Cenvat Credit entitlement where service tax paid by recipient: GAR-7 challan accepted if contains invoice particulars; denial set aside.

Decision addresses entitlement to cenvat credit where service tax was paid by the recipient and denial based on use of a GAR-7 challan. The tribunal applied the principle of documentary sufficiency, holding that a non-standard document may support credit if it contains the requisite invoice particulars; the department did not demonstrate that the GAR-7 lacked required contents, so denial of credit and its utilization was unsustainable. The adjudicating order was set aside on merits, the record showed no loss to the exchequer or irregular modus operandi, and the appeal was allowed restoring cenvat credit entitlement.

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Issues: (i) Whether the show cause notice proposing denial of Cenvat credit for the period April 2016 to March 2017 was barred by limitation; (ii) Whether, on merits, Cenvat credit can be denied where the recipient paid service tax on Business Auxiliary Service and availed credit based on GAR-7 challan/instruments.

Issue (i): Whether the demand in the show cause notice is time-barred.

Analysis: The appellant filed regular returns declaring the transactions and payment; no suppression, misrepresentation or fraud is alleged or proved. The extended period applies only where suppression/misrepresentation/fraud is shown. The limitation period was extended to two years from 14 May 2016, rendering demands from May 2016 onwards within limitation; only April 2016 falls outside the normal period.

Conclusion: The demand for April 2016 is time-barred and is set aside; demands for the period from May 2016 onwards are within limitation.

Issue (ii): Whether the appellant was entitled to avail Cenvat credit on service tax paid as recipient and whether GAR-7 challan/instrument sufficed for availing credit.

Analysis: The appellant paid the full service tax on commission though Business Auxiliary Service was not covered under the reverse charge notification. Under the Cenvat Credit Rules, entitlement to credit arises for the person who pays the service tax. The invoices produced did not show tax charged by the provider, but the appellant paid tax and GAR-7 challan was relied upon for credit. Rule 9 prescribes invoice particulars, but the proviso to Rule 9(2) permits other documents that suffice for all required invoice contents; the record does not show that GAR-7 lacked required particulars. No loss to the exchequer is shown.

Conclusion: The appellant is entitled to avail and utilize the Cenvat credit for the normal period (May 2016 to March 2017); denial of credit for that period is set aside.

Final Conclusion: The impugned order is set aside and the appeal is allowed in part by setting aside the demand for April 2016 on limitation grounds and allowing Cenvat credit for the period May 2016 to March 2017 on merits.

Ratio Decidendi: Where a tax recipient has paid the service tax, he is entitled to avail Cenvat credit of the tax paid; extended limitation period is invokable only upon proof of suppression, misrepresentation or fraud, and documents other than invoices may suffice for credit if they contain all particulars required by Rule 9(2) of the Cenvat Credit Rules, 2004.

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