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2019 (8) TMI 1372 - AT - Service TaxCENVAT credit - supplementary invoice - Rule 9(1) (bb) of CCR - appellants contention is that there was no fraud on his part and therefore it is not proper to deny credit to them on that count - HELD THAT - The provisions of the Rule is very clear and clearly talks fraud etc at the end of the service provider and not at the end of the service recipient as in the case of the Appellant. As the Appellants service provider M/s. Datta Enterprises has issued supplementary invoice after the department has initiated an investigation, the provisions of Rule 9(1) (bb) as existing on the date of availing credit by the Appellants are squarely applicable. Time Limitation - HELD THAT - There is force in the argument of the appellant that the department was well aware of the fraud /suppression etc. committed by M/s. Datta Enterprises. A show cause notice was issued to them on 25.03.2013. The Appellants were regularly submitting the ST-3 Returns. The unit was also audited in 2013-14 and a show cause notice was issued on 31.12.2015 which is clearly beyond the limitation provided - The department was aware of the fact when M/s. Datta Enterprises have issued a supplementary invoice. Moreover, the Appellants were also audited well before the issuance of show cause notice. Under the circumstances, no suppression etc can be alleged on the part of the Appellants - Therefore the show cause notice and the impugned order and liable to be set aside on limitation. Appeal allowed - decided in favor of appellant.
Issues:
- Disallowance of Cenvat Credit based on a supplementary invoice - Applicability of Rule 9(1)(bb) regarding fraud and suppression - Invocation of extended period for demand - Interpretation of CBEC circulars and case laws - Limitation for issuing show cause notice Analysis: 1. Disallowance of Cenvat Credit based on a supplementary invoice: The case involved disallowance of Cenvat Credit amounting to a specific sum based on a supplementary invoice issued by M/s. Datta Enterprises. The Appellants contested this disallowance, arguing that the credit availed was legitimate and that they had no mens rea or control over the supplier. The Appellants also invoked the doctrine of fairness as per the Supreme Court's ruling in Indian Tobacco Association case. The Tribunal analyzed the facts and provisions of Rule 3 of CCR, 2004 to determine the admissibility of the credit. 2. Applicability of Rule 9(1)(bb) regarding fraud and suppression: The Tribunal deliberated on the applicability of Rule 9(1)(bb) which pertains to supplementary invoices issued by service providers in cases of fraud, collusion, or wilful misstatement. The Appellants argued that the fraud or non-payment was on the part of the service provider, not them, and thus, they should not be penalized for availing the credit. The Tribunal examined the language of the rule and concluded that the provisions clearly address fraud at the service provider's end, making them applicable in the present case. 3. Invocation of extended period for demand: Regarding the invocation of the extended period for demand, the Appellants contended that since they were regularly submitting returns and undergoing audits without any allegations of suppression, the extended period should not be invoked. The Tribunal reviewed the timeline of events, including the issuance of the supplementary invoice, audits, and show cause notices, to determine the validity of invoking the extended period for demanding the disallowed credit. 4. Interpretation of CBEC circulars and case laws: Both the Appellants and the department referenced CBEC circulars and various case laws to support their arguments. The Appellants relied on circulars clarifying the admissibility of credit under specific circumstances, while also citing relevant case laws to bolster their position. The department, on the other hand, contested the applicability of the circulars cited by the Appellants and emphasized the insertion of Rule 9(1)(bb) as a basis for disallowance. 5. Limitation for issuing show cause notice: The Tribunal analyzed the limitation period for issuing the show cause notice in light of the events surrounding the case, including the knowledge of fraud by M/s. Datta Enterprises, the regular submission of returns by the Appellants, and the timing of audits and show cause notices. It was concluded that the show cause notice and the subsequent order were beyond the limitation period, leading to the decision to set aside the impugned order with consequential relief. In conclusion, the Tribunal set aside the disallowance of Cenvat Credit based on the supplementary invoice, emphasizing the lack of fraud or suppression on the part of the Appellants and the inapplicability of the extended period for demand due to the absence of suppression allegations. The judgment highlighted the importance of interpreting rules and provisions accurately, considering the specific circumstances of each case, and adhering to the principles of fairness and procedural limitations.
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