2021 (6) TMI 791 - AT - Service Tax

CENVAT Credit - input services - Association Membership fees - constructions services - rent-a-cab services - general insurance services of vehicles - repair services - catering services - civil work services - time limitation - period April, 2012 to March, 2016 - HELD THAT - It is an admitted fact that records of the appellant were audited regularly as mentioned in the Audit Report of the Auditor General by the ld. Counsel and also mentioned in the grounds of appeal. In view of the fact, the audit had been regularly conducted by the Audit Authority, of the books of accounts of the appellant for the period in April, 2013, July, 2014 and also July, 2016, it is evident that the affairs of the appellant regarding taking of cenvat credit were also in the knowledge of the Department. As such, invocation of extended period of limitation is not available to the Revenue. The ground with regard to limitation is allowable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on various services
- Disallowance of part of the cenvat credit
- Appeal before the Commissioner (Appeals)
- Interpretation of the definition of input service
- Allegation of suppression and limitation period
- Use of vehicles for business purposes
- Disallowance based on erroneous observations
- Regular audit of central excise records
- Limitation period for invoking extended period

Analysis:

The appellant, engaged in manufacturing, availed cenvat credit on various services treated as input services. The revenue alleged that certain services like Association Membership fees, constructions services, rent-a-cab services, etc., were not input services, leading to a show cause notice proposing recovery of cenvat credit. The Asstt. Commissioner partially allowed the credit but disallowed a portion related to insurance and repair of vehicles, imposing penalties under Cenvat Credit Rules. The appellant contended before the Commissioner (Appeals) that disallowance was unjustified, citing misinterpretation of the definition of input service and errors in the adjudication process.

The Commissioner (Appeals) upheld the disallowance, prompting the appellant to appeal before the Tribunal. The appellant argued that vehicles were used for business purposes, making related expenses eligible as input services. They also challenged the disallowance based on erroneous observations regarding the nature of the services. The appellant further highlighted the regular audit of central excise records, arguing that the disallowance was unjustified and the limitation period for invoking an extended period did not apply.

Upon considering the contentions, the Tribunal noted the regular audit of the appellant's records, indicating the department's awareness of the cenvat credit situation. As such, the Tribunal found the invocation of the extended limitation period by the Revenue unjustified. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits as per the law.