2015 (4) TMI 289 - HC - Service Tax

Challenge to the show cause notice - CENVAT Credit - summarization of the credits taken on capital goods - petitioner had not provided any details in respect of the usage of certain goods and also did not supply sample copies of invoices of such goods - Availability of alternate remedy - Held that - Commissioner has held that the petitioner has suppressed material with an intent to evade payment of duty. The petitioner contends that the fact of having availed of CENVAT duty was disclosed in the returns. It is necessary, however, to see whether the extent of disclosure in the returns was sufficient compliance. It would be necessary to ascertain whether the extent of disclosure would have enabled the assessing authority to determine whether in law the petitioner was entitled to CENVAT credit or not. There are various issues of fact which would be required to be considered. Even assuming that there was a disclosure of the fact of the petitioner having availed the credit, it would be necessary to ascertain whether there were other relevant facts which were necessary to be disclosed and whether the non-disclosure thereof constituted suppression. It is obviously for this reason that the petitioner rightly did not challenge the show cause notice itself at the outset. The petitioner rightly answered the show cause notice by filing a detailed reply therein. Even on merits, the petitioner thereafter appeared before the Commissioner and made detailed submissions. The petitioner filed detailed written submissions in this regard as well. - no reason to interfere at this stage in exercise of our extra-ordinary jurisdiction when the issue can be raised before the appellate Tribunal. It would be appropriate for the petitioner to challenge the order by filing an appeal before the Tribunal. - Decided against assessee.

Issues Involved:
1. Validity of the show cause notice dated 20.07.2012.
2. Validity of the order dated 12.12.2014 passed by the Commissioner, Central Excise.
3. Availability and appropriateness of alternate remedies.
4. Entitlement to CENVAT credit.
5. Timeliness of the show cause notice under Section 73(1) of the Finance Act, 1994.
6. Allegation of suppression of facts and intent to evade payment of duty.

Detailed Analysis:

1. Validity of the Show Cause Notice:
The petitioner challenged the show cause notice dated 20.07.2012, arguing that it was issued beyond the prescribed time limit under Section 73(1) of the Finance Act, 1994. The court noted that the petitioner had already responded to the show cause notice and had the option to appeal against the Commissioner's order under Section 35B of the Finance Act, 1994.

2. Validity of the Order Dated 12.12.2014:
The petitioner also contested the order dated 12.12.2014 passed by the Commissioner, Central Excise. The court observed that the Commissioner had issued a detailed order considering the facts, contentions, and legal provisions. The order concluded that the petitioner had availed inadmissible CENVAT credit and suppressed facts with intent to evade duty.

3. Availability and Appropriateness of Alternate Remedies:
The court emphasized that the petitioner had an alternate remedy of filing an appeal before the Tribunal. It was noted that the petitioner had already availed the alternate remedy by replying to the show cause notice and participating in the proceedings before the Commissioner. The court found no reason to interfere in the writ petition, suggesting the petitioner should pursue the appeal process.

4. Entitlement to CENVAT Credit:
The petitioner argued that it was entitled to CENVAT credit, while the Commissioner found the credits inadmissible. The court highlighted that the petitioner had admitted to an error in its ST-3 returns regarding the categorization of CENVAT credit for capital goods. The issue of whether the petitioner was entitled to CENVAT credit involved factual determinations, which were more appropriately addressed in an appeal.

5. Timeliness of the Show Cause Notice:
The petitioner contended that the show cause notice was time-barred under Section 73(1) of the Finance Act, which prescribes an eighteen-month period (twelve months at the relevant time). The court noted that the Commissioner invoked the proviso to Section 73(1), which extends the period to five years in cases of fraud, collusion, willful misstatement, suppression of facts, or contravention with intent to evade tax. The court found that determining whether the proviso applied involved factual issues best resolved in an appeal.

6. Allegation of Suppression of Facts and Intent to Evade Payment of Duty:
The Commissioner concluded that the petitioner had suppressed material facts with intent to evade duty. The court noted that the petitioner had disclosed the availed CENVAT credit in its returns but questioned whether the extent of disclosure was sufficient. The court highlighted that the issue of suppression involved factual determinations, which were more suitable for an appeal process.

Conclusion:
The court dismissed the writ petition, directing the petitioner to pursue the appeal process before the Tribunal. The court emphasized that it had not expressed any views on the merits of the case, including the applicability of Section 73 of the Finance Act. All contentions were kept open for consideration in the appropriate forum. There was no order as to costs.

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