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2021 (12) TMI 1050 - AT - Service TaxCENVAT Credit - availment and utilization of credit on the basis of the invoices addressed to the assessee, other than the registered office premises - contravention of the rule 3 (i) of the Cenvat Credit Rules 2004 or not - extended period of limitation - HELD THAT - The issue involved in the present case is squarely covered by the decision of the Tribunal in the case of KINETIC ADVERTISING (I) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II 2018 (6) TMI 257 - CESTAT MUMBAI , wherein the Tribunal relying on the decision in MANIPAL ADVERTISING SERVICES PVT. LTD. VERSUS CCE., MANGALORE 2009 (10) TMI 434 - CESTAT, BANGALORE has held that Appellants are eligible for the credit availed by them on the invoices issued to their branch offices. However, on perusal of the ST-3 Returns enclosed, it is found that, the appellant has in column of Cenvat Credit Taken indicated the credit taken nil throughout. Although in the column of Credit utilised , they have indicated the utilization of credit in each of the Return for every month. Undisputedly, the show cause notice has been issued to them for denial of the credit taken., whereas the appellant has summarized the utilization of the credit as not the credit taken. They have not substantiated their claim by ST-3 Returns to the effect that they have not taken the credit by producing the relevant cenvat credit register - Para 41 of the impugned order cannot be faulted with as the appellant has failed to produce the cenvat credit register before the concerned adjudicating authority. However, this issue becomes irrelevant. As the demand of service tax is being set aside, so is the demand of interest and penalty imposed on the appellant - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Disallowance and recovery of Cenvat credit amounting to ?6,17,37,765. 2. Recovery of interest on the disallowed Cenvat credit. 3. Imposition of penalty under Section 76 of the Finance Act, 1994. 4. Imposition of penalty under Rule 15(3) of the Cenvat Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. 5. Invocation of extended period of limitation. Issue-wise Detailed Analysis: 1. Disallowance and Recovery of Cenvat Credit: The Commissioner of Service Tax disallowed Cenvat credit totaling ?6,17,37,765 for the period from 01.06.2006 to 31.12.2008, ordering its recovery under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(2) of the Finance Act, 1994. The basis for this disallowance was that the invoices for input services were addressed to premises other than the registered office, contravening Rule 3(i) of the Cenvat Credit Rules, 2004. The Tribunal found that the issue was covered by the decisions in Kinetic Advertising (I) Pvt. Ltd. [2018 (6) TMI 257 - CESTAT Mumbai] and Manipal Advertising Services Pvt. Ltd. [2010 (19) STR 506 (Tri.-Bang.)]. These decisions held that credit could be availed based on invoices issued to branch offices if the entity had centralized billing or accounting systems. The Tribunal thus set aside the demand for recovery of Cenvat credit, stating that the appellant was eligible for the credit availed on invoices issued to their branch offices. 2. Recovery of Interest: The Commissioner ordered the recovery of interest on the disallowed Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994. However, since the Tribunal set aside the primary demand for recovery of Cenvat credit, the associated demand for interest was also set aside. 3. Imposition of Penalty under Section 76: The Commissioner imposed a penalty under Section 76 of the Finance Act, 1994, for failure to pay Service Tax for the period from 01.06.2006 to 09.05.2008. The Tribunal, by setting aside the primary demand, also set aside the penalty imposed under Section 76. 4. Imposition of Penalty under Rule 15(3) and Section 78: A penalty of ?6,17,37,765 was imposed under Rule 15(3) of the Cenvat Credit Rules, 2004, read with Section 78 of the Finance Act, 1994. The Tribunal, by setting aside the primary demand, also set aside this penalty. 5. Invocation of Extended Period of Limitation: The show cause notice invoked the extended period of limitation, alleging suppression of facts. The appellant argued that there was no suppression or wilful misstatement. The Tribunal did not specifically address the invocation of the extended period but implicitly negated its relevance by setting aside the entire demand based on the substantive merits of the case. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order in its entirety, including the demands for recovery of Cenvat credit, interest, and penalties. The judgment was pronounced in the open court on 23.12.2021.
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