Extended limitation and Cenvat credit on works contract service hinge on disclosure in books and direct nexus with output services.

Extended limitation could not be invoked for denial of cenvat credit because the relevant transactions were reflected in the books and supported by vouchers, leaving no material to show suppression or contumacious conduct. Cenvat credit on works contract service was also admissible where the service related to construction of a cafe and banquet hall forming part of the premises used for taxable output services, since the construction had a direct nexus with rendering those services under the main input service definition. On these findings, the demand and penalties were not sustainable, and relief was granted to the assessee.

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Issues: (i) Whether the extended period of limitation could be invoked for denial of cenvat credit on the ground of suppression of facts. (ii) Whether cenvat credit on works contract service was admissible under the definition of input service.

Issue (i): Whether the extended period of limitation could be invoked for denial of cenvat credit on the ground of suppression of facts.

Analysis: The transaction was duly reflected in the books of account and supporting vouchers. The dispute arose from an audit note based on the recorded transactions. In such circumstances, there was no material to establish suppression or contumacious conduct so as to justify invocation of the extended period.

Conclusion: The extended period of limitation was not available to the Revenue.

Issue (ii): Whether cenvat credit on works contract service was admissible under the definition of input service.

Analysis: Credit was claimed for construction of the cafe and banquet hall, which formed part of the premises used for providing taxable output services. The main limb of the input service definition allows credit for services used by a provider of output service in relation to rendering such output service. On the facts, the construction services had a direct nexus with the output services and the credit claim was supported by precedent.

Conclusion: Cenvat credit on works contract service was admissible.

Final Conclusion: The demand and penalties could not be sustained, and the assessee was entitled to relief.

Ratio Decidendi: Extended limitation cannot be invoked in the absence of wilful suppression with intent to evade duty, and credit is admissible where the input service has a direct nexus with the rendering of output service under the main definition of input service.

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