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2024 (1) TMI 643 - AT - Service TaxCENVAT Credit of service tax paid - import of services under reverse charge mechanism for the period prior to 18.04.2006 - invocation of Extended period of Limitation - HELD THAT - This issue is no more res-integra and has been considered by various benches of the Tribunal and it has been consistently held by the Tribunal that the assessee is entitled to cenvat credit of service tax paid under reverse charge mechanism on the services received from Foreign Service provider prior to 18.04.2006. This issue was finally settled by the Hon ble Supreme Court 2022 (11) TMI 48 - SUPREME COURT wherein it has been held that if the services are provided by a non-resident and are received outside India, the service would be taxable from 18.04.2006. Invocation of extended period of limitation - HELD THAT - Keeping in view the fact that the position of law was not clear during the relevant time, invocation of extended period of limitation is not justified because the appellant has not suppressed any material fact from the department and was subject to regular audit and has been regularly filing monthly service tax returns with the department. Therefore, the invocation of extended period is not justified in the facts and circumstances of this case. The impugned order is bad in law on merits as well as on limitation - Appeal allowed.
Issues Involved:
1. Eligibility for CENVAT credit on service tax paid on import of services under reverse charge mechanism for the period prior to 18.04.2006. 2. Invocation of the extended period of limitation. Summary: The present appeal challenges the order dated 15.10.2012 by the Commissioner (Adjudication) Service Tax, New Delhi, confirming a demand of Rs. 6,73,96,506/- under Section 73(1) of the Finance Act, 1994, read with Rule 14 of the Cenvat Credit Rules, 2004, along with interest and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The appellant, engaged in providing taxable services, availed CENVAT credit on service tax paid on input services, including those under the reverse charge mechanism. The dispute arose regarding the eligibility of CENVAT credit for service tax paid on import of services prior to 18.04.2006. The Ld. Counsel for the appellant argued that the impugned order denied CENVAT credit based on the premise that the appellant was not liable to pay service tax on import of services before 18.04.2006. She highlighted the lack of clarity and evolving legal provisions during the relevant period, including various notifications and amendments, culminating in the introduction of Section 66A of the Act effective from 18.04.2006. The Counsel cited several judicial precedents supporting the eligibility of CENVAT credit even when service tax was paid under a mistake of law. The Tribunal considered whether the appellant is eligible for CENVAT credit on service tax paid on import of services under reverse charge mechanism for the period prior to 18.04.2006. It was noted that this issue has been consistently decided in favor of the assessee by various benches of the Tribunal, affirming the eligibility of CENVAT credit for service tax paid under reverse charge mechanism on services received from foreign service providers before 18.04.2006. The Tribunal referred to decisions such as Alcatel Lucent India Ltd., where it was held that the appellant is entitled to CENVAT credit on service tax paid under reverse charge mechanism before 18.04.2006. The Tribunal emphasized that the appellant acted under a bona fide belief and paid service tax under Rule 2(1)(d) of the Rules, availing and utilizing the CENVAT credit for outward service tax liability. Regarding the invocation of the extended period of limitation, the Tribunal found it unjustified due to the lack of clarity in the law during the relevant period and the appellant's regular compliance with audits and filing of returns. The Tribunal concluded that the impugned order is bad in law on both merits and limitation, setting it aside and allowing the appeal with consequential relief. (Pronounced on 12.01.2024)
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