Mandatory invoice defects can justify denial of Cenvat credit, while penalty may be waived where the defect lies with the service provider.

An invoice omission of the service provider's registration number was treated as a mandatory defect under the Cenvat Credit Rules, and not as an omission that could be condoned under Rule 9(2); on that basis, Cenvat credit was denied and the related service tax demand with interest was sustained. Penalty, however, was found unnecessary because the mistake lay with the service provider rather than the assessee, and the defect itself was not committed by the assessee. The substantive credit reversal therefore remained in place, but relief from penalty was granted.

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Issues: (i) Whether Cenvat credit could be denied where the invoice did not contain the service provider's registration number and the omission was not one that could be condoned; (ii) whether penalty was justified in the facts of the case.

Issue (i): Whether Cenvat credit could be denied where the invoice did not contain the service provider's registration number and the omission was not one that could be condoned.

Analysis: The omission of the service provider's registration number on the invoice was treated as a mandatory defect. Rule 9(2) of the Cenvat Credit Rules did permit the proper officer to condone certain omissions, but the absence of the registration number was not among the omissions capable of being waived. On that footing, the denial of credit and the consequential demand of service tax with interest were sustained.

Conclusion: The denial of Cenvat credit and the demand of service tax with interest were upheld.

Issue (ii): Whether penalty was justified in the facts of the case.

Analysis: The mistake was attributable to the service provider rather than the appellant. Since the appellant could have obtained a proper invoice if vigilant, but the defect itself was not committed by it, the imposition of penalty was considered unnecessary in addition to reversal of credit with interest.

Conclusion: The penalty was set aside.

Final Conclusion: The substantive denial of credit was sustained, but the appellant obtained relief from penalty.

Ratio Decidendi: Where an invoice omission is not one of the defects that can be condoned under the applicable credit rules, Cenvat credit may be denied and the related tax and interest sustained, but penalty may be waived if the defect was committed by the service provider and not by the assessee.

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