2015 (11) TMI 467 - AT - Service Tax

Denial of Cenvat credit - services received for training of persons in dispensing of CNG in retail outlets - Invocation of extended period of limitation - Held that - Dispensing activity of CNG in the retail outlet is undertaken by personnel who are the employees of service provider and not of appellant. This service provider is discharging service tax under the category of business auxiliary services; Cenvat credit availed by the appellant is of the service tax paid on the services rendered for training of the personnel. - if services are utilised by the service provider Cenvat credit can be availed by such service provider and not any other assessee. - Credit cannot be allowed - on merit decided against the assessee. Extended period of limitation - appellant had availed Cenvat credit on the months of March and April 2009, the said availment of credit has been informed to Department when they filed monthly returns. In my considered view, appellant could have entertained a bona fide belief that having paid for the training of personnel, they can avail the Cenvat credit of the service tax paid and I do not see any element of suppression or misstatement of facts on the part of the appellant that too with intent to evade duty in a situation as is in this case. Entertaining a bonafide belief of availment of Cenvat credit of the service tax paid that too, when assessee pays for such services, is a rational interpretation that would be taken by any assessee, in a situation as is the case before me. In my view, show cause notice dated 14th October 2010 invoking the extended period is incorrect and impugned orders confirming the demands on the grounds of suppression and misstatement are unsustainable and liable to be set aside when it is on records and undisputed that appellant has been filing monthly returns with the authorities indicating therein the availment of Cenvat credit on the invoices raised by the service provider for training of personnel. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Denial of Cenvat credit on service tax paid for training of personnel in dispensing CNG at retail outlets.

Analysis:
The appellant availed Cenvat credit on service tax paid for training conducted by a service provider for dispensing CNG. Revenue authorities contended that the credit was not available as the training was for the staff of an agency providing business auxiliary services. A show cause notice was issued alleging suppression, leading to confirmation of demands, interest, and penalties. The first appellate authority upheld this decision.

The appellant argued that the training was essential due to the hazardous nature of dispensing CNG, emphasizing safety concerns. They cited a judgment from the Bombay High Court to support their claim. The departmental representative countered, stating that the training was for staff dispensing CNG, not directly employed by the appellant. They highlighted the definition of input service and the need for an integral connection between activities and the business of manufacturing final products.

Regarding limitation, the appellant argued that the demand was time-barred as the Department was aware of the Cenvat credit during monthly returns filing. The Tribunal found merit in this argument, noting the appellant's good faith belief in availing the credit. They held that the extended period invocation was incorrect, as there was no suppression or intent to evade duty. The impugned order confirming demands, interest, and penalties was set aside based on the appellant's regular disclosure of credit availed in monthly returns.

In conclusion, the Tribunal upheld the denial of Cenvat credit on merit but set aside the confirmation of demands, interest, and penalties due to the incorrect invocation of the extended period. The appeal was disposed of accordingly.