9911796707
TMI Blog2016 (6) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... tember, 2009, and imposition of penalties under various provisions. In the adjudication proceedings that followed, the proposals in the notice were confirmed, equal penalty under Section 76 of the Finance Act, 1994 as also penalties under Sections 77and 78 ibid imposed. An amount of Rs. 1,56,17,727/- deposited by the appellants before issue of the notice, was appropriated towards the service tax and interest demands. The adjudicating authority also held that the Cenvat credit cannot be availed by the appellant based on documents prior to the date of obtaining service tax registration, therefore the amount of Rs. 2,33,68,662 debited from such wrongly availed Cenvat credit will have to be paid in cash by them. 3. Aggrieved, the appellants have preferred this appeal. 4. Shri B Venugopal, the learned Advocate for the appellants, submitted that at the material time the micro finance industry was a new and emerging industry and there was ambiguity in terms of service tax applicability. They were under bonafide belief that Micro Financing does not come under Banking and Financial Service . However after being advised by their statutory auditors, they obtained opinion from KPMG when only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the adjudicating authority himself has accepted that the appellants were advised by their statutory auditors that services rendered by them attract service tax and that they thereon obtained service tax registration on 08-06-2009. It is also not in dispute that the appellant, pursuant to scrutiny of records by department in August 2009, but well before the issue of the show cause notice on 24-04-2010, had worked out their service tax liability for the period December, 2004 to August, 2009 as being Rs.3,77,37,965/-, and had partly discharged the said liability by adjustment of Rs. 2,21,20,238/- from Cenvat credit and balance of Rs. 1,56,17,727 along with interest liability thereof Rs. 27,09,290/- total Rs. 1,83,27,017/- was paid by them by GAR-7 Challan dated 17-09-2009. The department has demanded a slightly higher tax liability, for the same period, of Rs. 3,89,86,389/- along with interest thereon. The adjudicating authority has however found that the aforesaid adjustment of liability by the appellant by utilization of Cenvat credit availed is improper since according to him, till such time he is not registered with the department, provisions of Cenvat Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered (as per Service Tax Rules, 1994) and only a service provider can take credit (as per Cenvat Credit Rules, 2004) and deducing that an unregistered service provider does not get eligibility for credit. This is not a very sound argument. By not getting registered a person does not cease to become a provider of taxable service if he is actually providing such service. Even if a service provider is not registered there will be tax liability on him if he is providing taxable service. The concomitant benefit of Cenvat credit also has to be seen accordingly, of course subject to provisions in Cenvat Credit Rules 2004, in the absence of clear provisions to the contrary .The same view has been echoed in the following cases also. i) In the case of Nitesh residency Hotels Pvt.Ltd. Vs CST, Bangalore 2016(41)STR 498(Ttri-Bang). ii) In the case of Amar Remedies Vs CCE, Surat, 2010(257) EALT 552(Tri-Ahmd) the Hon'ble Tribunal observed that The appellant s claim is that the inputs are duty paid and the inputs have been received in the factory. However, this aspect has not been examined in this case since the Cenvat Credit has been disallowed on the threshold that the registration was obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently also. This view is further supported by the consistent stand taken by various judicial forums in the case of clandestine removals, even if the duty is paid subsequently, Cenvat credit on inputs used will be available to the assessee /manufacturer subject to the conditions that proper documents showing the payment of duty are available. In the case of SSI Units also, wherever SSI benefits have been denied, Cenvat credit has been allowed. Therefore, in this case also the action of the appellants in taking credit on 09-10-2009 has to be upheld. It can be seen from the above reproduced ratio of the Division Bench decision that the appellant is eligible to avail Cenvat credit of the service tax paid on input services after getting registration. In this case, it is recorded that the appellant has shown or recorded the service tax paid on input services in a register which is considered as a Cenvat account. If the appellant is eligible for Cenvat credit, post registration, this availment or showing the account being credited by the service tax paid on input services, but not availing the same for the purpose of discharge of duty, would be more or less the same or an identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act, 1994. In this regard we find that the very availment of Cenvat credit, out of which the major part of the duty liability had been adjusted by the appellant, was in dispute and in view of the proviso to the said Section 73(3) ibid, we hold that the issue of the show cause notice in this case was not ultra vires. 10. With regard to the appellant s alternative plea on limitation, it is not the case that the appellant had filed returns or had otherwise approached the department for clarity on the taxability of their activities. In fact we find that only after the appellant obtained service tax registration and were subsequently audited by the department , did the latter come in the know of the nature and scale of the taxable services provided by the former. There thus emerges a case of suppressio veri, of suppression of facts, and the department was well within the ambit of law to issue demand for the extended period of limitation provided in Section 73 ibid. We also note that the appellant had no objection or protest to pay up their entire tax liability for the period December, 2004 to September, 2009, which is the very period for which the show cause notice has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
