Cenvat credit challenge over missing electronically generated DIN on show cause notice leads to invalidation of notice and appeal allowed

Cenvat credit dispute concerning validity of a show cause notice for failure to mention an electronically generated document identification number resulted in the notice being treated as invalid and non est, thereby nullifying the demand; extended period invocation was found unjustified and therefore cannot sustain recovery. The requirement to reverse proportionate Cenvat credit for common input services used for both taxable services and trading, in absence of separate records, remains a compliance issue but could not be enforced given the invalidated notice. Reliance on the service provider's certificate was improperly ignored, leading to allowance of the appeal and setting aside of the impugned appellate order.

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Issues: (i) Whether the Show Cause Notice is invalid for non-inclusion of computer-generated Document Identification Number (DIN) as required by Circular No.122/41/2019-GST; (ii) Whether the extended period of limitation under the proviso to Section 73(1) Finance Act, 1994 is invokable against the appellant on the facts; (iii) Whether reversal of proportionate Cenvat credit and imposition of penalty are sustainable in absence of proof that input services were used for exempted activity and in absence of dishonest or deliberate suppression.

Issue (i): Validity of Show Cause Notice for absence of DIN as required by CBIC circular dated 5-11-2019.

Analysis: The Tribunal examined the statutory circular requiring electronically generated DIN on communications after 8-11-2019 and considered authority holding that non-inclusion renders the communication invalid. The Show Cause Notice was issued on 11-12-2019 and did not bear the DIN nor claim any exception under the circular; the Revenue did not comply with the mandatory requirement.

Conclusion: The Show Cause Notice is invalid and shall be deemed never to have been issued; this conclusion is in favour of the assessee.

Issue (ii): Invocation of extended limitation under proviso to Section 73(1) Finance Act, 1994.

Analysis: The Tribunal assessed whether the facts demonstrate fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade tax. Records and returns showed the disputed taxable value was reflected in books and returns; there was no evidence of deliberate concealment. Precedent and statutory interpretation require strict construction of 'suppression' and burden on Revenue to prove it.

Conclusion: The extended period of limitation was wrongly invoked; the demand is time-barred. This conclusion is in favour of the assessee.

Issue (iii): Reversal of proportionate Cenvat credit and imposition of penalty for alleged common input service use and non-reversal.

Analysis: The Tribunal considered the Cenvat Credit Rules concerning ineligibility of credit for exempted services and the option/procedures for reversal, and the appellant's records including a certificate from the security service provider indicating use for taxable activity. The Tribunal also applied legal principle that penalty requires contumacious, dishonest or deliberate default; absent proof of suppression or deliberate evasion, penalty is not warranted.

Conclusion: The findings sustaining proportionate reversal and penalty are unsustainable on the record; conclusions favourable to the appellant were reached regarding eligibility and penalty.

Final Conclusion: The cumulative effect of the above conclusions is that the impugned order is set aside and the appeal is allowed; the Revenue's proceedings are invalidated on grounds of defective notice and time-bar, and penalty and demand cannot be sustained.

Ratio Decidendi: A show cause notice issued after 8-11-2019 without the computer-generated DIN required by CBIC Circular No.122/41/2019-GST is invalid; further, the extended limitation under proviso to Section 73(1) Finance Act, 1994 cannot be invoked absent clear proof of suppression, fraud, collusion, wilful misstatement or intent to evade, and penalty requires evidence of deliberate or dishonest conduct.

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