2024 (11) TMI 204 - AT - Service Tax

Cenvat Credit on the basis of invoices of various broadcasting service providers - Invocation of extended period of limitation - HELD THAT - We find that the respondents have regularly filing the ST-3 returns and it was not required during the relevant time to submit the copies of invoices with ST-3 returns and it was only during audit, it was noticed by the Department that the respondent is availing the Cenvat credit on photocopies. We find that the Department has not been able to establish that there was intention of the appellant to evade the payment of service tax. Further, the Commissioner has rightly observed in para 4.8 of the impugned order wherein he has held that the show cause notice is within normal period of limitation of one year for the period from October, 2008 to March, 2009 and for the remaining period of time i.e. March, 2005 to September, 2007; the show cause notices were barred by limitation. Cenvat Credit availed on photocopies of invoices - Respondent has wrongly availed the Cenvat credit on the basis of photocopies alone which does not bear the signature of the issuing authority, therefore, we set aside the impugned order and confirmed the demand for the normal period from October, 2008 to March, 2009 along with interest; no penalties are required to be imposed on the respondent. Accordingly, the matters are remanded back to the Original Authority to quantify the demand of wrongly availed Cenvat Credit for the period October, 2008 to March, 2009 along with interest. Both appeals are disposed of on the above terms.

Issues Involved:

1. Validity of Cenvat Credit availed on photocopies of invoices.
2. Applicability of CBEC's Excise Manual Supplementary Instructions to service providers.
3. Invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994.

Issue-wise Detailed Analysis:

1. Validity of Cenvat Credit availed on photocopies of invoices:

The primary issue in this case was whether the respondents could avail Cenvat Credit based on photocopies of invoices issued by broadcasting service providers. The Department argued that Cenvat Credit can only be availed on original documents as prescribed in Rule 9(1) of the Cenvat Credit Rules, 2004. The adjudicating authority initially allowed the credit, citing that the deficiencies in the invoices were curable defects. However, the Tribunal found that the adjudicating authority did not substantiate the loss of original documents, as no FIR was lodged regarding their loss. The Tribunal emphasized that the Cenvat Credit scheme relies on the sanctity of original documents, and photocopies do not suffice as valid documents for credit. Citing precedents, it was held that credit cannot be availed on photocopies, as this could lead to multiple claims on the same invoice.

2. Applicability of CBEC's Excise Manual Supplementary Instructions to service providers:

The adjudicating authority had observed that the instructions contained in CBEC's Excise Manual Supplementary Instructions were not applicable to service providers under the Finance Act, 1994. However, the Tribunal disagreed, stating that the Cenvat Credit Rules are applicable to both Central Excise and Service Tax Rules. The Tribunal found that the instructions are indeed relevant and applicable to service providers, thereby invalidating the adjudicating authority's reasoning for allowing credit on photocopies.

3. Invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994:

The Department invoked the extended period of limitation, arguing that the respondents had suppressed facts by availing credit on photocopies. However, the Tribunal found that the respondents regularly filed ST-3 returns and that the requirement to submit invoices with these returns was not in place during the relevant period. The Tribunal noted that deficiencies were detected during an audit and not due to any willful misstatement or suppression by the respondents. Consequently, the Tribunal held that the extended period of limitation was not applicable. The demand for the period from March 2005 to September 2007 was barred by limitation, while the demand for the period from October 2008 to March 2009 was within the normal period of limitation.

Conclusion:

The Tribunal concluded that the respondents wrongly availed Cenvat Credit based on photocopies of invoices, which lacked the necessary signatures of issuing authorities. The impugned order was set aside, and the demand for the normal period from October 2008 to March 2009 was confirmed, along with interest. No penalties were imposed on the respondents. The matters were remanded back to the Original Authority to quantify the demand for the specified period. Both appeals were disposed of on these terms.

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