Tribunal overturns denial of Cenvat credit, emphasizing procedural compliance. No penalty or interest.

The Tribunal ruled in favor of the appellants, holding that the denial of Cenvat credit based on procedural irregularities and the absence of registration number on invoices was unjustified. The Tribunal emphasized that once the requirements of the relevant rules were met, the benefit of Cenvat credit could not be denied. The Tribunal also noted that as the department was aware of the credit availed, there was no suppression of facts, making the demand unsustainable. Consequently, the order was set aside, and the question of penalty and interest did not arise.

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Issues:
The issues involved in the judgment are the eligibility of Cenvat credit in respect of services received prior to registration and the procedural irregularities/lapses in availing Cenvat credit.

Eligibility of Cenvat Credit:
The appellants, engaged in providing 'manpower recruitment agency' and 'commercial training or coaching' services, wrongly availed Cenvat credit on input services and invoices issued in the name of locations not included in Centralized registration. The appellants argued that Rule 4A of the Service Tax Rules does not impose an obligation for the service recipient to be registered. They cited various cases to support their claim. The Tribunal observed that once the requirements of Rule 4A and Rule 9 of Cenvat Credit Rules are satisfied, the benefit of Cenvat credit cannot be denied. The Tribunal also noted that the absence of registration number of the receiver in the invoice does not invalidate the credit claim. Relying on precedents, the Tribunal held that the denial of Cenvat credit on unregistered premises is unjustified.

Procedural Irregularities/Lapses:
The appellants contended that the non-registration of branches was a procedural lapse and did not affect the eligibility of credit usage for providing taxable output services. They argued that substantive benefit cannot be denied due to procedural irregularities. The appellants maintained that the department was aware of the credit availed as returns were filed regularly. The Tribunal agreed with the appellants, stating that the extended period for issuing a show cause notice can only be invoked in cases of tax evasion or intent to evade payment. As the department was aware of the credit availed, there was no suppression of facts. Therefore, the demand was deemed unsustainable, and the question of penalty and interest did not arise. The Tribunal cited relevant case law to support its decision.

Conclusion:
After hearing both sides and examining the records, the Tribunal found that the impugned order was not sustainable. The Tribunal set aside the order, emphasizing that the denial of Cenvat credit based on procedural irregularities was unjustified. The judgment was pronounced on 22.05.2023.

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