Issue 1: Cenvat Credit for Input Transport/GTA
The appellant claimed cenvat credit for input transport/GTA paid for receiving motor vehicles and spare parts manufactured by Tata Motors while providing authorized service station services. The dispute arose due to an amendment in Rule 2(e) of the Cenvat Credit Rules, 2004, effective from 1.4.2011, defining trading as an exempted service. The appellant had taken cenvat credit prior to this amendment based on precedents and maintained proper books of accounts. The audit raised objections, proposing reversal of cenvat credit for trading activities. The appellant contested the show cause notice, arguing that no malafide intent existed, and the demand for the extended period was unsustainable post the rule amendment. The Tribunal, considering the precedents and the rule change, held that the appellant had not acted in bad faith and allowed the appeal, directing the demand for the normal period with interest.

Issue 2: Extended Period of Limitation
The Revenue invoked the extended period of limitation based on audit findings and subsequent show cause notice. The appellant argued against the extended period, citing timely provision of information and lack of malafide intent. The Tribunal, after considering the arguments, held that the extended period of limitation was not applicable in this case. The appellant's compliance with providing information and the absence of malafide intent were crucial factors in determining the inapplicability of the extended period. Consequently, the penalty was set aside, and the appellant was entitled to a refund of any excess amount paid.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal based on the absence of malafide intent in claiming cenvat credit and the inapplicability of the extended period of limitation. The judgment highlighted the importance of maintaining proper records, timely compliance, and adherence to legal provisions in tax matters.