2014 (12) TMI 542 - AT - Service Tax

Denial of CENVAT Credit - credit of service tax paid in respect of digital photographs - Invocation of extended period of limitation - Held that - As the entire case of the Revenue was that photographs used for brochure meant for sale promotion cannot held to be eligible input service, the presentation of the brochure before Commissioner (Appeals) cannot held to be a additional evidence so as to hit by the provision of Rule 5 of Central Excise (Appeals) Rules, 2001. There is no dispute by the lower authorities that the credit was availed and duly reflected in the returns. If there is no column in the returns to show the nature of the input services, the assessee cannot be blamed for not providing the details of the input services. It is well settled that non-disclosure of the fact which is not required to be disclosed in the law, cannot attribute any suppression to the assessee. As such, the reasoning of the Commissioner (Appeals) that appellants have not disclosed the digital photograph service as a service on which credit was availed thus leading to suppression, cannot be upheld. Accordingly, I set aside the demand on the point of limitation - Decided in favour of assessee.

Issues involved:
1. Denial of credit of service tax for digital photographs used in the preparation of brochure/catalogue for sale promotion.
2. Rejection of appeal by Commissioner (Appeals) under Rule 5(1) of Central Excise Rules, 2001.
3. Allegation of suppression due to non-disclosure of nature of input services in returns.

Analysis:

Issue 1: Denial of credit for digital photographs
The judgment addresses the denial of credit of service tax for digital photographs used in creating a brochure/catalogue for sale promotion. The Revenue argued that such photographs did not qualify as eligible input services. The Commissioner (Appeals) rejected the appeal, stating that the appellants produced the brochure only during the appeal, which he deemed inadmissible. However, the Tribunal disagreed with this reasoning. It held that the presentation of the brochure during the appeal did not constitute additional evidence that would fall under Rule 5 of Central Excise (Appeals) Rules, 2001. Therefore, the denial of credit based on the nature of the photographs was not upheld.

Issue 2: Rejection of appeal under Rule 5(1) of Central Excise Rules, 2001
The Commissioner (Appeals) rejected the appeal under Rule 5(1) of Central Excise Rules, 2001, on the grounds that the appellants had not disclosed the digital photographs as the service for which credit was availed. This non-disclosure was considered as suppression by the Commissioner. However, the Tribunal disagreed with this assessment. It noted that the credit was availed and reflected in the returns, even though the nature of the input services was not specifically detailed. The Tribunal emphasized that if the law did not mandate disclosure of certain information, the failure to disclose such information could not be equated to suppression. Consequently, the Tribunal set aside the demand based on the point of limitation and allowed the appeal with relief to the appellant.

Issue 3: Allegation of suppression due to non-disclosure
The issue of alleged suppression by the appellants due to the non-disclosure of the nature of input services in the returns was a key point of contention. The Commissioner (Appeals) attributed suppression to the appellants for not explicitly stating that the credit availed was for digital photographs. However, the Tribunal clarified that if there was no specific column in the returns requiring the disclosure of the nature of input services, the appellants could not be faulted for not providing such details. The Tribunal underscored that the non-disclosure of information not mandated by law could not be construed as suppression. Therefore, the reasoning of the Commissioner (Appeals) on this matter was deemed untenable, leading to the Tribunal setting aside the demand on the point of limitation and granting relief to the appellant.

This detailed analysis of the judgment highlights the key issues addressed and the Tribunal's findings on each matter, providing a comprehensive understanding of the legal reasoning employed in the decision.

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