2019 (7) TMI 1415 - AT - Service Tax

Extended period of limitation - Whether the SCN dated 02.05.2013 is issued validly invoking the extended period of limitation for disallowing the cenvat credit taken by the appellant during the financial year 2009-2010? - HELD THAT - In spite of the audit objection and three reminders, the appellant had not responded in writing and thereafter, the Revenue also did not take any further action, and only after 24 months, the show cause notice was issued. The normal period of limitation during the period of dispute is 18 months. Further, no reason has been given by the Revenue for not issuing the show cause notice for all these months, during the period of 18 months as permissible. The appellant has maintained proper documents of the transactions and submitted ST-3 Returns regularly. Thus, in the facts and circumstances, no case of falsification of record and/or suppression or any contumacious conduct is made out against the appellant. The extended period of limitation is not available to the Revenue - appeal allowed - decided in favor of appellant.

Summary

Issues:
Validity of show cause notice invoking extended period of limitation for disallowing cenvat credit taken by the appellant during the financial year 2009-2010.

Analysis:

1. Extended Period of Limitation: The issue revolved around whether the show cause notice dated 02.05.2013 was validly issued invoking the extended period of limitation for disallowing the cenvat credit taken by the appellant during the financial year 2009-2010. The Revenue alleged that the appellant wrongly availed cenvat credit due to deficiencies in documents required under the provisions. The extended period of limitation was invoked under proviso to Section 73(1) of the Act read with Rule 14 of the Cenvat Credit Rules for issuing the show cause notice.

2. Allegations and Objections: The Revenue conveyed objections to the appellant in Feb. 2010 regarding deficiencies in documents supporting cenvat credit. Despite reminders and allegations of intent to suppress and avail cenvat credit improperly, the appellant did not comply until the show cause notice was issued in May 2013. The Audit detected the deficiencies, and it was alleged that the appellant would have utilized the disputed cenvat credit based on improper documents if the lapse had not been detected.

3. Appellate Proceedings: The appellant appealed before the Commissioner (Appeals) challenging the disallowance of credit and penalty, along with the issue of limitation. The Commissioner upheld part of the allegations, including the disallowance of credit and penalty, rejecting the limitation argument based on a ruling of the Allahabad High Court. The appellant contended that the ruling was not applicable to their case as all relevant documents were produced before the Audit team, and there was no insufficiency or falsification of records.

4. Decision and Rationale: After considering the contentions, the Tribunal found that the appellant had not responded to the audit objections and reminders in writing. The show cause notice was issued after a gap of about 24 months, exceeding the normal limitation period of 18 months. The Tribunal noted that the appellant had maintained proper transaction documents and submitted ST-3 Returns regularly, indicating no falsification, suppression, or contumacious conduct. Consequently, the Tribunal held that the extended period of limitation was not available to the Revenue. The appeal was allowed, and the impugned order was set aside, granting the appellant consequential benefit.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of timely action by the Revenue and the absence of evidence supporting the invocation of the extended period of limitation.