Cenvat Credit procedural compliance: failure to file prescribed returns defeats adjustment, sustaining tax demand and penalties.

The article examines sustainment of service tax demand and related fiscal liabilities where procedural non-compliance with Cenvat Credit rules is alleged. It explains that Cenvat credit entitlement depends on prescribed return filings and ledger entries; absence of ST-3 entries or timely intimations defeats credit adjustment. Statutory provisions on extended limitation for suppression, interest for delayed payment, mandatory penalty for suppression, and late fee for non/late filing are applied where facts indicate deliberate non-compliance. It also notes the lawful appropriation of deposits against quantified dues. The piece emphasises procedural proof and time bar rules as determinative for credit claims and liability enforcement.

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Issues: Whether the demand of service tax, interest, penalty under Section 78 and late fee imposed on the appellant for period 2012-13 to 2015-16 is sustainable, and whether claimed CENVAT credit could be allowed to be adjusted against the demand.

Analysis: The adjudication quantified total service tax liability and recorded deposits made by the appellant; the appellant asserted availability of CENVAT credit and relied on ledger certifications and case law. The decision applies statutory provisions including Section 73 (extended period for demand where suppression is found), Section 75 (interest on delayed payment), Section 78 (penalty for suppression/contravention), Section 70 (returns and late fees), relevant definitions in Chapter (Section 65B(44), Section 66D) and the Cenvat Credit Rules, 2004 (notably Rule 4(7), Rule 9(9), Rule 9(11) and Rule 14). The authorities held that claiming CENVAT credit is subject to procedural conditions (filing and showing claim in prescribed returns) and that absence of ST-3 entries or timely intimations defeats the claim; statutory time limits and prescribed procedure under the Cenvat Credit Rules were applied. The authorities found facts supporting deliberate non-compliance and suppression with intent to evade, invoking the proviso to Section 73(1) to extend limitation; accordingly interest and mandatory penalty provisions were applied. Appropriation of amounts deposited was ordered to be adjusted against quantified dues, and late fee liability for non-filing/late filing of returns was sustained.

Conclusion: The demand of service tax, interest, penalty under Section 78 and late fee are upheld and the appellant's claim for adjustment of CENVAT credit is rejected for failure to comply with statutory procedural requirements; deposits made by the appellant are appropriated against the confirmed dues.

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