2022 (6) TMI 924 - HC - Service Tax

Court dismisses Writ Petition challenging SVLDRS-3 without CENVAT deduction, stresses need for supporting documentation.

The court dismissed the Writ Petition challenging the SVLDRS-3 issuance without deducting the CENVAT amount. The court emphasized the importance of ... Validity of SVLDRS-3 issued to petitioner - non consideration of the CENVAT credit claimed by the Petitioner - SVLDRS-3 challenged on the ground that the same is issued without deducting the eligible CENVAT amount - HELD THAT:- The entire CENVAT credit claimed by the Petitioner was not allowed by the adjudicating authority while passing the order in original. The Appeal filed against the said order was also dismissed on the ground of limitation. The stand of the Respondent is that the Petitioner never produced on record the documents to justify the claim of CENVAT credit - In the present case, it is not disputed that the Petitioner was given opportunity of hearing. Written submissions were also placed on record by the Petitioner. Judgments relied by the Petitioner are basically on the point that the amount of pre-deposit made has to be considered. There cannot be any dispute with the said proposition. In the present case, the factum of the CENVAT credit as claimed by the Petitioner is in dispute. According to the department, Petitioner could not produce any document to justify the claim of the CENVAT credit i.e. dis-allowed by the adjudicating authority. No doubt Petitioner would be entitled for the benefit of CENVAT credit. The Petitioner will have to justify the same by necessary documentary evidence. Once the CENVAT credit is disallowed, in absence of proof of it, it would be difficult for the court to conclude about the justification to claim the benefit of CENVAT credit - In absence of the proof, of the Petitioner having paid the tax to which the Petitioner is entitled for the benefit of CENVAT, the documents would be necessary to come to the conclusion. It is not the case that the Petitioner was not accorded with the opportunity. The show cause notice were issued to the Petitioner giving the details. Claim of the Petitioner for CENVAT credit to a large extent was disallowed. In view of disallowance, it is difficult to arrive at a conclusive finding that the Petitioner would be entitled for the entire CENVAT credit as claimed by the Petitioner so as to negate SVLDRS-3 - Petition dismissed. Issues:Challenge to SVLDRS-3 issued without deducting eligible CENVAT amount.Analysis:1. The Petitioner contested the SVLDRS-3 issued without deducting the eligible CENVAT amount, claiming to be a service provider engaged in renting immovable properties.2. The Petitioner received show cause notices for service tax demands and CENVAT credit claims, which were adjudicated in a common order disallowing a significant portion of the claimed CENVAT credits.3. Seeking resolution under the Sab Ka Vishwas Dispute Resolution Scheme 2019, the Petitioner filed a declaration, but the Designated Committee issued SVLDRS-3 without deducting the CENVAT amount, leading to the challenge.4. The Petitioner argued that the rejection of CENVAT credit deduction in SVLDRS-3 contradicted scheme guidelines and legal provisions, emphasizing that CENVAT credits are essential for tax paid on raw material purchases.5. Legal counsel cited relevant circulars and judgments to support the Petitioner's claim for CENVAT credit deduction, highlighting the need for adherence to scheme rules and past legal precedents.6. The Respondents contended that the Petitioner failed to provide evidence of discharging service tax liability or justifying claimed exemptions, especially regarding CENVAT credit utilization.7. The Respondents emphasized the lack of supporting documents for CENVAT credit claims, leading to disallowances and highlighting discrepancies in the Petitioner's submissions.8. The Respondents argued that the Petitioner's attempt to adjust CENVAT credit against arrears was unjustified, given the specifics of the case and the documents provided.9. The Respondents defended the legality of SVLDRS-3 issuance, stating that after due consideration and verification, the decision was appropriate and aligned with the scheme's objectives.10. The court noted the core dispute concerning the consideration of CENVAT credit by the adjudicating authority, emphasizing the importance of supporting documentation for such claims.11. While acknowledging the relevance of past judgments on pre-deposit considerations, the court highlighted the necessity for the Petitioner to substantiate CENVAT credit claims with proper evidence.12. The court emphasized the need for conclusive proof of tax payment to justify CENVAT credit claims, underscoring the importance of documentary evidence in such disputes.13. Considering the disallowance of a significant portion of claimed CENVAT credits and the lack of conclusive proof, the court found it challenging to support the Petitioner's claim against SVLDRS-3.14. The court concluded that without concrete evidence of tax payment and entitlement to CENVAT credit, it was difficult to overturn the SVLDRS-3 decision based on the available information and legal framework.15. The court determined that the Petitioner's reliance on circulars and FAQs did not sufficiently support the claim for CENVAT credit, especially when the adjudicating authority had already disallowed the credits.16. Ultimately, the court found no legal basis to challenge the impugned order, leading to the dismissal of the Writ Petition without granting any relief to the Petitioner.17. The Rule was discharged, and the Writ Petition was dismissed without costs, affirming the decision on the SVLDRS-3 issue.