2011 (8) TMI 417 - AT - Service Tax

Tribunal Rejects Revenue's Appeal, Upholds Credit Denial and Limitation Bar Without Penalty

Commissioner of Central Excise Indore Versus M/s. Medicaps Ltd.

CESTAT (New Delhi) dismissed Revenue appeals challenging Cenvat credit denial. The tribunal upheld the limitation bar, rejecting Revenue's suppression ... Imposing any penalty - Extended period of limitation - the credit availed by the assessee was reflected in the monthly returns - If there is no column in the monthly return to show the nature of service on which the credit was availed, the assessee cannot be blamed for not disclosing the said fact - For invoking the longer period of limitation, there has to be a suppression or mis-statement with an intent to evade payment of duty - When the respondents have reflected the amount of credit availed by them in their monthly returns, it cannot be said that there was any positive act of suppression of mis-statement on their part - As such, we are of the view that Commissioner (Appeals) has rightly held a part of the demands as barred by limitation - Decided in favour of assessee. The Appellate Tribunal (CESTAT, New Delhi) disposed of two Revenue appeals concerning denial of Cenvat credit on service tax and education cess paid for outward transportation of excisable goods. The original adjudicating authority confirmed the demand but declined to impose penalty, stating: 'imposition of penalty... is unnecessary... since the matter pertains to interpretation of the law. No mens rea is involved.'The Commissioner (Appeals) held the show cause notices barred by limitation, reasoning that since the credit was reflected in monthly returns, no suppression or mis-statement existed to invoke the extended limitation period. The Commissioner directed reassessment only within the limitation period and rejected the Revenue's appeal on penalty grounds as irrelevant.The Revenue contended that failure to specify the service in returns amounted to suppression with intent to avail wrongful credit. The Tribunal rejected this, emphasizing that 'if there is no column in the monthly return to show the nature of service... the assessee cannot be blamed,' and that reflecting credit in returns negates suppression. The Tribunal upheld the limitation bar and agreed with the original authority's finding of no mens rea, concluding that invoking the extended limitation period was unwarranted.Accordingly, the Tribunal found 'no merit in the revenue's appeal' and dismissed it.