2015 (2) TMI 843 - AT - Service Tax

Tribunal sets aside excess CENVAT credit demands and penalties, remands for input services verification.

M/s. Deloitte Haskins And Sells Versus Commissioner of Central Excise, Thane I

M/s. Deloitte Haskins And Sells Versus Commissioner of Central Excise, Thane I - 2015 (38) S.T.R. 1220 (Tri. - Mumbai) Issues Involved:1. Availment of CENVAT credit in excess of the 20% limit.2. Wrong availment of CENVAT credit on invoices addressed to a different registered unit.3. Applicability of extended period of limitation and penalties.Issue-wise Detailed Analysis:1. Availment of CENVAT Credit in Excess of the 20% Limit:The appellant argued that they did not provide any exempted services during the disputed period. They claimed that the exempted services shown in the ST-3 returns pertained to services provided before 01.03.2006, when Notification No. 59/1998-ST was in force. The billing for these services was done subsequently, and there was no appropriate column in the ST-3 returns to reflect this income. The Commissioner, however, confirmed the demand based on the allegation that the appellant provided both exempted and taxable services, invoking the restriction under Rule 6(3)(e) of the CENVAT Credit Rules, 2004. The appellant relied on various Supreme Court judgments to argue that confirmation of demand beyond the scope of the show-cause notice is not sustainable in law.The Tribunal found that the appellant's claim regarding the exempted services being from a period before 01.03.2006 was not disputed by the Revenue. Additionally, the Tribunal agreed with the appellant's contention that Notification No. 25/2006 and Notification No. 4/2004 are conditional notifications, and the appellant chose to pay tax on the entire amount due to the composite nature of the services provided.2. Wrong Availment of CENVAT Credit on Invoices Addressed to a Different Registered Unit:The appellant contended that the wrong availment of CENVAT credit was merely a procedural defect, as the input services were received and consumed by the unit at Mafatlal House, although the invoices were addressed to the Worli unit. The Tribunal noted that similar cases had allowed credit despite such procedural infractions, provided the input services were indeed used for providing output services. The Tribunal allowed the CENVAT credit on principle but remanded the case to the Commissioner for factual verification that the input services were used in the Mafatlal House office and not in the Worli office.3. Applicability of Extended Period of Limitation and Penalties:The appellant argued that the extended period of limitation could not be invoked as the issue involved interpretation of statutory provisions and procedural infractions. They also contended that suppression of information was not established in the show-cause notice, making the imposition of penalties unsustainable. The Revenue, however, argued that the fact of wrongly addressed invoices was not evident from the ST-3 returns and that the appellant had not revealed they were availing credit on inputs used for both taxable and exempted services.The Tribunal found that the demand of Service Tax duty did not sustain, making it unnecessary to delve into the aspects of the extended time period and penalties.Judgment:The Tribunal set aside the impugned orders, including the demands of Rs. 1,92,10,120 and Rs. 2,78,23,485. The demands of Rs. 31,25,737 and Rs. 5,65,600 on account of wrongly addressed invoices were also set aside, with the matter remanded to the adjudicating authority for verification that the input services were used in the Mafatlal House office. The confirmation of interest and penalty in respect of these demands was also set aside. The appeals were allowed in these terms.