2024 (2) TMI 370 - AT - Service Tax

Tribunal Overrules Demands on Cenvat Credit for Catering Services; Appeals Allowed with Relief for 2008-2011 Period.

The Tribunal set aside the confirmed demands against the Appellant regarding Cenvat credit for 'Outdoor Catering Services.' For the period August 2008 to ... CENVAT Credit - input services - Outdoor Catering Services - denial on the account of raising of invoice after 14 days - HELD THAT:- As a matter of fact, neither in the Show Cause Notice, nor in the Order-in-Original there is any dispute that this amount was not paid by the service provider so as to deny the Cenvat Credit. So far as the denial of the same on account of raising of the invoice after 14(fourteen) days from the date of provision is concerned, it is noted that this is not a normal invoice for which this provision would be applicable. This invoice is specifically raised for the Service Tax paid by the service provider for the past period. Therefore, there are no infirmity for the Appellant taking Cenvat Credit. Further, the entire demand of 1,52,82,260/- is for the period August 2008 to September 2009, wherein there was no exclusion clause for taking Cenvat Credit on ‘Outdoor Catering Services’. Therefore, the confirmed demand of Rs.1,52,82,260/- is set aside. Second confirmed amount of Rs.98,12,269/- - HELD THAT:- It is found that almost the entire Cenvat Credit pertains to the invoices raised before 31.03.2011. From the tables annexed to the Show Cause Notice, it is found that in the case of one service provider, they have raised the Bills on 01.04.2011, which clearly show that the service has been provided during the month of March 2011 only. In case of another service provider they have raised the Bill on 31.03.2011, but the credit has been taken in the month of July 2011. Therefore, the clarification given in the cited Circular fully applies to these Bills - the confirmed demand of Rs.98,12,269/- is set aside. Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether Cenvat credit is admissible in respect of Outdoor Catering Services provided prior to 31.03.2011 notwithstanding invoices or supplementary invoices raised after the service period. 2. Whether a supplementary invoice issued by a service provider after the statutory 14-day period can be disallowed for Cenvat credit where the supplementary invoice relates to Service Tax actually paid by the service provider for an earlier period. 3. Whether invoices raised after 01.04.2011 are ineligible for Cenvat credit when the service was rendered prior to 31.03.2011, and whether departmental clarification (Circular No.943/04/2011-CX dated 29.04.2011, Sl. No.12) affects eligibility. ISSUE-WISE DETAILED ANALYSIS Issue 1: Admissibility of Cenvat credit for Outdoor Catering Services provided prior to 31.03.2011 Legal framework: Cenvat Credit Rules, 2004, definition of input services (Rule 2(l)) and applicable exclusion/amendment effective from 01.04.2011; statutory amendments effective date governs eligibility for credits. Precedent Treatment: No judicial precedent was cited or applied by the authorities below or before the Tribunal in the impugned orders; the Tribunal relied on textual application of the Rules and the departmental circular. Interpretation and reasoning: The Court examined the temporal scope of the legislative exclusion and held that for services provided prior to 31.03.2011 there was no statutory bar to taking Cenvat credit. The Tribunal found that the demands which related to periods entirely before 31.03.2011 could not be sustained merely because invoices or entries were effected later. Ratio vs. Obiter: Ratio - Cenvat credit is permissible for Outdoor Catering Services where the service was provided prior to 31.03.2011, notwithstanding invoicing date, subject to satisfaction of other statutory conditions. Obiter - none additional on this point. Conclusions: The confirmed demand in respect of the period August 2008 to September 2009 (entirely prior to 31.03.2011) was set aside on the ground that there was no exclusion preventing Cenvat credit for Outdoor Catering Services for that period. Issue 2: Validity of supplementary invoice raised after 14 days where the service provider has paid the shortfall of Service Tax for earlier periods Legal framework: Rule 9 of Cenvat Credit Rules, 2004 (conditions for availing credit including documentary requirements) and statutory requirement regarding time limit for raising invoices (14 days) for ordinary invoices. Precedent Treatment: No precedent was invoked; the Tribunal construed the Rules and the nature of the invoice (supplementary)/context (payment by service provider) to distinguish ordinary invoice rules. Interpretation and reasoning: The Tribunal differentiated between a normal invoice (to which the 14-day rule applies) and a supplementary invoice specifically raised to reflect Service Tax actually deposited by the service provider for prior periods. As the service provider had in fact remitted the Service Tax (evidenced by GAR-7 challan and calculation sheet), the supplementary invoice was treated as satisfying the requirements under Rule 9 for Cenvat credit. The 14-day limitation was held inapplicable to such a corrective/supplementary invoice that documents a prior tax payment. Ratio vs. Obiter: Ratio - A supplementary invoice raised to reflect Service Tax actually paid by the service provider for prior periods is not disqualified from supporting Cenvat credit merely because it was raised after 14 days; the decisive factor is actual payment and documentary proof. Obiter - the Tribunal noted that the invoice type and purpose determine applicability of the 14-day restriction. Conclusions: The denial of Cenvat credit on the ground of late issuance of the supplementary invoice was rejected and the portion of demand attributable to such credit was set aside. Issue 3: Effect of invoices raised after 01.04.2011 where services were provided prior to 31.03.2011 - applicability of departmental clarification Legal framework: Amendments to Cenvat Credit Rules effective 01.04.2011 and Circular No.943/04/2011-CX dated 29.04.2011 (Sl. No.12) clarifying availability of credit where service provided prior to 31.03.2011 even if invoice raised after that date. Precedent Treatment: No judicial decisions referenced; reliance placed on departmental circular as interpretative guidance of policy and rules. Interpretation and reasoning: The Tribunal examined the invoices and found most bills were raised before 31.03.2011; where a bill was dated 01.04.2011, contemporaneous material (showing service provision in March 2011) established that the service had been provided prior to 31.03.2011. The Tribunal applied the departmental clarification which allows credit where service was provided prior to 31.03.2011 even if the invoice is post-dated, holding the clarification applicable and persuasive in construing the scope of the amendment. Ratio vs. Obiter: Ratio - Where services were rendered prior to 31.03.2011, Cenvat credit is available notwithstanding that invoices were raised after 31.03.2011; departmental clarification supports this interpretation. Obiter - the Tribunal treated the circular as relevant interpretative guidance but did not purport to treat it as binding precedent beyond the facts. Conclusions: The confirmed demand relating to invoices raised after 01.04.2011 (but evidencing services rendered before 31.03.2011) was set aside; overall demand for the second period was vacated. Cross-references and Consolidated Conclusion Where related factual and documentary proof shows that Service Tax was remitted by the service provider and the service was provided prior to 31.03.2011, Cenvat credit cannot be denied on grounds of late invoicing or on account of amendments effective 01.04.2011. The Tribunal set aside both confirmed demands and allowed the appeals with consequential relief as per law.