2024 (10) TMI 1343 - AT - Service Tax

Non-payment of differential tax - short reporting of taxable services - whether in the facts of the case, the credit claimed to have been adjusted against the service tax liability by the appellant can be allowed or otherwise? - HELD THAT - In the facts of the case, it is obvious that they are not disputing the liability as such and infact they have paid certain amount through challan way back in 2016 itself i.e. much before the detection of non-payment by the Audit Team. Therefore, there was no intention as such not to pay the service tax liability on the said unreflected amount of provision of services. Apparently, they were under the impression that the Cenvat Credit accrued to them would automatically get adjusted against the total liability and they have to discharge only on the net liability by way of challan payments. Admittedly, they made such adjustment during relevant period without reflecting all these transactions in the ST-3. Since, the factual matrix is not very clear and the appellant will be required to demonstrate the actual availability of credit and its adjustment in their books of accounts, this requires to be remanded back to the Original Jurisdictional Authority, who shall go through the books of accounts, IT Returns and any other relevant documents which the appellants may like to produce in support of their legitimate Cenvat Credit and its adjustment. However, it is made clear that non-mentioning of the said credit in the ST-3 would not debar them from off setting or adjusting the said credit towards total liability - Adjudicating Authority should also see whether this credit has been otherwise not been used in discharge of liability for any other services during the relevant period or got transited to GST Regime with effect from approved date. Subject to such verification available credit would be admissible for adjustment towards outstanding liability. The order of the Commissioner (Appeals) is set aside and the matter is remanded back to the Original Jurisdictional Authority for fresh adjudication - Appeal allowed by way of remand.

Summary

Issues involved:
1. Whether the appellant's claim of payment of differential service tax through Cenvat Credit is admissible.
2. Whether the appellant's adjustment of credit against outstanding liability can be allowed.
3. Interpretation of provisions regarding availment of credit and its reflection in ST-3 returns.

Detailed Analysis:
Issue 1: The appellant contended that they had paid a portion of the differential tax through Cenvat Credit, which the Department did not agree with. The Adjudicating Authority confirmed the demand, stating that the credit was not admissible as it was not reflected in the ST-3 returns. The appellant argued that the credit was recorded in their books and IT returns, even though not in the ST-3, and relied on case laws to support their position.

Issue 2: The appellant disputed the denial of adjustment of credit against the outstanding liability. The Learned CA highlighted that the credit was reflected in their books and IT returns, and although not in the ST-3, it was utilized to offset the liability during the relevant period. The Department and the Original Adjudicating Authority raised concerns about restrictions on credit availment, but the appellant maintained that the credit should be allowed for adjustment.

Issue 3: The Tribunal examined the case laws cited by the appellant and acknowledged that if credit is recorded in the books, it cannot be denied solely for not being reflected in the ST-3. The Tribunal emphasized that procedural requirements should not disentitle genuine credit, especially if duly recorded and reported through other authorities. The Tribunal directed a remand to the Original Jurisdictional Authority for further verification of the availability and adjustment of credit in the appellant's records, emphasizing that non-mentioning in the ST-3 should not prevent offsetting the credit against the liability.

Conclusion: The Tribunal set aside the Commissioner (Appeals) order and remanded the matter for fresh adjudication, emphasizing the need for verification of the credit availability and adjustment in the appellant's records. The decision highlighted that non-disclosure in the ST-3 should not hinder the adjustment of credit towards the outstanding liability, subject to verification. The issue of limitation was left open for further consideration during the fresh adjudication process.