2015 (8) TMI 1186 - AT - Service Tax

Denial of CENVAT Credit - Goods Transport Agency Service - Invocation of extended period of limitation - Held that - There is no suppression in taking of credit. I also hold that under the facts and circumstances, construction of hostel/quarters for employees is in relation to the manufacturing business of appellant. Accordingly, the input service tax credit is available for construction of hostel/quarters. I also find that the appellant has taken the credit in March, 2009, whereas the show-cause notice has been issued on 25.11.2011 after a period of more than two and half years. Accordingly, I hold that the demand is hit by time bar. Since there is no suppression on part of the appellant and the appellants have disclosed the facts in relevant EA-3 returns about availment of CENVAT Credit, the extended period is not invocable. - Decided in favour of assessee.

Summary

Issues:
- Eligibility of CENVAT Credit for construction services used for employee accommodation
- Imposition of penalty for alleged suppression of information
- Liability for interest on CENVAT Credit

Eligibility of CENVAT Credit:
The appellant, a manufacturer of excisable goods, availed CENVAT Credit for Service Tax paid on construction services used to build hostel/quarters for employees. The adjudicating authority denied the credit, asserting that the services did not qualify as input services. The Commissioner (Appeals) upheld this decision, leading to the appellant's appeal. The appellant argued that the services fell within the definition of 'input service' under the Cenvat Credit Rules, 2004. They contended that the construction services were essential for smooth manufacturing operations and were directly related to the manufacturing process. Rule 2(1) of the Cenvat Credit Rules was cited to support their claim. The tribunal held that the construction of employee accommodation was indeed linked to the manufacturing business, making the input service tax credit valid. Moreover, the demand was deemed time-barred as the notice was issued over two and a half years after the credit was taken, and there was no suppression of facts by the appellant.

Imposition of Penalty:
Regarding the penalty imposed for alleged suppression of information, the appellant argued that they had disclosed the CENVAT Credit availed in their relevant EA-3 returns. The appellant contended that there was no statutory obligation to disclose, making the allegation of suppression baseless. They further asserted that there was no evidence of deliberate action to evade duty. Consequently, the appellant deemed the penalty unjustifiable. The tribunal concurred, finding no suppression on the part of the appellant and ruling that the extended period for invoking penalties was not applicable.

Liability for Interest on CENVAT Credit:
The appellant also challenged the imposition of interest on the CENVAT Credit. They argued that since they were not required to reverse the credit, there should be no penalty or interest levied. The tribunal, considering the lack of suppression and the timely disclosure of facts by the appellant, agreed that there was no basis for imposing interest. The appellant's reliance on specific legal precedents further supported their contentions. Ultimately, the tribunal allowed the appeal, granting any consequential relief as per the law.