2024 (1) TMI 1120 - AT - Service Tax

Eligibility of CENVAT Credit - credit was not mentioned in the ST-3 Returns filed - credit has been taken after the prescribed period of six months or one year (from 01.03.2015) - Extended period of limitation - HELD THAT - The learned Commissioner finds that CENVAT credit on input and input services can only be availed within a period of six month or one year (w.e.f. 01.03.2015) from the date of invoice and in the instant case, time period of one year has already elapsed and moreover, the appellants have not claimed the CENVAT credit in the ST-3 Returns. It is found that the Tribunal in the case of Origin Learning Solutions Pvt. Ltd. 2021 (7) TMI 898 - CESTAT CHENNAI held that CENVAT credit cannot be denied for the reason that such availment was not reflected in ST-3 Returns. It is also found that Tribunal and High Courts have been consistently holding that a substantial rate of eligibility to CENVAT credit cannot be denied on the basis of procedural violations. The credit cannot be denied only because it has been utilized late. Moreover, it is found that the show-cause notice has been issued on the basis of third-party information. Extended period of limitation - HELD THAT - Though extended period has been invoked, no evidence of suppression, mis-statement, fraud, collusion etc., has been put forth. In the absence of the same, extended period cannot be invoked. It is found that the Tribunal in the case of Balaji Machinery 2022 (8) TMI 704 - CESTAT KOLKATA held that where the demand is merely on the basis of data obtained from Income Tax Department, it cannot be alleged that there was suppression etc. to justify the invocation of extended period. Therefore, it is found that the impugned order is not legally sustainable. The appeal is allowed both on merits and limitation.

Summary

Issues involved:
The issues involved in the judgment are related to the denial of CENVAT credit to the appellant for availing input services beyond the prescribed period and the time limitation for raising the demand by the Department based on third-party information.

Issue 1: Denial of CENVAT credit for availing input services beyond prescribed period

The appellants, registered for services like "Manpower Recruitment/ Supply Agency Service" and "Commercial Training or Coaching Service," provided only Manpower Recruitment/ Supply Agency Service during the impugned period. The Department issued a show-cause notice alleging non-filing of ST-3 Returns and demanded recovery of service tax. The appellants contended that they have enough credit to pay the demanded service tax and have discharged the same. The demand was confirmed by the Original Authority and upheld by the Appellate Authority. The learned Counsel for the appellants argued that they have availed input services and paid duty on the cum-tax value, exceeding the service tax by Rs.6,781. He further argued that the denial of credit based on the period of availing the credit is incorrect, citing relevant legal precedents. The Tribunal found that the appellants have availed the services, paid the service tax, and possessed documents indicating such availment. The Tribunal held that denial of credit solely on the basis of delayed utilization is not justified. The impugned order was deemed legally unsustainable, and the appeal was allowed on merits.

Issue 2: Time limitation for raising the demand based on third-party information

The Department raised demands for the period 2014 to 2017 through a show-cause notice issued in 2019. The learned Counsel for the appellants argued that there was no suppression of material facts on their part, making the demand time-barred. Legal precedents were cited to support this argument. The Department's Authorized Representative reiterated the findings of the impugned order, highlighting discrepancies in the ST-3 Returns filed by the appellants. The Tribunal observed that the demand was based on third-party information and that no evidence of suppression, misstatement, fraud, or collusion was presented to invoke the extended period. Citing legal precedents, the Tribunal held that demands based solely on data obtained from the Income Tax Department do not justify the invocation of the extended period. Consequently, the impugned order was deemed legally unsustainable, and the appeal was allowed on both merits and limitation.