9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 1180 - AT - Service TaxCENVAT Credit - duty paying invoices - eligibility of credit on the strength of supplementary invoices issued by the service providers - credit availed based upon such supplementary invoices which were raised by those service providers who short paid the service tax with mala fide intent - suppression of fact of availment of Cenvat Credit on the strength of supplementary invoices - levy of penalty - invocation of extended period of limitation. Rejection of Cenvat Credit of service tax on the strength of supplementary invoices issued by the service providers - Rule 3 (1)of Cenvat Credit Rules, 2004 - HELD THAT - The Rule clarifies that credit can be availed by manufacturer of final product for any input service received by him. In the present case apparently and admittedly, appellant is the manufacturer of medicaments. The contract labour was received for the said manufacture by two manpower recruitment supply agencies. Hence the services received from said agencies are nothing but the input service for the appellant being used in manufacture of his final product. Thus, it stands clear that appellant was entitled for availment of Cenvat credit - credit allowed. Rejection on the ground that the Cenvat Credit is availed based upon such supplementary invoices which were raised by those service providers who short paid the service tax with mala fide intent - HELD THAT - In the present case, there is no dispute about availment of Cenvat Credit by the appellant on the amount of initial invoices which was for service charges in respect of providing manpower services to the appellant. The dispute is only with respect to the Cenvat Credit availed on the amount of service tax which was paid for certain reimbursable amounts which were demanded by the service providers by way of supplementary invoices due to the reason that an investigation had initiated against them in February, 2012 denying them the exemption from the tax liability towards the reimbursable amounts - Since the service providers had voluntarily paid the said duty demand that they issued the supplementary invoices to the appellants claiming the amount of tax liability already discharged by them. Non-payment of service tax on the reimbursable expenses of the salary/ wages of the contract labours received by the service providers of manpower recruitment agencies from their service recipients - HELD THAT - Hon ble Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT has held as per Section 67 (un-amended prior to 1st May, 2006) or after its amendment w.e.f. 1st May, 2006 the only possible interpretation of the said section 67 is that for the valuation of taxable services for charging service tax, the gross amount charged for providing such taxable services only has to be taken into consideration. Any other amount which is not for providing such taxable service cannot be the part of the said value. It was clarified that the value of service tax cannot be anything more or less than consideration paid as quid pro quo for rendering such services. Accordingly, it was held that section 67 of Finance Act, 1994 do not allow inclusion of reimbursable expenses in valuation of service rules - keeping in view that the period of dispute in the present case is the period prior to May, 2015, it is held that the appellant as well as its service providers were rightly under the bonafide belief that there is no service tax liability as far as the reimbursable part of the salary/ wages is concerned. Rejection of Cenvat credit availed on supplementary invoices - HELD THAT - This Tribunal in the case of MADRAS CEMENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY 2010 (6) TMI 397 - CESTAT, CHENNAI has held that supplementary invoices on the strength of which disputed credit was taken cannot be an in-eligible document - Credit remains allowed. Levy of penalty under section 76, 77 and 78 of the Finance Act, 1992 - HELD THAT - Section 78 of the Finance Act provides for imposition of penalty due to suppression of facts or contravention of provision of law on part of the assessee with the intent to evade payment of duty etc. The service tax liability was duly discharged by the appellant and by the service provider with reference to the amount charged for providing manpower and that there is no denial about the same - the proviso to Rule-9(1)(bb) containing exclusion clause cannot be pressed into service to deny CENVAT Credit against supplementary invoices. Above all, Commissioner (Appeals) himself has set aside the penalty as was imposed under section 78 of Finance Act observing no malafide on part of the appellant. Confirmation of demand still relying upon section 9 (1) (bb) is therefore held wrong. It is further observed that neither the SCN nor the impugned Order-in-Original dated 04.12.2017 alleges that the invoices were not genuine, the services were not received or the same were not utilized in the manufacture of dutiable final product. Mere fact that the differential amount of service tax was paid by the service provider on being pointed out by central excise officers doesn't establish that the service tax was short paid or was not paid by reason of fraud, suppression, misstatement etc. with an intent to evade the payment of service tax - penalty set aside. Extended period of Limitation - HELD THAT - The issuance of Show Cause Notice in the year 2017 is apparently beyond the reasonable time for issuing the same. At least it stands clear that fact of availment of Cenvat credit on disputed supplementary invoices was in the notice of the Department since the year 2012-2013. The Department is not entitled to invoke the extended period of limitation. The entitlement of the appellant to avail Cenvat credit has been denied are hereby set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement of the appellant to avail Cenvat Credit on the strength of supplementary invoices. 2. Allegation of mala fide intent by service providers in short-paying service tax. 3. Suppression of facts by the appellant regarding the availment of Cenvat Credit. Issue-wise Detailed Analysis: 1. Entitlement of the appellant to avail Cenvat Credit on the strength of supplementary invoices: The appellant, a manufacturer of medicaments, entered into contracts with manpower recruitment and supply agencies. The appellant availed Cenvat Credit based on supplementary invoices issued after service tax was voluntarily paid by the service providers post-investigation. The Commissioner (Appeals) denied this credit citing Rule 9 (bb) of Cenvat Credit Rules, 2004. However, Rule 3 (1) of Cenvat Credit Rules, 2004 allows a manufacturer to take credit for any input service received. The services from the manpower agencies qualify as input services for the appellant's manufacturing process. The Tribunal concluded that the appellant was entitled to avail Cenvat Credit. 2. Allegation of mala fide intent by service providers in short-paying service tax: The dispute centered on the Cenvat Credit availed on service tax paid on reimbursable expenses, which were later billed through supplementary invoices. The issue of non-payment of service tax on reimbursable expenses was settled by the Supreme Court in Union of India and Anr. Vs. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd., which held that reimbursable expenses should not be included in the taxable value of services. The Tribunal found that the appellant and service providers had a bona fide belief that there was no service tax liability on reimbursable expenses. Thus, there was no mala fide intent in short-paying the service tax. 3. Suppression of facts by the appellant regarding the availment of Cenvat Credit: The Tribunal examined Rule 9 (1) (bb) of the CENVAT Credit Rules, 2004, which restricts credit on supplementary invoices if the additional tax is due to fraud or suppression of facts. The Tribunal found no evidence of fraud or suppression by the appellant or the service providers. The service tax was paid voluntarily before adjudication, and no penalties were imposed under sections 76, 77, and 78 of the Finance Act, 1994, indicating no intent to evade duty. The Tribunal held that the appellant's case did not fall within the exceptions of Rule 9 (1) (bb), and thus, the Commissioner (Appeals) erred in denying the Cenvat Credit. Conclusion: The Tribunal set aside the grounds of rejection by the Commissioner (Appeals), stating that the appellant was entitled to avail Cenvat Credit on supplementary invoices, there was no mala fide intent in short-paying service tax, and no suppression of facts occurred. The appeal was allowed, and the order under challenge was set aside.
|
