2023 (3) TMI 296 - AT - Service Tax

CENVAT Credit - improper documents as prescribed under Rule 9(1) of CCR - credit taken on the basis of running account bills prepared by the staff of the appellant (service receiver) containing measurement of work and amount to be paid to the Contractor (service provider) - It appeared, these bills do not contain the mandatory information required for availing Cenvat credit in terms of Rule 9(1) of CCR - period April 2015 to March 2017 - HELD THAT - It is not in dispute that the appellant PSU have prepared the running bills as per the norms prescribed by the State Government. It is not disputed that such running bills are not genuine, or payment to the service provider/contractor have not been made as per the running bills, after adjustment of various if any like Income Tax at source, Vat at source, security deposit, etc. It is further found that this is a case of failure to exercise jurisdiction by the court below in verifying the genuineness of the transaction and allowing the credit accordingly, wherein in Rule 9(2) of CCR read with proviso it has been prescribed that-where a document does not contain all the particulars but contains substantial particulars, inter alia details of service tax payable, description of service etc. The assessing officer on being satisfied that the goods on services covered by the said documents have been received and accounted for in the books of account of the receiver, he may allow the Cenvat credit - there is no such contrary finding in the orders of the court below as regards non receipt of service or the Cenvat credit taken being sham or fake. The Cenvat credit in under dispute is allowable to the appellant-assessee - Appeal allowed.

Summary

Issues:
1. Absence of the appellant during the hearing.
2. Alleged wrongful availment of Cenvat credit by the appellant.
3. Disallowance of credit, imposition of penalty, and interest by the authorities.
4. Adjudication of the case by the Commissioner (Appeals).
5. Appeal before the Appellate Tribunal challenging the lower court's decision.

Issue 1:
The appellant was absent during the hearing, prompting the Tribunal to proceed ex parte with the assistance of the authorized representative. The appellant had been absent on multiple previous occasions, and no adjournment was requested during the current hearing.

Issue 2:
The case involved the alleged wrongful availment of Cenvat credit amounting to Rs. 17,56,714 by the appellant PSU. The credit was taken based on 'running account bills' prepared by the appellant's staff, which were found to lack the mandatory information required for availing Cenvat credit under Rule 9(1) of the Cenvat Credit Rules.

Issue 3:
Following the audit findings, a show cause notice (SCN) was issued proposing the recovery of the Cenvat credit along with the imposition of penalties under Rule 15 of the Cenvat Credit Rules read with Section 78 of the Act. The SCN was adjudicated, confirming the disallowance of credit, interest, and imposing an equal penalty.

Issue 4:
The appellant contested the SCN, arguing that the running bills complied with the rules and guidelines set by the State Government and contained all necessary details. The appellant maintained that the contractors were registered with the service tax department, and payments were made through proper channels. The Commissioner (Appeals) dismissed the appeal, citing the improper nature of the documents for availing Cenvat credit.

Issue 5:
The appellant appealed before the Appellate Tribunal, challenging the lower court's decision. The Tribunal found that the running bills prepared by the appellant were in compliance with the norms set by the State Government and that the genuineness of the transactions was not in dispute. The Tribunal held that the Cenvat credit was allowable to the appellant, setting aside the impugned order and granting consequential benefits to the appellant.

In conclusion, the Appellate Tribunal allowed the appeal, holding that the Cenvat credit in dispute was admissible to the appellant-assessee. The Tribunal found that the lower court failed to verify the genuineness of the transactions properly and ruled in favor of the appellant, granting them consequential benefits.