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2021 (4) TMI 1041 - HC - Service TaxSabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - entitlement to take advantage of CENVAT credit on input tax under the scheme or not - whether the same has to be treated as pre-deposit under the Scheme or not? - after issuance of show cause notice on 7.9.2018, the respondent did file service tax returns and claimed CENVAT credit - HELD THAT - The dispute in the present case is that the appellants have disallowed the pre-deposit of ₹ 1,45,87,081/- i.e., amount of CENVAT which is the subject matter of the show cause notice while considering the application preferred in the SVLDR Scheme. The learned Single Judge has allowed the writ petition and has directed the Designated Committee to accept the declaration filed by the petitioner/respondent in the prescribed format as final and issue a modified Form No.SVLDRS-3 giving credit to the sum of ₹ 4,15,14,081/- as deposit and collect the remaining sum as tax dues and on payment of the said dues, issue a discharge certificate under the Scheme. The record of the case reveal that there is a total non compliance of Rule 6 of the CENVAT Credit Rules and the respondent has submitted the invoices pertaining to the year 2013 in the year 2019 which is not during the regime of CENVAT Credit Rules, but during the regime of GST - In the considered opinion of this Court, the learned Single Judge has not at all considered the impact of Rule 6 of the CENVAT Credit Rules, 2017 as invoices were of the year 2013-2014 which is much beyond the period of one year and therefore, the claim of the respondent could not have been appropriated in respect of the amount of ₹ 4,15,14,081/-. Another important aspect of the case is that the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 does not have any authority to modify the SVLDS-3 at all. When once the appellants have adjusted the claim of respondent as the CENVAT credit of ₹ 4,15,14,081/- availed by the respondent and subsequently, utilized, is an inadmissible CENVAT credit and availment of the same is proposed to be denied in show cause notice. Therefore, in the light of Rule 6(1) of the CENVAT Credit Rules, 2017, by no stretch of imagination the respondent was entitled to claim CENVAT credit. It is an undisputed fact that the respondent has not filed ST-3 returns till the intervention of the department and the assessee however filed a declaration in the year 2019, after introduction of GST. As the respondent has not filed the GST TRAN-1, he is not eligible on account of Rule 6(1) of the CENVAT Credit Rules, 2017. The Designated Committee was justified in passing the order which was subject matter of challenge in the writ petition - Decided in favor of Revenue.
Issues Involved:
1. Entitlement to CENVAT credit as pre-deposit under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS). 2. Compliance with Rule 6 of the CENVAT Credit Rules, 2017. 3. Authority of the Designated Committee under SVLDRS to modify the SVLDRS-3 form. 4. Applicability of the Frequently Asked Questions (FAQs) by CBIC. 5. Consideration of time limits for claiming CENVAT credit. Issue-wise Detailed Analysis: 1. Entitlement to CENVAT Credit as Pre-deposit under SVLDRS: The respondent, a partnership firm providing Advertising Agency Services, was issued a show cause notice on 7.9.2018 for non-payment of service tax amounting to ?13,06,07,137/-. The respondent claimed CENVAT credit of ?4,15,14,081/- in their service tax returns filed in July and August 2018. The respondent applied under the SVLDRS on 28.12.2019, declaring a payable amount of ?1,45,87,081/- after accounting for pre-deposit, including the CENVAT credit. The Designated Committee, however, disallowed the CENVAT credit, estimating the payable amount as ?5,62,21,162/-. The learned Single Judge ruled in favor of the respondent, directing the Committee to accept the CENVAT credit as pre-deposit. However, on appeal, the High Court found that the respondent was not entitled to claim CENVAT credit as pre-deposit under the Scheme, as it was inadmissible due to non-compliance with Rule 6 of the CENVAT Credit Rules, 2017. 2. Compliance with Rule 6 of the CENVAT Credit Rules, 2017: The crux of the matter was whether the respondent could claim CENVAT credit on input services amounting to ?4,15,14,081/- as pre-deposit under the Scheme. The High Court emphasized that Rule 6 of the CENVAT Credit Rules, 2017, stipulates that CENVAT credit cannot be claimed after one year from the date of the invoice. The respondent submitted invoices from 2013-2014 in 2019, well beyond the one-year limit. Thus, the claim was inadmissible. 3. Authority of the Designated Committee under SVLDRS to Modify SVLDRS-3 Form: The High Court clarified that the Designated Committee under the SVLDRS does not have the authority to modify the SVLDRS-3 form once issued. The Committee had correctly disallowed the CENVAT credit claim of ?4,15,14,081/- as it was inadmissible under the CENVAT Credit Rules. 4. Applicability of the Frequently Asked Questions (FAQs) by CBIC: The learned Single Judge had relied on Section 52 of the FAQs by CBIC, which the High Court found to be misapplied. The FAQs cannot override statutory provisions, and the respondent’s claim for CENVAT credit was not permissible under the existing rules. 5. Consideration of Time Limits for Claiming CENVAT Credit: The High Court reiterated that CENVAT credit is a concession, not a vested right, and must be claimed within the stipulated time frame. The respondent’s claim was time-barred as they failed to file the requisite forms within the prescribed period, and their right to claim the credit had lapsed. Conclusion: The High Court set aside the order of the learned Single Judge, ruling that the respondent was not entitled to claim the CENVAT credit as pre-deposit under the SVLDRS. The Designated Committee's decision to disallow the credit was upheld, and the writ appeal was allowed. The statutory provisions under the CENVAT Credit Rules, 2017, were given precedence, emphasizing that time-barred claims cannot be adjusted under the Scheme.
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