2018 (10) TMI 1554 - AT - Service Tax

Appellant entitled to CENVAT credit despite procedural lapses

M/s UPS Jetair Express Private Limited Versus Commissioner of CGST, Mumbai East

The Tribunal held that the Appellant was entitled to the CENVAT credit despite procedural lapses in mentioning the vendor's service tax registration ... CENVAT Credit - denial on the ground that the service tax registration number of vendor was not mentioned in its input invoices - case of appellant is that since the vendor was registered under Service Tax laws, therefore inadvertent error on the invoices should not be used as a basis to deny the CENVAT credit - Held that:- The vendor applied for service tax registration number on 17.10.2001 and the same was allowed to the vendor on 29.04.2005 i.e. much before the vendor issued invoices to the Appellant for the period in question - It is not the case of Revenue that the vendor has not paid the Service Tax which was collected by him from the Appellant, who have utilised their services. CENVAT credit is being denied to the Appellant only on the ground that the invoices were not having the registration number of the service provider. There is no allegation or finding to the effect that the input services were not received by the Appellant or that the said services were not covered under the scope of eligible input services in terms of CENVAT Credit Rules, 2004 - There is no dispute that the Appellant had made substantial compliance for availing the CENVAT credit, whatever error or discrepancy has occurred that too was rectified by the Appellant without any delay. Non-mentioning of registration number is merely a procedural lapse. It is settled legal position that CENVAT credit should not be denied on mere technicalities or procedural lapses. Credit allowed - appeal allowed - decided in favor of appellant. Issues:Denial of CENVAT credit due to non-mentioning of service tax registration number on input invoices.Analysis:The appeal arose from an order denying CENVAT credit of Rs. 81,854 to the Appellant because the vendor's service tax registration number was not included in the input invoices. The Appellant promptly submitted the registration details upon objection by the Audit. Despite this, the Revenue issued a show-cause notice invoking the extended period of limitation, questioning the CENVAT credit, interest, and penalties. The Adjudicating Authority upheld the demand, which was affirmed by the first Appellate Authority.The key issue was whether the Appellant contravened Rule 11(2) of Central Excise Rules, 2002 and Rule 9(2) of CENVAT Credit Rules, 2004 by availing CENVAT credit on invoices lacking the vendor's service tax registration. The vendor had obtained the registration before issuing the invoices, and there was no dispute regarding the receipt or eligibility of the input services. The Appellant rectified the error promptly upon notification by the Audit. The Tribunal emphasized that denial of CENVAT credit solely due to procedural lapses or technicalities is inappropriate, especially when there is no deliberate violation of the law.Consequently, the Tribunal held that the Appellant was entitled to the CENVAT credit. As there was no intentional defiance of the law, the extended period of limitation did not apply. The appeal was allowed, granting the Appellant the relief sought.This judgment highlights the importance of substantial compliance in availing CENVAT credit and cautions against denying such credits based solely on procedural errors. The decision underscores that technical shortcomings should not be a barrier to legitimate credit entitlements when there is no deliberate violation of the law.