2019 (2) TMI 752 - AT - Central Excise

CENVAT Credit of service tax paid - development and annual maintenance of website - extended period of limitation - Held that - The assessee was audited in August 2014 and thereafter the show-cause notice was issued in December 2015 which is beyond the period of limitation of one year as prescribed under the Act. Further, after the audit, no material has come to the notice of the Department which has been relied upon for issuing the show-cause notice. The show-cause notice was issued based on audit report itself. Tribunal in various cases has consistently held the extended period of limitation cannot be invoked when the show-cause notice is based on audit. Further, the appellant has shown the credit in their returns. Further, the Department has also failed to bring on record any material except saying that the suppression was detected during the audit and had it not been detected during the audit it would have gone unnoticed. This is not sufficient reason for invoking extended period of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of CENVAT credit on service tax for website development and maintenance.
2. Barred by limitation - Extended period of limitation invocable.
3. Suppression of material fact by the appellant.
4. Department's reliance on audit report for issuing show-cause notice.
5. Applicability of case laws on limitation and suppression.

Eligibility of CENVAT Credit:
The appeal challenged the disallowance of CENVAT credit on service tax for website development and maintenance. The Assistant Commissioner disallowed the credit, imposed recovery with interest and penalty, which was upheld by the Commissioner(Appeals). The appellant contended that the credit was declared in returns, and the Department failed to bring new material post-audit. The Tribunal found the entire demand beyond the one-year limitation period, set aside the impugned order, and allowed the appeal.

Barred by Limitation - Extended Period:
The appellant argued that the demand was time-barred as the show-cause notice was issued beyond the normal limitation period from the audit date. Citing various decisions, the appellant emphasized that the extended limitation period cannot be invoked when based on audit findings alone. The Tribunal agreed, noting the absence of new material post-audit and the credit declaration in returns. Relying on case laws, the Tribunal held the demand as barred by limitation and set aside the impugned order.

Suppression of Material Fact:
The appellant asserted no suppression of material fact regarding CENVAT credit. The Tribunal concurred, highlighting the credit declaration in returns and lack of new material post-audit. The Department's argument of suppression detected during audit was deemed insufficient to invoke the extended limitation period, leading to the appeal's allowance.

Department's Reliance on Audit Report:
The Department contended that the appellant concealed CENVAT credit availment, detected during audit. However, the Tribunal found the show-cause notice solely based on the audit report without new post-audit material. This lack of additional evidence post-audit, coupled with credit declaration in returns, led to the Tribunal setting aside the impugned order.

Applicability of Case Laws on Limitation and Suppression:
Both sides cited case laws to support their arguments on limitation and suppression. The Tribunal analyzed these precedents, emphasizing the importance of new material post-audit, credit declaration in returns, and insufficiency of suppression detected during audit alone. Relying on these case laws, the Tribunal concluded the demand as time-barred and allowed the appeal, setting aside the impugned order.