2022 (4) TMI 129 - AT - Central Excise

CENVAT Credit - input services - outward transportation service (GTA) used for removal of goods - demand barred by time limitation or not - HELD THAT - The appellant have maintained proper records of the transactions and the fact of taking credit. Further, the appellant has also filed periodical returns regularly. Admittedly, show cause notice has been issued in September, 2019 disputing taking of cenvat credit on outward GTA for the period April, 2016 to March, 2017. During the course of argument, learned Counsel have also filed copy of the excise return in Form ER-1, wherein they have reflected the cenvat credit taken in the relevant columns alongwith other details as required. Thus, no case of suppression, mis-representation or fraud is made out against the appellant. The Tribunals, High Courts and even the Supreme Court have taken divergent views on the subject of allowability of credit on outward GTA. Finally, the CBIC has issued a circular in the year, 2018 mentioning four rulings of Hon ble Supreme Court in Roofit 2015 (4) TMI 857 - SUPREME COURT , Ultratech 2018 (2) TMI 117 - SUPREME COURT , Ispat Industries, 2015 (10) TMI 613 - SUPREME COURT etc. wherein divergent views have been taken and thereafter have given instruction to the Field Officer to take a pragmatic view in the matter of allowability of outward GTA. Thus, evidently the issue was open to more than one interpretation and thus the dispute raised by the Department is debatable and subject to different interpretation. The extended period of limitation is not available to Revenue. Accordingly, I hold the show cause notice is hit by limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the appellant rightly took cenvat credit of service tax paid on outward transportation service (GTA) used for removal of goods.
2. Whether the demand is hit by limitation.

Analysis:

Issue 1: Cenvat Credit on Outward Transportation Service (GTA)
The appellant, a manufacturer of dutiable goods, availed cenvat credit of service tax paid on outward transportation service (GTA) for the removal of goods. The dispute arose when the revenue contended that GTA services did not fall within the definition of input services as only outward transportation up to the place of removal was considered valid. The appellant sold goods from the factory premises to customers, paying service tax on outward freight under reverse charge mechanism. The revenue proposed disallowing the cenvat credit, citing that the factory gate was the place of removal, not the final customer's location. The adjudicating authority disallowed the credit, invoking the extended period of limitation, alleging suppression of facts by the appellant. The Commissioner (Appeals) upheld this decision. However, the appellant argued that they did not suppress any facts and had taken the credit in good faith, citing relevant case law supporting their position.

Issue 2: Limitation of Demand
The appellant maintained proper records, filed returns regularly, and reflected the cenvat credit in the statutory records and ER-1 returns. The Tribunal noted the divergent views on the allowability of credit on outward GTA, with various courts and the CBIC issuing conflicting rulings. Given the debatable nature of the issue and the lack of suppression, misrepresentation, or fraud by the appellant, the Tribunal held that the extended period of limitation was not applicable to the revenue. Consequently, the show cause notice was deemed hit by limitation, leading to the appeal being allowed and the impugned order set aside.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the lack of fraudulent intent, the debatable nature of the issue, and the absence of suppression of facts. The ruling highlighted the importance of maintaining proper records and complying with statutory requirements in tax matters.