2018 (7) TMI 1117 - AT - Service Tax

Tribunal rules in favor, dismisses extended limitation period, stresses record-keeping

The Tribunal ruled in favor of the appellant, holding that the extended period of limitation was not applicable. The demand and penalty of Rs. 9,86,597 ... Extended period of Limitation - denial of CENVAT Credit - plethora of litigation existed between the assessee and the Revenue - Whether the learned Commissioner have rightly held that the extended period of limitation is available in the facts and circumstances? Held that:- It is an admitted fact that all the transactions are properly recorded in the books of accounts ordinarily maintained by the appellant assessee - Further, from the facts on record which are not disputed, it is found that the proposal to deny Cenvat Credit is by way of change of opinion, as admittedly the appellant assessee was registered with the Department and had filed regular returns and maintain proper records. The extended period of limitation is not invocable - demand set aside - appeal allowed - decided in favor of appellant. Issues:1. Availability of extended period of limitation in the given circumstances.Analysis:The appeal revolved around the question of whether the extended period of limitation was rightly applied by the learned Commissioner. The case had already undergone one round of litigation where certain deductions were allowed, and the issue of extended period invocation was left open for further examination. The appellant, a trading and service center for automobiles, faced a demand for disallowed Cenvat Credit amounting to Rs. 9,86,597 for various services like advertisement, travel consultancy, recruitment, and catering. The learned Commissioner upheld the disallowance, citing that these services were not essential for an Authorized Service Station, and thus, the extended period of limitation was rightly invoked. Additionally, penalties were imposed under Rule 15 of CCR read with Section 78 of the Act.Upon review, the Tribunal found that all transactions were properly recorded in the appellant's books of accounts, and there was no dispute regarding the regular filing of returns and maintenance of records by the appellant. It was noted that the proposal to deny Cenvat Credit seemed to be based on a change of opinion rather than any intentional evasion. Consequently, the Tribunal held that the extended period of limitation was not applicable in this case. As a result, the demand and penalty of Rs. 9,86,597 were set aside, and the appellant was entitled to consequential benefits as per the law.In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the denial of Cenvat Credit appeared to stem from a change of opinion rather than any deliberate evasion. The decision highlighted the importance of maintaining proper records and filing returns regularly to avoid unwarranted penalties and demands.