2014 (2) TMI 619 - AT - Service Tax

Tribunal Rules in Favor of Appellant in Tax Dispute Case

M/s. Johnsons Matthey Chemical India P. Ltd. Versus CCE. Kanpur

The Tribunal ruled in favor of the appellant, determining that the demand for wrongly taken Cenvat Credit and non-paid service tax, as well as the ... Cenvat Credit in respect of GTA service - extended period of limitation - Held that:- availment of Cenvat Credit in respect of GTA services and its utilization for payment of service tax on scientific & technical consultancy service has been disclosed by them in their ST-3 Returns, they cannot be accused of having suppressed any relevant facts from the department. In view of this, neither the extended period under proviso to Section 11A(1) of the Central Excise Act, 1944 and proviso to Section 73 (1) of the Finance Act, 1994 would be available to the department for recovery of allegedly wrongly taken Cenvat Credit and non-paid service tax nor the penal provisions of Section 11 AC of the Central Excise Act, 1944 or of the Section 78 of the Finance Act would be attracted. - Demand set aside - Decided in favor of assessee. Issues:1. Eligibility for Cenvat Credit in respect of Goods Transport Agency (GTA) service.2. Application of penalty under Section 11 AC of Central Excise Act, 1944 and Section 78 of the Finance Act, 1994.3. Invocation of extended period under Proviso to Section 11A(1) of the Central Excise Act, 1944 and proviso to Section 73(1) of the Finance Act, 1994.Analysis:Issue 1: Eligibility for Cenvat Credit in respect of GTA serviceThe appellant claimed Cenvat Credit for GTA services used for inward transportation of inputs to manufacture final products exported through a job work arrangement. The department contended that as the GTA service was utilized for trading activities, the appellant was not entitled to Cenvat Credit. The Tribunal acknowledged the trading nature of the appellant's activities but noted that the appellant had disclosed the Cenvat Credit availed in their returns, thus not suppressing any relevant facts. Consequently, the Tribunal ruled that the department could not invoke the extended limitation period for recovery of Cenvat Credit or service tax. As a result, the demand for wrongly taken Cenvat Credit and non-paid service tax was deemed time-barred and unsustainable.Issue 2: Application of penaltyThe Tribunal examined whether penalties under Section 11 AC of the Central Excise Act, 1944 and Section 78 of the Finance Act, 1994 were appropriate. The appellant argued that there was no wilful misstatement or suppression of facts, making the penalties unsustainable. The department contended that penalties were justified due to alleged suppression of relevant facts. The Tribunal found in favor of the appellant, stating that since there was no suppression and the demand was time-barred, the penalties under the mentioned sections were not sustainable.Issue 3: Invocation of extended limitation periodRegarding the invocation of the extended limitation period under Proviso to Section 11A(1) of the Central Excise Act, 1944 and proviso to Section 73(1) of the Finance Act, 1994, the Tribunal held that since the appellant had disclosed the relevant information in their returns, the extended period could not be invoked. Consequently, the demand based on the extended limitation period was deemed unsustainable.In conclusion, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant, as the demand for wrongly taken Cenvat Credit and non-paid service tax, along with the imposed penalties, was found to be unsustainable due to the absence of suppression of facts and the time-barred nature of the demand.