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The CESTAT allowed the appeal, setting aside the impugned order that sought to extinguish service tax credit for failure to carry it forward in statutory returns over four years. The Tribunal held that mere non-reporting of credit does not amount to its forfeiture in the absence of any misuse or wrongful utilization of the credit. Reliance on a Larger Bench decision concerning a different factual matrix was found misplaced, as there is no statutory provision prescribing a "reasonable period" for credit restoration. The appellant's failure was deemed a procedural lapse without affecting the substantive entitlement to credit. Consequently, the credit was not extinguished, and the order demanding its forfeiture was quashed.
The CESTAT allowed the appeal, setting aside the impugned order that sought to extinguish service tax credit for failure to carry it forward in statutory returns over four years. The Tribunal held that mere non-reporting of credit does not amount to its forfeiture in the absence of any misuse or wrongful utilization of the credit. Reliance on a Larger Bench decision concerning a different factual matrix was found misplaced, as there is no statutory provision prescribing a "reasonable period" for credit restoration. The appellant's failure was deemed a procedural lapse without affecting the substantive entitlement to credit. Consequently, the credit was not extinguished, and the order demanding its forfeiture was quashed.
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