Appellant wins appeal on service tax credit eligibility due to limitation issue.

The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal primarily on the grounds of limitation. The appellant was found eligible to avail credit for wrongly paid service tax as the proceedings were deemed hit by limitation due to delayed issuance of the show cause notice. The Tribunal held that the appellant had disclosed the credits in their returns, rendering the proceedings ab initio hit by limitation.

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Issues involved:
1. Eligibility of availing credit for service tax wrongly paid
2. Applicability of limitation period for issuance of show cause notice

Issue 1: The appellant had paid service tax on reverse charge basis to M/s.Hanil-E-HWA-Korea for services received before 10.9.2004. The Department contended that the credit taken by the appellant of Rs. 36,02,550/- was erroneous. The appellant argued that since service tax was not liable to be paid for import of services until the enactment of Section 66A of the Finance Act w.e.f. 18.4.2006, the wrongly paid tax amount was eligible to be availed as credit. The appellant also claimed that the proceedings were hit by limitation as the show cause notice was issued more than 2 years after taking credits. The Tribunal found that the appellant had disclosed the availment of credits in their returns and held that the proceedings were ab initio hit by limitation. Consequently, the impugned order was set aside, and the appeal was allowed on limitation grounds with consequential relief as per law.

Issue 2: The Department had issued a show cause notice on 24.4.2007 for a different period and context related to the same service tax liability amounting to Rs. 36,02,550/-. The appellant argued that the extended period of limitation could not be invoked based on the same amount involved in the previous notice. However, the Tribunal found that the show cause notice for the current issue was issued only on 5.3.2008, which was beyond the statutory limitation period. The Tribunal held that there were no justifiable reasons to invoke the extended limitation period in this case. Therefore, the impugned order was deemed unsustainable, set aside, and the appeal was allowed on limitation grounds with consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, allowing the appeal primarily on the grounds of limitation due to the delayed issuance of the show cause notice and the eligibility of availing credit for wrongly paid service tax.

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