2016 (1) TMI 817 - AT - Central Excise

Cenvat Credit of Service tax - whether the appellant has availed the Cenvat Credit of Service tax paid on the amount received by them from their employees for availing the services of canteen and whether extended period can be invoked for demand of such ineligible Cenvat Credit? - Held that - The issue on merits as to eligibility to avail Cenvat Credit on the Service tax paid of the amount collected from their employees, the issue is now settled by the judgment of the Hon ble High Court of Bombay in the case of Ultratach Cement-2010 (2010 (10) TMI 13 - BOMBAY HIGH COURT). Accordingly, on merits appellant has no case. As regards limitation during the relevant period appellant herein had every reason to believe that they are eligible to avail Cenvat Credit of service tax paid on the amount paid for canteen services, to that extent demand which have been raised and confirmed by the lower authorities by invoking extended period is liable to be set aside, if any demand is within limitation from the date of show cause notice, it is upheld along with interest and appellant is directed to pay the same to the revenue. - Decided in favour of assessee.

Summary

Issues involved:
Whether the appellant is required to reverse the cenvat credit availed on outdoor catering services during a specific period, and if the extended period can be invoked for demanding ineligible cenvat credit.

Analysis:
1. The appeal challenged Order-in-Appeal No. PI/VSK/57/2010 dated 29/03/2010, focusing on the reversal of cenvat credit availed on outdoor catering services during April 2005 to March 2008. The adjudicating authority confirmed a demand of Rs. 2,71,087/- with interest and imposed a penalty of Rs. 5000, excluding reversal of cenvat credit on insurance and penalty under section 11AC of the Central Excise Act 1994. The first appellate authority upheld the order-in-original, rejecting the limitation argument raised by the appellant.

2. The appellant contended that the show cause notice issued on 14 January 2009 invoked the extended period for seeking reversal of cenvat credit availed on service tax paid for canteen services collected from employees. While the merits were against them, the appellant argued that the limitation issue, being a mixed question of facts and law, could be raised at any point, citing relevant tribunal and apex court judgments. The appellant highlighted that the larger bench's judgment supported their belief in availing cenvat credit on service tax paid for canteen services.

3. The departmental representative argued that the appellant's failure to raise the limitation point before the adjudicating authority justified invoking the extended period. Referring to a High Court judgment, the representative supported the extended period invocation due to non-depositing of collected amounts to the government treasury.

4. The Tribunal considered both sides' submissions and addressed the issue of whether the appellant availed cenvat credit on service tax paid for canteen services collected from employees and if the extended period could be invoked for demanding ineligible cenvat credit. The Tribunal noted that the High Court's judgment clarified the eligibility criteria for availing cenvat credit on such services, concluding that the appellant had no case on merits.

5. Regarding limitation, the Tribunal acknowledged the appellant's reliance on relevant judgments during the period in question, which supported their belief in availing cenvat credit. Therefore, the demand raised and confirmed by lower authorities invoking the extended period was set aside, except for any demand within the limitation period from the show cause notice date. The Tribunal emphasized that the issue of limitation is a mixed question of law and facts that can be raised at any stage, especially when based on a bona-fide belief.

6. Ultimately, the Tribunal disposed of the appeal by upholding demands within the limitation period, setting aside penalties imposed due to the appellant's bona-fide belief in availing cenvat credit on service tax paid for canteen services collected from employees.