TaxTMI 
TaxTMI 
2023 (8) TMI 995
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly) availed/ utilized wrongly during the period 2007-08 to 2011-12, as discussed, to be recovered from M/s G.D. Goenka Pvt. Ltd., N-85, Connaught Place, New Delhi-01, under Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 (1) of Finance Act 1994, as amended by invoking extended period of limitation. I appropriate the confirmed demand amounting to Rs.51,44,455/- out of Rs.52,95,634/- already deposited by M/s G.D.Goenka Pvt. Ltd; (iii) I drop the demand of Service Tax amounting to Rs.1,25,429/- on wrong adjustment of excess amount paid; (iv) I order for charging and recovery of interest at appropriate rate on late payment of service tax and on Rs.51,44,455/- of Cenvat Credit due to be reversed till the date of deposit of service tax from M/s G.D.Goenka Pvt. Ltd., N-85, Connaught Place, New Delhi-01, under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994. (v) I order for recovery of interest of Rs.43,231/- for the intervening period in respect of the ineligible Cenvat Credit taken prior to the date of eligibility of Cenvat Credit from M/s G.D.Goenka Pvt. Ltd., N-85, Connaught Place, New Delhi-01, under Rule 14 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ey used the school to train franchisees and educate them regarding the standards to be maintained in the schools which will be run by them under the brand name of the appellant. According to the learned counsel, therefore, there is a direct nexus between the input services used to construct the school building and the taxable franchisee services provided by the appellant. 5. It is also his submission that the appellant had rented out a portion of the school building to its associate firm M/s. GD Goenka Group. This renting of immovable property was a taxable service on which the appellant paid service tax. Thus, the input services used for constructing the school building were also used by the appellant to provide renting of immovable property service to M/s G D Goenka group. 6. Learned counsel for the appellant further submits that as per Rule 6(5) of the Cenvat Credit Rules, 2004 [CCR], in respect of some input services, full credit will be available unless such services are exclusively used for providing exempted services and it is not necessary to apportion such input services as used for providing taxable and exempted services. All the input services in dispute are covere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ull Credit Eligible under Rule 6(5) of CCR Total 17,86,020 18,31,129 14,07,323 1,45,724 51,70,205 Return Filing Date 21.10.2008 16.04.2010 22.10.2009 08.07.2011 25.10.2010 21.04.2011 Date upto which SCN could have been issued 20.10.2009 15.04.2010 21.10.2010 07.07.2011 24.10.2011 20.04.2012 Submission on Limitation Demand barred by limitation Demand barred by limitation Demand barred by limitation 8. Before we proceed to examine the merits of the case, we proceed to examine the question of limitation. The reasons for invoking extended period of limitation given in the Show Cause Notice [SCN] was that after audit, a letter dated 7.9.2012 was sent to the appellant asking it to pay the service tax short paid due to wrong availment of CENVAT credit along with interest and penalty. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... operating in a regime of self-assessment in which it was required to self-assess service tax and pay it and file returns correctly. Since the appellant had not assessed the service tax correctly by availing and utilising ineligible CENVAT credit, it is a violation of the provisions of the Act and Rules and it amounts to intentional and wilful suppression of the fact of availing inadmissible CENVAT credit. (c) The appellant did not disclose to the department in its returns that it had availed CENVAT credit of the service tax paid on services which do not qualify as input services in the case. (d) The appellant did not even seek clarification from the department regarding the eligibility of the CENVAT credit. (e) But for the audit, the fact that the appellant availed ineligible CENVAT credit would have never come to light. 11. We have examined these grounds for invoking extended period of limitation. 12. Section 73 provides for recovery of service tax not levied, not paid, short levied, short paid or erroneously refunded. The provisions of this section apply mutatis mutandis to irregularly availed CENVAT credit recoverable under Rule 14 of CCR. This ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment and, during the adjudication proceedings and is before us that it is entitled to the CENVAT credit. Thus, we find that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Naturally, the appellant self-assessed duty and paid service tax as per its view. Such a self-assessment, cannot, by any stretch of imagination, be termed deliberate and wilful suppression of facts. 15. Another reason given in the SCN for invoking extended period of limitation was that the appellant had deposited the disputed amount of service tax during audit but later disputed it which shows the appellant's intent to wilfully and deliberately suppress the facts. This reasoning of the Revenue cannot be accepted because there is nothing in the law which requires the assessee to accept the views of the audit or of the Revenue. There is nothing in the law by which an inference of intent to evade can be drawn if the assessee does not agree ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self assessment, its obligation is discharged. 18. Another ground for invoking extended period of limitation is that the appellant had not sought any clarification from the department. We find that there is neither any provision in the law nor any obligation on the assessee to seek any clarification. It was held by the High Court of Delhi in paragraph 32 of Mahanagar Telephone Nigam Ltd. vs. Union of India & Ors. [2023-TIOL-407-DELHI HIGH COURT ] as follows: " 32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cuments and other evidence he may deem necessary. Thus, in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72. 21. This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs [CBEC] in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows: 1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case). CBEC felt that facilitating preliminary scrutiny online would enhance efficiency and release manpower for detailed manual scrutiny, which could then become the core function of the Range/Group. 2) A detailed scrutiny programme also serves a 'workload development' function by initiating referrals for audit/anti-evasion. 1.2.2 Authority and Ownership 1.2.2A The authority to conduct scrutiny of returns for verifying the assessment done by the assessee is provided in Rule 5A of the Service Tax Rules, 1994. This rule, interalia, authorizes the Commissioner to empower any officer to carry out 'Scrutiny, verification and checks, as may be necessary to safeguard the interest of revenue'. The Rule also allows the officer to call for any record maintained by the assessee for accounting of transactions, the trial balance or its equivalent, and the Income Tax Audit Report maintained under Section 44AB of the Income Tax Act. In other words, the Rule permits the officer to examine financial records for scrutinizing the return to determine the correctness of the assessments made. In pursuance of this, the Board has also issued guidelines vide letter F.N....