2019 (10) TMI 370 - AT - Service Tax

Recovery of CENVAT credit with equal penalty u/r 15(3) of CENVAT Credit Rules - various input services - time limitation - HELD THAT - The original authority has allowed the CENVAT credit on the impugned services and on appeal by the Department, the Commissioner(Appeals) has reversed the decision of the original authority and has also held that the appellant has suppressed the material fact from the Department and has not disclosed the same in their ST3 return. The finding of the Commissioner(Appeals) that the appellants have not disclosed these facts and have not filed the ST3 returns is factually incorrect. Extended period of limitation - HELD THAT - Once the appellant has disclosed all the facts in the ST3 returns and has not suppressed any facts from the Department, then the Department cannot invoke the extended period of limitation and confirmed the demand - In the present case, the period of dispute is January 2012 to March 2012 whereas the show-cause notice has been issued on 07/10/2014 which is beyond the period of limitation as prescribed under the law. Appeal allowed on the ground of limitation.

Summary

Issues:
Recovery of CENVAT credit on various input services with penalty under Rule 15(3) of CENVAT Credit Rules; Alleged suppression of material facts affecting the limitation period for demand.

Analysis:
The appeal challenged an order confirming the recovery of CENVAT credit on input services and imposing a penalty under Rule 15(3) of CENVAT Credit Rules. The appellant, engaged in courier agency, Manpower Recruitment/supply agency, and Works Contract Service, availed CENVAT credit on Employee Medical Insurance Benefits, canteen expenses, and pest control charges from January 2012 to September 2012. The Assistant Commissioner initially allowed the credit, but the Department appealed, leading to the present case.

The primary contention revolved around the limitation period for the demand, with the appellant arguing that the demand was time-barred due to no suppression of material facts. The appellant emphasized that they had disclosed all relevant information in their ST3 returns, as required by the Central Government format. The appellant cited various decisions to support their position, emphasizing that if there was no suppression, the extended period could not be invoked.

The Commissioner(Appeals) had reversed the original authority's decision, alleging suppression of facts by the appellant. However, the Tribunal found this allegation factually incorrect. The show-cause notice was based on the ST3 returns filed by the appellant, where all material facts regarding the CENVAT credit were disclosed. As such, the Tribunal held that since there was no suppression, the extended period of limitation could not be invoked. The show-cause notice issued on 07/10/2014 for the period January 2012 to March 2012 was beyond the prescribed limitation period, leading the Tribunal to set aside the demand solely on the ground of limitation without delving into the merits of the services in question.

In conclusion, the Tribunal allowed the appeal solely on the basis of limitation, finding that the demand for CENVAT credit recovery on various input services was barred by limitation due to the absence of any suppression of material facts by the appellant, as evidenced by their proper disclosure in the ST3 returns.