Cenvat credit

[Vasudev Mehta]

Assesse was suffering from financial crunches and could not file ST-3 returns on time and hence filed ST-3 returns belatedly. However, they also had not declared some amount in ST-3 returns. Some portion of cenvat credit was not taken in ST-3 returns due to inadvertent mistake of accountant and since the returns were filed late I. E. After 2 years, principal commissioner has denied cenvat credit on the ground that it has been availed after a period of 1 year. However it is not the case since only the returns are filed late however cenvat credit pertains to that period only. We have various case laws that not mentioning cenvat credit is mere procedural lapse and have case law of baba auto link wherein the cenvat credit cannot be denied merely on the ground that the returns were filed late. Is it worth going to cestat and can we aregue that there was no intention to evade tax? Can the experts enlighten me on this and is there any more case laws in favour of assesse

[Shilpi Jain]

Yes, there are many cases under CENVAT regime which have held that when credit is availed in books, non-availng in the returns is only a procedural lapse, more so when the department does not dispute eligibility on any other grounds.

[KASTURI SETHI]

Truly expressing it is a hard nut to crack. The burden of proof is cast on the assessee in terms of Rule 9 (5) of Cenvat Credit Rules, 2004. Time bar issue is very serious matter.The Supreme Court is very strict on time-bar issue. Such case may go in favour of Govt.

In my view, such lapse cannot be termed as a procedural lapse.

[Vasudev Mehta]

Sir but there are cestat judgements in the case of vaibhav global and temenos india. Further in my case the returns are filed late. Rule 9 only states that cenvat credit should be availed within one year but it does not specify that returns should be filed on time.

[Amit Agrawal]

Under Cenvat Credit regime, there is no legal basis - in my humble view - to link date of return (Form ST-3) filed with date of availing Cenvat Credit. Accordingly, mere delay in filing return cannot be equated with delay in availing Cenvat Credit.

W.r.t. second issue about linking / adjusting Cenvat Credit available in books (but not shown as 'credit taken / availed' even in belated return/s filed) with outstanding output tax liability (which also remains undisclosed in Form ST-3 so filed), there cannot be straight jacket formula and same is not an unchallengeable right of any assessee to claim. Such issues needs to be seen holistically from overall case-contents & documents thereto, assessee's contention/s defending itself etc. and same cannot be answered - one way or the other - with limited facts.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Course 5 Intelligence Pvt Ltd Vs CCGST - 2022 (12) TMI 1192 - CESTAT MUMBAI 

ST - The issue involved is, whether the authorities below are justified in rejecting refund claim filed by appellant under Rule(5) of CCR, 2004 r/w Notfn 27/2012 - CE(NT) on the ground of nondisclosure of availment of Cenvat Credit in ST-3 Returns - Time and again in series of decisions Tribunal has repeatedly held that non-mentioning of credit availed in ST-3 return is only a procedural lapse for which substantial relief cannot be denied to assessee but despite that the lower authorities seem to be adamant in not taking cognizance of views of Tribunal - From impugned order, it seems that although Commissioner agreed with submission of appellant about violation of principle of natural justice but according to him since he has heard appellant therefore natural justice has been restored, which is not correct understanding of law on aforesaid principle - Mistake committed by assessee is merely a procedural lapse which they tried to rectify immediately thereafter but were not permitted and substantial relief was denied to them, which is not permissible in law - Admittedly, ST-3 Returns manually filed by assessee were not verified as same were not accepted by authority below - Matter remanded to Original Authority in order to decide issue afresh: CESTAT

Many such cases under ST.

Under CENVAT regime credit was considered as a beneficial provision for assessee.

[Padmanathan KV]

Regarding the actual question, ie. is it worth going to CESTAT would depend upon the money involved etc and other factors. But there is definitely a case which you can make out here before the Tribunal.

AI Summary

Cenvat credit procedural lapse: late return filing alone does not justify denial of credit; tribunal relief possible.
When Cenvat credit is recorded in the assessee's books for the relevant period, nondisclosure in belated ST 3 returns has been held by tribunals to be a procedural lapse that does not automatically preclude credit. The operative issues are the evidentiary burden on the assessee to prove entitlement, the strict treatment of time limit rules by higher authorities, and the need for holistic assessment of documents; Tribunal precedents often permit remedy or remand where substantive eligibility is not disputed.