2022 (8) TMI 499 - AT - Service Tax

CENVAT Credit - duty paying documents - debit notes are valid documents for availment of Cenvat credit of Service Tax or not - Rule 9 of the Cenvat Credit Rules, 2004 - levy of penalty u/s 78 of FA - HELD THAT - As per clause (f) of Rule 9 of the Cenvat Credit Rules, 2004, an invoice issued by a provider of input service is a valid document for availment of Cenvat credit - In the present case of the Appellant, the heading of the document as seen from sample copies attached with the appeal paper book though are nomenclated as debit notes but they contain all the disclosures as required in a tax invoice as per Rule 4A of the Service Tax Rules, 1994. Further it is not in dispute that the services have not been consumed/utilised by the Appellant and no such allegation had been made out in the SCN issued - Cenvat credit cannot be denied to the Appellants and thus the appeal succeeds to that extent and the demand is quashed. Levy of penalty u/s 78 of FA - HELD THAT - As regards service tax liability under RCM, since the amount has been paid with interest before issuance of the SCN itself, no penalty under section 78 can be imposed in the present case of the Appellant, being a settled jurisprudence. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of Cenvat credit on debit notes.
2. Service tax liability under Reverse Charge Mechanism (RCM).

Availment of Cenvat credit on debit notes:
The appeal revolved around the validity of availing Cenvat credit on debit notes issued by Visa Infrastructure Ltd. The Department contended that debit notes are not valid documents for Cenvat credit. The Appellant had availed Cenvat credit on debit notes for 'business support' and 'management consultancy services'. The dispute centered on whether Cenvat credit could be availed on debit notes under the Cenvat Credit Rules, 2004. Rule 9 of the Rules provides a list of documents on the basis of which Cenvat credit can be taken. The Tribunal analyzed the rule and found that as per clause (f) of the rule, an invoice issued by a provider of input service is a valid document for availing Cenvat credit. The Tribunal noted that although the documents were labeled as debit notes, they contained all the required disclosures as per Rule 4A of the Service Tax Rules, 1994. It was established that the services were not consumed by the Appellant, and no such allegation was made in the Show Cause Notice (SCN). Consequently, the Tribunal ruled in favor of the Appellant, quashing the demand for Cenvat credit.

Service tax liability under Reverse Charge Mechanism (RCM):
The second issue pertained to the service tax liability under Reverse Charge Mechanism (RCM). An amount was demanded under RCM, which the Appellant paid along with interest before the issuance of the SCN. The Tribunal noted that since the amount was paid with interest before the SCN, no penalty under section 78 could be imposed on the Appellant. This decision was based on settled jurisprudence. Consequently, the Tribunal allowed the appeal in favor of the Appellant on this issue as well.

In conclusion, the Appellate Tribunal CESTAT KOLKATA, in the judgment delivered by Shri P.K.CHOUDHARY, Member (Judicial), addressed the issues of availing Cenvat credit on debit notes and service tax liability under Reverse Charge Mechanism. The Tribunal ruled in favor of the Appellant on both issues, quashing the demand for Cenvat credit and acknowledging the payment made under RCM without imposing any penalty.