OUR UNIT START FROM FY 14-15 . OUR UNIT IS SSI UNIT IN FY 15-16. WE HAVE NOT TAKEN A EXEMPTION OF 150 LAKH. WE HAVE NOT AVAIL SERVICE TAX CREDIT OF FY 14-15 & ALSO NOT TAKEN I

[vinod ambekar]

OUR UNIT START FROM FY 14-15 . OUR UNIT IS SSI UNIT IN FY 15-16. WE HAVE NOT TAKEN A EXEMPTION OF 150 LAKH. WE HAVE NOT AVAIL SERVICE TAX CREDIT OF FY 14-15 & ALSO NOT TAKEN IN ER-3 , CAN WE AVAIL SERVICE TAX CREDIT OF FY 14-15 & SHOW IN ER-3 NOW ?

[KASTURI SETHI]

 

From 1.9.2014 to 28.2.2015 Time limit for availing (taking) credit was 6 months.

From 1.3.2015 onward Time limit increased to one year vide Notification No.6/2015-CE(NT) dated 1.3.2015

In terms of Rule 4(7) of Cenvat Credit Rules,2004 (as amended) , input service credit shall not be allowed by the department and also no hope of getting the relief through litigation.

Earlier also time limit of taking credit within 6 months was enforced vide Notification No.28/1995-CE (NT) dated 29.6.1995. The Supreme Court upheld such amendment of restriction of taking Cenvat Credit within 6 months in the case of Osram Surya Pvt. Ltd. Vs.CCE Indore reported as 2002 (142) E.L.T. 5 (S.C.).= 2002 (5) TMI 49 - SUPREME COURT OF INDIA The Apex observed as under:-

Modvat - Duty paying documents - Availment of credit within six months of the issue of duty paying documents - Amendment to Rule 57G of the Central Excise Rules, 1944 introduced by Notification No. 28/95-C.E. (N.T.) providing such time limit of six months is prospective in nature - Amendment does not take away any vested right but merely introduces limitations for availment of credit - Amendment is not retrospective in operation since it does not cancel the credit nor does it effect the right of the persons who have already taken credit - In the absence of challenge to the validity of the Rules, the pleas that time limit cannot be applied to credit accrued prior to the amendment and introduction of amendment to rule is arbitrary, not available. [1999 (106) E.L.T. 3 (S.C.)=  1999 (1) TMI 34 - SUPREME COURT OF INDIA (EICHER MOTORS LTD. Versus UNION OF INDIA) distinguished]. [paras 7, 8, 9]

Interpretation of statute - Change in law - Amendment to Rules incorporating time limit for availment of credit - Introduction of time limit does not take away any vested right, it is only the time limit within which said right is to be enforced hence amendment is prospective in effect - Erstwhile Rule 57G of the Central Excise Rules, 1944. [para 7]

Penalty imposed specifically questioned before the Tribunal but it failed to consider - Penalty imposed on similarly placed assessee, however, set aside by the Tribunal - Modvat credit whether can be availed beyond a period of 6 months from the date of issue of duty paying documents issued prior to amendment of Rule 57G of Central Excise Rules, 1944 - Penalty set aside by the Supreme Court - Rule 173Q ibid. [para 10].

Go through the judgement word for word and read between the lines and then decide whether to challenge the validity of restriction of time limit of one year or not. Without challenging the amendment, relief is not feasible. Now it is your option whether to challenge validity of rule of one year limit or not.

As per the present law, you cannot take credit for the past period which is more than one year.

[Ganeshan Kalyani]

Law should be abide by which in the interest of development of Nation. However failure in taking credit within specified time period of the tax which is already paid while procuring the goods seems not logical. It is like prepaid mobile recharge. Suppose I have recharged for Internet for X amount for one month then I am supposed to utilise the credit within the said one month only. In any case it will be carried forward. In the same way we have to adhere to the rules framed under excise law. Thanks.

[KASTURI SETHI]

Sh. Ganeshan Kalyani Ji,

Rightly said, Sir. You have echoed my views. There is purpose to impose restriction of one year. During my service I have detected one case where the assessee took credit again for the same invoices for the past period. On being detected he expressed very lame excuse like ,"I was not aware. I remained on long leave." Amount was got reversed along with interest and penal action initiated. Amount was 2-3 lacs but it is a matter of issue and not the amount. After all laws have been framed to be complied with and honoured and not to be flouted. There are assessees in large number who consider evasion of duty or Service Tax as their right. So the purpose of one year is to protect revenue.

There honest and sincere assessee also but they are very limited in number.

[Ganeshan Kalyani]

My previous post was just my views as a common man who would think if he paid tax why there should be a time limit. But as tax person I fully agree with Kasturi Sir's reply.

[MADAN RAHEJA]

Law of limitation has to be in place, whether for claiming benefits from State or denial thereof by State

[Mahir S]

Vinod ji,

You cannot avail input service credit for the past period , as rightly explained above.

[Mahir S]

There is no way for availing input service credit for the invoices received during the period from April 14 to September 14.

However, if you have not yet submitted your quarterly return ending December 2015, then you can avail service tax credit from October 2014 to March 2015 and you can show them in your ER-3 returns.

Else, you can now surely avail input service credit for the period January 2015 to March 2015 in your excise records and show them in the ER-3 return for the quarter ending March 2016.

[Ganeshan Kalyani]

Thanks Kasturi Sir for sharing your valuable views.

[KASTURI SETHI]

Sh.Mahir S.,

Sir, there is no dispute about availing credit within one year. By calculation of period, you have made convenient for the assessee.

AI Summary

Time limit for availing input service credit restricts retroactive claims; procedural challenge may be the only remedy under amended Cenvat rules
Input service credit must be claimed within the statutory time limit under the Cenvat Credit Rules; earlier six month and later one year limits make credits for invoices older than the applicable window time barred and not admissible through routine ER 3 filings. Administrative practice and precedent uphold prospective application of time limit amendments, and absent a legal challenge to the validity of the limitation rule, departmental denial or reversal (and possible penal consequences) is to be expected.