2014 (8) TMI 512 - AT - Service Tax

CENVAT Credit availed belated - This mistake of the branch was found out in their internal audit and later they filed revised returns for the periods April 2008 to March 2009, to take such credit and thereafter transferred such unutilized credit to the Circle office - whether the credits so taken were properly taken by the Branch Office and whether the Circle office was eligible to take such credit and utilize it - Held that - If the Ludhiana Branch had taken credit before surrendering the license of the branch the branch would have been eligible for taking the disputed credit. There is no time limit on taking of credit with reference to the point of time of the payment of the bill received from service provider claiming reimbursement of service tax. The two appellants involved are two different offices of the same legal entity. where invoice was addressed to one office of a company and credit was taken by another office, that fact by itself is not a reason to deny credit on such tax paid. Thus no case of real revenue loss is made out but some procedural infractions are alleged, that too in a situation of changing from a system of payment of service tax by every branch to a system of paying tax by the Circle office for all branches falling under the circle - Stay granted.

Summary

Issues: Stay petitions in two appeals involving service tax payment, Cenvat credit transfer, and procedural infractions.

Analysis:
1. Service Tax Payment and Cenvat Credit Transfer:
The case involves two appeals arising from the same order regarding service tax payment by a bank for the period 1-4-2008 to 31-3-2009, totaling Rs. 2,05,60,426/-. The bank transitioned to a centralized service tax payment system from April 2009, transferring unutilized Cenvat credits from branch offices to the Circle office. The dispute arose when the Ludhiana branch failed to claim Cenvat credit before surrendering its license. The Revenue contended that the branch's revised returns were improper, leading to a demand for recovery from both the branch and the Circle office. However, the Tribunal found no real revenue loss, only procedural infractions due to the transition in payment systems.

2. Procedural Infractions and Penalty Imposition:
The Revenue alleged that the revised return filed by the Ludhiana branch was beyond the prescribed time limit, questioning the need for such a return to claim service tax credit at the Circle office. The Tribunal noted that while procedural errors were present, they did not result in actual revenue loss. The Tribunal emphasized that the appellants, being different offices of the same legal entity, were entitled to claim the disputed credit. The Tribunal indicated that the imposition of penalties and denial of credits based on procedural infractions should be examined during the final hearing, highlighting that requesting pre-deposit in a case with no actual revenue loss would unfairly prejudice the appellants.

3. Waiver of Pre-Deposit and Stay of Dues Collection:
Considering the lack of real revenue loss and the transitional nature of the service tax payment system, the Tribunal granted a waiver of pre-deposit and stayed the collection of dues pending the appeal. This decision aimed to prevent undue prejudice to the appellants' interests during the appeal process, emphasizing the absence of actual revenue loss and the procedural nature of the infractions in question.

In conclusion, the Tribunal's judgment focused on the transition in service tax payment systems, the transfer of Cenvat credits, procedural infractions, and the lack of real revenue loss. The decision highlighted the entitlement of the appellants to claim credits, the need for a thorough examination of penalties and credit denials, and the importance of preventing undue prejudice by granting a waiver of pre-deposit and staying the collection of dues during the appeal process.