2021 (12) TMI 1188 - AT - Service Tax

Time Limitation - CENVAT Credit availed under wrong category - maintenance of proper records or not - penalty - HELD THAT - Admittedly the appellant have maintained proper books of accounts and there is no allegation that they have filed incomplete statutory return or have left any relevant column of the return blank, which they are required to fill. Extended period of limitation is not invokable in the facts and circumstances of the case. Further, as substantial proposed demand have been dropped by the Adjudicating Authority and also a large amount have been reversed and not contested, prior to the issuance of the show cause notice. Penalty also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the show cause notice is time-barred.

Analysis:
The appeal involved a dispute regarding the time-barred show cause notice. The appellant, engaged in storage infrastructure business, had availed cenvat credit on various services. The Department issued a show cause notice proposing to disallow the credit and impose a penalty. The appellant contested the notice, stating that the services were business-related and eligible for credit. The Department adjudicated the notice, partially dropping the proposed demand. The Commissioner (Appeals) disallowed credit for certain services but allowed it for others. The appellant argued against the invocation of the extended period of limitation, claiming proper record maintenance and regular filing of returns. The Commissioner upheld the extended period, leading to the appeal.

The Commissioner disallowed credit for E-voting service and certain insurance policies, citing exclusion under Cenvat Credit Rules. However, credit for fire insurance of jetty was allowed as the jetty was used as plant and machinery for providing taxable services. Regarding the extended period of limitation, the Commissioner found the detection of irregular credit during audit justified the extension. The appellant contended that proper records were maintained, returns filed regularly, and no suppression of facts occurred, challenging the invocation of the extended period.

The Tribunal held that the appellant maintained proper records and filed returns regularly, with no allegations of incomplete filings or suppression of facts. Consequently, the Tribunal deemed the invocation of the extended period of limitation unjustified. As substantial proposed demands were dropped, and a significant amount was reversed before the show cause notice, the penalty imposed on the appellant was set aside. The appeal was allowed, granting the appellant consequential benefits in accordance with the law.

In conclusion, the Tribunal ruled in favor of the appellant, finding the show cause notice not time-barred due to proper record maintenance and regular filing of returns. The penalty was overturned, and the appellant was entitled to consequential benefits.