2019 (11) TMI 64 - AT - Service Tax

CENVAT Credit - denial on the ground that the appellant has failed to produce the documents on the strength of which they have availed cenvat credit - time limitation - HELD THAT - The appellant availed cenvat credit in the financial year 2008-09 and 2009-10 and in March 2010, the closing balance of cenvat credit lying in their cenvat credit account was ₹ 1,58,07,543/- and the same was opening balance on 01.04.2010. Further, the appellant started utilizing the said cenvat credit from October 2010 onwards. In that circumstances, the show cause notice issued on 21.04.2016 is highly time barred i.e. beyond the period of limitation of 5 years. Therefore, the proceedings against the appellant are not sustainable - the availment of cenvat credit at this stage cannot be disputed by the revenue - Credit allowed. CENVAT Credit - denial of cenvat credit on the ground that at the time of issuance of invoices were in the name of the appellant located at Ludhiana whereas the appellant was registered at Mohali Punjab in the jurisdiction of Mohali Range - HELD THAT - It is not disputed that the CBSL Cable is the same which is registered with the department and the appellant has availed the services and paid service tax thereon, in that circumstances, the cenvat credit of ₹ 7,41,600/- cannot be denied to the appellant. Therefore, the same is admissible to the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit due to lack of document production.
2. Allegation of inadmissible cenvat credit utilization.
3. Jurisdictional discrepancy in availing cenvat credit.
4. Time-barred show cause notice.
5. Dispute over service tax denial.

Analysis:

Issue 1: Denial of cenvat credit due to lack of document production
The appellant's cenvat credit was challenged based on the failure to produce documents supporting the availed credit. The audit team found discrepancies in the cenvat credit utilization, leading to the allegation that the appellant availed credit without proper documentation, violating Rule 9 of Cenvat Credit Rules, 2004. The appellant was accused of utilizing inadmissible cenvat credit for service tax payments.

Issue 2: Allegation of inadmissible cenvat credit utilization
The appellant, engaged in providing lease line services, had a long-term agreement with a company where service tax payments were made and carried forward as cenvat credit. The audit revealed discrepancies in the utilization of cenvat credit, leading to the allegation of inadmissible credit usage for service tax payments.

Issue 3: Jurisdictional discrepancy in availing cenvat credit
There was a jurisdictional issue raised regarding the appellant availing cenvat credit on invoices from a company located in Ludhiana, while the appellant was registered in Mohali, Punjab. This raised concerns about the eligibility of the appellant to claim cenvat credit based on the location mismatch.

Issue 4: Time-barred show cause notice
The show cause notice issued to the appellant was challenged as being beyond the statutory limitation period of 5 years. The appellant argued that since they had been utilizing the cenvat credit since October 2010 and the notice was issued in 2016, it was time-barred, rendering the proceedings against them unsustainable.

Issue 5: Dispute over service tax denial
The appellant disputed the denial of service tax amounting to &8377; 7,41,600, asserting that the services were availed and payments made, hence they should not be denied the cenvat credit. The appellant's argument was that since there was no dispute regarding the services and payments, they should be entitled to avail the cenvat credit.

In the judgment, the Tribunal found in favor of the appellant on the grounds that the show cause notice was time-barred, and the cenvat credit utilization was found to be permissible based on the circumstances presented. The jurisdictional discrepancy in availing cenvat credit was resolved in favor of the appellant, allowing the appeal and setting aside the impugned order.