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TMI Blog2025 (1) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and the payment for the services are also made to the service providers. We find that the debit notes contain the essential particulars as required under Rule 9 (2) of the Cenvat Credit Rules, 2004. Further, these debit notes are accounted in the books of accounts of the appellant. Therefore, the appellant has fulfilled the requirements under Rule 4A of Service Tax Rules, 1994 and Rule 4 (7) and 9 (2) of CCR, 2004. Therefore, the denial of Cenvat credit on the debit notes is unsustainable. Whether CENVAT credit of Rs. 74,160/- availed on the invoices issued for out of pocket expenses is admissible? - HELD THAT:- The invoice produced by the Appellant clearly shows that it is for the purpose of completion of various activities. Facts being so, there is no justification in denying the CENVAT credit against the above invoices once it is paid with applicable service tax. Extended period of Limitation - HELD THAT:- The issue involved in the present appeal is in the nature of interpretation and considering the fact that Appellant has been paying service tax and filing ST-3 returns in time and there is no allegation that the Appellant had made a deliberate attempt to evade payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether interest is payable on CENVAT credit availed but not utilized. 2. The brief facts of the case are appellant is registered with Respondent under various service categories and was paying service tax as per the declarations made by the Appellant. During the course of Audit for the period from October 2009 to March 2011, it is observed that the Appellant; received an amount of Rs. 27,14,44,272/- as reimbursement expenses from other companies, which are leviable to service tax under the category of BAS/BSS and the service tax liability was Rs. 2,79,58,760/-; availed service tax credit on the basis of debit notes issued by various service providers amounting to Rs. 63,71,692/; availed input service tax credit on various input services alleged to have no direct nexus with their output services to the extent of Rs. 4,17,47,810/-; availed service tax credit of Rs. 74,160/- on invoice issued by M/s. Deloitte for Rs. 6,74,160/- for out of pocket expenses; availed input service tax credit of Rs. 1,24,65,080/- under the category of 'Management and Repair' service, however, the description of the service as per input invoices was showing as housekeeping, pest control, outdoor cat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out business through two divisions i.e. Sales and Distribution Division (IN Division) and Development Division (IDC Division); they are two limbs of Appellant s company i.e. IN and IDC Divisions and they do not represent two different entities. However, the Adjudication Authority has presumed that the two Divisions of the Appellant are two different companies, and such finding is factually incorrect; the amount alleged as reimbursement of expenses is in fact the closing balance of an expense ledger; the impugned order confirmed a demand of service tax amounting to Rs. 27,958,760 /-based on the incorrect assumption that the said amount of Rs 271,444,272/- pertains to reimbursement of expenses from other companies; this amount represents the office space that was reallocated from one division of the Appellant (the IN division) to another (the IDC division); the disputed amount of Rs. 271,444,272/- is not attributable to any value of reimbursement of expenses or a consideration received from other companies as assumed in the impugned Order; the amount alleged as reimbursement of expense is the closing (debit) balance of one expense ledger account for office rent; there could be ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al basis of accounting by following the accounting standards. The Learned Counsel also relied on the decision of the Hon ble High Court in the matter of M/s Firm Foundation Vs. Principal Commissioner (MANU/TN/ 1734/2018), wherein the Hon ble High Court held that service tax liability cannot be determined based on the profit and loss accounts. 7. The Learned Counsel further submitted that Service Tax is to be levied on the value of services provided by the service provider. The term charged under Section 67 coupled with such service has to be read in context and in tandem with each other. In this case there is no sum charged by the appellant to the service recipient for provision of any service. In the absence of any service recipient in the present case, there is no consideration received by the Appellant for providing services and the transaction is in the nature of reallocation/ reclassification or cost allocation between two divisions of same entity and there is no consideration for providing the services between these two entities. Thus, considering these two divisions of the Appellant separately and to consider it as reimbursement and to deny the CENVAT credit is unsustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation with regard to value, nature of service, payment of service tax are not made available in the debit notes and due to these reasons, same cannot be treated as eligible documents under Rule 9 of Cenvat Credit Rules, 2004. However, on bare perusal of the documents, it is evident that the entire details are available in the debit notes and facts being so, denial of the same is unsustainable. 11. The Learned Counsel further submitted that once the Appellant have produced receipts for the service and payment is made to the service provider, Appellant has complied with substantial condition for availing credit and cannot be disputed. The Learned Counsel in this regard relied on the decision of M/s Pharma Lab Process Equipment Vs. CCE -2009 (242) E.L.T 467 and CCE Vs. M/s Gwalior Chemicals Industries, Ltd -2011-TIOL-1635-(CESTAT Del) and CCE Vs. M/s Grasim Industries Ltd - 2011 TIOL-1660 CESTAT Del . In this regard, the Learned Counsel also submitted that the finding of the Adjudication authority that the debit notes have not been accounted in the books of accounts is factually incorrect. There is no evidence adduced either in the SCN or in the impugned order to reach such a conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be enacted prospectively or retrospectively. A retrospective effect indisputably can be given in case of curative and validating statute. In fact, curative statutes by their very nature are intended to operate upon and affect past transaction having regard to the fact that they operate on conditions already existing. However, the scope of the Validating Act may vary from case to case. The learned counsel submitted that the period involved in this case is October 2009 to March 2011, therefore in the light of the above, no interest is payable on the amount of Cenvat credit reversed prior to utilization. 15. The Learned Counsel also challenged the impugned order on the grounds of limitation. There is no reason or justification to invoke the extended period of limitation and due to that reason, penalty and interest cannot be demanded from the Appellant. 16. The Authorised Representative (AR) for the Revenue reiterated the finding in the impugned order and submitted that the CENVAT credit is denied on the debit notes since the debit notes are not issued in compliance with Rule 9 (2) of the Cenvat Credit Rules, 2004. As regards the service tax availed on invoices of the consultant, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ST-3 returns. Following the judgment of the Hon ble Supreme Court in the matter of M/s Rajasthan Spinning Weaving Mills-2008 (238) ELT 3 (SC), the Adjudication authority rightly invoked the extended period of limitation. 20. As a rejoinder the learned counsel, as regards the interest on the Cenvat credit, which was availed but duly reversed before utilization submitted that the demand is made mechanically without considering Rule 14 of Cenvat Credit Rules, 2004. Moreover, the issue is settled by the judgment of Hon ble Supreme Court in the matter of CC Vs. Bombay Dyeing and Manufacturing Co. Ltd. - 2007 (215) ELT 3, wherein it is held that Cenvat credit reversed before utilization thereof would be tantamount to credit not having been availed. The said principle has also been accepted by CBEC as per Circular no. 858/16/2007-CX dated 08.11.2007. 21. Heard both sides and perused the records. 22. As regards, the demand of service tax alleging transaction as reimbursement of expenses from other companies, we find that there is no service provided and it is shown only for the accounting purpose between two Divisions of the Appellant. Therefore, service tax cannot be demanded on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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