2022 (12) TMI 55 - AT - Service Tax

CENVAT Credit - availment of depreciation under Income Tax Act, 1961 was assailed as breach in common - failure to discharge tax liability earned for rendering of taxable service for the period from 1st April 2009 to 30th September 2009 for which section 73 of Finance Act, 1994 has been taken recourse to - HELD THAT - The adjudicating authority has failed to consider the altered paradigm consequent upon notification of Point of Taxation Rules, 2011 by which the regime of taxation of receipts was substituted by taxation of accruals. The impugned order has also failed to take into consideration the liability discharged by the appellant; settled law on such compliance must be given effect to. The contention of the appellant that depreciation claimed earlier has since been revised and appropriate changes made in returns under Income Tax Act, 1961 should have been considered in the light of judicial decision without exceeding the jurisdictional competence of the adjudicating authority for insisting upon acceptance of the same by authorities empowered under that statute. The adjudicating authority is required to consider the evidence furnished by the appellant that duty liability having been discharged on tippers sourced by them, as now placed on record, before concluding that the credit availed therein is ineligible. The impugned order is, thus, bereft of findings based on law, as enacted and judicially determined, applied to the facts put forth by the assessee and requires re-determination - matter remanded back to the original authority for fresh disposal of show cause notice after granting opportunity to assessee to make submissions on all issues. Appeal allowed by way of remand.

Summary

Issues:
Appeal against order-in-original for multiple recoveries under CENVAT Credit Rules, 2004; Tax liability on rendering taxable service; Recovery of credit on procurement of capital goods; Denial of opportunity to be heard; Disputed service charges; Discrepancy in invoices for capital goods; Ineligibility of credit due to availing depreciation; Application of relevant statutory provisions; Impact of Point of Taxation Rules, 2011; Consideration of revised returns under Income Tax Act, 1961; Evidence of duty liability discharge on procured goods; Relevance of registration in credit eligibility.

Analysis:
1. The appeal challenged three recoveries under CENVAT Credit Rules, 2004. The appellant, a mining services provider, faced tax liability for rendering taxable services. The recovery of credit on capital goods procurement and ineligibility due to availing depreciation were contested. The issue of denial of opportunity to be heard was raised regarding fixing hearing dates improperly.

2. The appellant's tax liability for rendering taxable services was detailed. The recovery of credit on capital goods, including tippers and excavators, was disputed. The discrepancy in invoices and registration details added complexity to the case.

3. Legal precedents were cited to challenge the computation of undischarged liability. The appellant argued against the ineligibility of credit due to availing depreciation, citing relevant case law and technical issues related to CENVAT credit.

4. The respondent defended the application of statutory provisions and cited tribunal decisions supporting ineligibility of credit in similar cases. The impact of relevant case law and Supreme Court judgments on credit eligibility was emphasized.

5. The relevance of registration in credit eligibility for service providers was debated. The impact of revised returns under the Income Tax Act, 1961, and evidence of duty liability discharge were crucial factors in determining credit eligibility.

6. The impugned order was criticized for lacking legal basis and factual analysis. The matter was remanded for fresh disposal after granting the appellant an opportunity to present submissions on all issues. The decision was pronounced on 29/11/2022.