2019 (1) TMI 1304 - AT - Service Tax

CENVAT Credit - capital goods - angles, beams, channels etc., which are used to install the towers and the pre-fabricated buildings and panels which are used in connection with providing of output services - input services - telephoning services - input services which were required for installing and erection of such towers and pre-fabricated buildings - period involved is 2004-05 to 2007-08 - time limitation - Held that - This entire case can be disposed of on the question of limitation only. During the relevant period, different views were expressed by the adjudicating authority as well as the Tribunal, the appellant could have entertained a bonafide belief as to eligibility to avail CENVAT Credit on angles, channels and beams and pre fabricated buildings as also various input services - impugned order is set aside only on the ground of limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility to avail CENVAT Credit on capital goods used in providing output services.

Analysis:
The appeal in this case challenges Order-in-Original No. 39/2009-ST, which questioned the eligibility of availing CENVAT Credit on Central Excise duty paid on capital goods used in providing telephoning services. The appellant contended that they should be allowed to claim credit on items like angles, beams, channels, and pre-fabricated buildings necessary for offering telephoning services. The dispute primarily revolves around the interpretation of whether these items qualify for CENVAT Credit. The period under consideration spans from 2004-05 to 2007-08. The adjudicating authority rejected the appellant's contentions, citing the extended period and limitation, and upheld the demands raised.

Upon examining the submissions and records, the tribunal found that the case could be resolved based on the question of limitation alone. The demand for the relevant period was initiated through a show cause notice dated 19.05.2009, invoking the extended period. The adjudicating authority noted a lack of specific information regarding the availed CENVAT Credit on certain items in the ST-3 returns filed by the appellants. However, the tribunal referred to a previous case involving a similar issue where it was decided in favor of the appellant due to interpretational confusion and conflicting views. Citing judgments from the Hon'ble Apex Court and Co-ordinate Benches, the tribunal set aside the penalties and demands barred by limitation for the specific period, while upholding the demand for the normal period.

In line with the precedent and recognizing the differing views during the relevant period, the tribunal concluded that the appellant could have genuinely believed in the eligibility to claim CENVAT Credit on the disputed items and services. Consequently, the impugned order was overturned solely on the grounds of limitation. The appeal was disposed of accordingly, providing consequential reliefs if applicable.

This judgment highlights the significance of limitation periods in tax disputes and the importance of considering precedents and conflicting views in determining the eligibility of availing CENVAT Credit on capital goods and input services. The decision underscores the need for clarity in reporting and documenting credit availed to avoid disputes and emphasizes the impact of bonafide beliefs on such matters.