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2025 (4) TMI 691 - AT - Service TaxAvailment of CENVAT Credit after laps of six months/one year during the relevant period - HELD THAT - If the period permissible to issue show-cause-cum-demand notice is taken into consideration vis. a. vis. provision available under Section 73(1) of the Finance Act 1994 it is service of notice from which date computation of period of limitation is to be counted backward and in so doing there will be no hesitation on the part of this Bench to give a finding that for the period from April 2013 to September 2014 the demands are barred by limitation though Appellant had also contested invocation of extended period on other justifiable grounds. Admittedly Appellant had not shown in its periodic ST-3 Returns that it had adjusted the available CENVAT Credits towards discharge of Service Tax liability but every payment of balance tax that was made in cash was admittedly the exact differential amount between tax dues and CENVAT Credit utilised. This being the facts on record there is no point as to why periodic showcause notices with invocation of extended period was to be issued which is not justifiable after issue of the first show-cause notice on the same ground. Be that as it may this Tribunal is consistent in its finding that in such a scenario if CENVAT Credit utilisation is properly reflected in the books of account of Assessee-Appellant and in other related documents mere non-discloser of the same in ST-3 Returns would not permit the Respondent-Department to demand the same again and in carrying forward the judicial precedent set by this Tribunal. Conclusion - i) The demands for Service Tax for the periods 2013-14 and April 2014 to September 2014 are barred by limitation as per Section 73 of the Finance Act 1994. ii) The Appellant s failure to reflect CENVAT Credit in the ST-3 Returns does not invalidate its utilization if properly documented in the books of account. iii) The Appellant s utilization of CENVAT Credit is permissible under the CENVAT Credit Rules 2004 despite non-reflection in the ST-3 Returns. The order passed by the Commissioner of CGST CX Thane is hereby modified to the extent of dropping the demand of Rs.8, 51, 206/- and Rs.19, 01, 040/- for the period 2013-14 and 2014 to June 2017 respectively alongwith its corresponding interest and penalties including penalty of Rs.10, 000/- imposed under Section 77 of the Finance Act 1994 - Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Limitation under Section 73 of the Finance Act, 1994 Relevant legal framework and precedents: Section 73 of the Finance Act, 1994, prescribes a limitation period for issuing show-cause notices for recovery of service tax not paid, short-paid, or erroneously refunded. The standard limitation period is five years from the relevant date. Court's interpretation and reasoning: The Tribunal noted that the show-cause notices for the financial years 2013-14 and April 2014 to September 2014 were served beyond the five-year limitation period. The Tribunal emphasized that the computation of the limitation period should be backward from the date of service of the notice. Key evidence and findings: The Appellant demonstrated that the show-cause notices were served beyond the prescribed limitation period, which was not contested by the Respondent. Application of law to facts: The Tribunal applied Section 73 and concluded that the demands for the periods in question were barred by limitation. Treatment of competing arguments: The Respondent did not provide sufficient justification for invoking the extended period of limitation. Conclusions: The Tribunal held that the demands for the specified periods were time-barred. Reflection of CENVAT Credit in ST-3 Returns Relevant legal framework and precedents: The CENVAT Credit Rules, 2004, require proper documentation and reflection of credit utilization in statutory returns. Court's interpretation and reasoning: The Tribunal acknowledged that the Appellant did not reflect the CENVAT Credit utilization in the ST-3 Returns, but it was recorded in the books of account. Key evidence and findings: The Appellant provided documentary evidence, including statements prepared by a Chartered Accountant, demonstrating the deduction of CENVAT Credit from taxable value. Application of law to facts: The Tribunal found that the mere non-disclosure in the ST-3 Returns does not invalidate the utilization if properly documented in the books of account. Treatment of competing arguments: The Respondent argued that the absence of reflection in the ST-3 Returns indicated non-utilization, but the Tribunal disagreed, citing precedents where documentation in books sufficed. Conclusions: The Tribunal concluded that the Appellant's CENVAT Credit utilization was valid despite not being reflected in the ST-3 Returns. Permissibility of CENVAT Credit Utilization under CENVAT Credit Rules, 2004 Relevant legal framework and precedents: Rule 4(1) of the CENVAT Credit Rules, 2004, limits the time frame for availing CENVAT Credit to six months/one year. Court's interpretation and reasoning: The Tribunal noted that the Appellant's utilization of CENVAT Credit was documented in its books and aligned with judicial precedents allowing such practice. Key evidence and findings: The Appellant's books of account showed timely entries of CENVAT Credit utilization, corroborated by documentary evidence. Application of law to facts: The Tribunal applied the relevant rules and found the Appellant's practice in compliance with legal requirements. Treatment of competing arguments: The Respondent's position that the utilization was impermissible due to non-reflection in ST-3 Returns was rejected based on established precedents. Conclusions: The Tribunal held that the Appellant's utilization of CENVAT Credit was permissible under the rules. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
Verbatim quotes of crucial legal reasoning: "In such a scenario, if CENVAT Credit utilization is properly reflected in the books of account of Assessee-Appellant and in other related documents, mere non-disclosure of the same in ST-3 Returns would not permit the Respondent-Department to demand the same again." Core principles established: Proper documentation in books of account can suffice for CENVAT Credit utilization, even if not reflected in statutory returns. Final determinations on each issue: The Tribunal allowed the appeals, modifying the Commissioner's order to drop the demands for Rs.8,51,206/- and Rs.19,01,040/- along with corresponding interest and penalties.
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